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Buying Land in Central Portugal

3971 Views 7 Replies 5 Participants Last post by  canoeman
Hi, new member here....

I am looking to buy some land around the Ansiao area with a view to building on it at some point in the future. (will be 3+ years min). However, I would welcome any perspective on what we are doing and either validate what I have been told or give me the benefit of experience from those who have been through the process before.

So here goes... We have visited Ansiao and we got a good feeling for the place. We have friends who have bought in a nearby town (probably 5km) and I quite like the idea of doing a bit of a "grand designs" type project at some point in the future with use of architects and professional help.

I will be looking to do this by funding without lending so will take time and effort to get the resources together so as I said, it wont be a case of wanting to start now and it could be as long as 5-10 years before we start or start sooner but do in stages as and when we can afford.

For anyone who knows the area....

Could they give me an idea of what the going rate is per square meter in Ansiao itself, would it be reasonable to expect that is it more expensive than the surrounding villages?

We are told that the seller has to go to the town hall to get confirmation that the land can be built on. I understand that this is to confirm that a property with 450m2 living space can be built - providing it meets planning rules etc? Can anyone confirm whether this is worth the paper it is written on? As I said i will be using an architect so does this reduce the risks? Is there anything else I should be thinking about here?

The land we were shown was 4000-5000m2 which we were told was in fact 3 plots but after asking whether it would be possible for them to maybe split into 2 bigger plots as I wanted 50% of the 2nd plot, we were advised a mistake had been made and that in fact the 3 plots were only 2 and that the plot we wanted half of was actually the same plot. We found this strange and told them we were not interested because the budget we had was completely obliterated with the price they were asking.

On the day of returning home, we were advised that they would reduce the cost of the land and we were told that the reason for the reduction in price (25%) approx was because the owner was in financial difficulty. I said that I would think about it when I was at home back in the UK.

I have had my friends and the local rep telling me how good a deal this is and if it wasn't a distressed sale, we would be paying a lot more. I have done my research as best as I can and must admit, I am struggling to find land at this price in Ansiao so close to the town. I also know what they paid for land with ruins on and it seems very well priced in comparison.

The cost of the land is outside my original budget but if push came to shove, I could get the money together so have told them that I would proceed on basis that i had proof that the land could be built on and that the topography was the amount of land I expected.

As part of the emails that have gone back and forth, it has come to light that the land is actually 3 plots and not 2 and that the reason they are discounting so much is because they are going to make 2 plots into 1. If I want it in 2, then I have to pay the full price. When asked why I was told it was only 2, then he said that it was a misunderstanding.

My plan was to buy the 2nd (or 3rd as it transpires) at some point so I had the whole area but I am now a bit put off by the whole episode with confusion of the plots.

I have a lawyer who will do the legal work for me etc but I am now thinking i should put the brakes on and asking more questions etc and try and get some other perspective and views on this. Ideally from people who know the area or at least central portugal.

Could someone confirm wether it is 1% or 5% tax on purchase of the purchase price? I was going to get this confirmed with my lawyer but other discussions have meant that I have not got there yet..

Sorry for the long post for my 1st one but hopefully there will be some advice for me to consider.
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Before the recent increases in fees at Notary and Conservatoria, it was relatively easy and cheap to divide or combine land Articles now it is not.

It's the norm that a parcel of land or building might well have more than 1 division or article number, what is important and relevant to you is the official designation of that land, if you want to build then the area you want to build on must be designated as Urbana, or clear proof that permission would be granted.
Urbana is building land
Rustica is farm land (and unlikely to be granted permission to build)
Mista is a mixed urban/rustica plot
Then there are 3 or 4 others that don't seem to apply here.

The first thing I would do is ask for copies of the Caderneta' from Financas and the Conservatoria.
Each Article will have it's own Caderneta
The Financas document should have Caderneta Predial Urbana printed in the top right.
Conservatoria document might not, if theres no building.

If there not prepared to supply them, I'd walk away, but either way I wouldn't precede until they have clearly sorted out the plots (Articles) and their official designations and price. Because of my comments below unless you can afford the whole parcel, I'd walk away.

There are a few others things you must also research and understand.
1. the design, planning, permissions reguired and timescale to build and complete and who can do the necessary work.
It requires permission and extra expense to build a property over a period of time, my advice is if you don't have the funds available or in place don't start till you do.

2. Portugal has a Right to Buy, which gives boundary neighbours the Right to buy Rustic designated land, in your case then it could be difficult or not possible to purchase this 2-3? plot at a later date if a neighbour wanted it or you might have to share with him.

The RtB only applies to Rustic land, but as there is no property on the land I believe that this would apply to you, e.g you agree a purchase, price and set a date for Escritura with Vendor for lets say 3 Atricles, 1 is Urbana, 2 are Rustic, he must legally notify the boundary neighbours and give them the option to purchase, if they wanted to buy they must pay the same price as you and must be able to complete the purchase by the set Escritura date, they cannot just buy the Rustic land.

Stamp duty 0,8% of Purchase price, IMT Urbana 6.5%, Rustica 5% which is why there's a bit of haggling over the values given to mixed plots
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I would agree with all that Canoe has stated.

we have just moved into our house on the Silver Coast which we had built to our specifications, having first bought the land.

My advice would be to check, re-check and check again about the status of the land. If someone is suggesting it is a great deal then the old adage "beware of Greeks bearing gifts" may apply.

Next I would ensure that I had all my budget funds in place + 15% (to cover the things you don´t´know about, or your builder and architect haven´t told you about)

Also make sure you allocate plenty of funds to come over and check progress, as you spend more time with your Builder you will come to understand that everything, and I mean EVERYTHING will have to be signed off by you, and this is 99% of the time in person. Do not expect to find out about things from your Builder, you have to go and dig about to get things sorted.

Above all, go into it with your eyes open and prepared for a lot of hard work and it will be worth it.

Contact me if I can help further.

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The Biggest potential problem I see here is that you mention you might not build for a number of years!
there is nothing to guarantee that although you may get a viability to build letter from the council to build a house now,(subject to a full planning appliction, at least 12 months) in the next few years you may not, as that viability is only for right now, the future may and often is very different when it comes to applying for permission to build.
unless you are going to start a planning application now and then build and finish the property straight away, I would not buy any land with thoughts of building in the future, its just far too big a risk, there are a few people out there that have done that only to find they cant build, expensive mistake to make, I would wait and then pick up a bit of land when your ready to start your prject, (might even be cheaper in a few years with the way things are heading!)
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I would add one other point. The IMT Urbana of 6.5 % is based on the assessed value of the property, not the purchase price. I discovered this when I purchased a piece of land last year at 50% of the assessed value. I imagine this can work both ways, but our property had been assessed in 2004, so the assessment was fairly high.
Properties with older assessments are currently going through a reassessment process all over Portugal. I believe this may apply to Urbana and not Rustica (not sure here). All this to say, in my opinion, I wouldn't feel rushed to buy, I suspect this will be a buyers market for a while longer.
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IMT(Municipal Tax on Real Estate Transfer) is the tax you pay on the purchase price, a one off tax like stamp duty (one of the reasons buyers are tempted to agree to lesser prices been shown on Escritura don't it just creates serious problems and issues at a later date)

IMI (Municipal Tax on Real Property) is the yearly tax you pay on the taxable net-worth value
(TNW)assesed value of land/buildings, generally a re-valuation is done when sold and then again when your house is built or alternations are made like adding double glazing, garage, swimming pool basically things that increase the TNW

To confuse life Finanacas show the TNW on the Caderneta under section
Year land property first listed Valor Patrimonal actual (CIMI) €value & Date of last valuation
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Many thanks for taking the time to reply.

So clearly, the correct way is to get all the funds together and then buy land and start the process or at least know that the finds will be in place within 6-12mths for when the planning has gone through?

Re the land, I am led to believe it is urbana classified and will get the lawyer to check this. I understand from Derek's post that this still could pose issues for building if its not started within 12mths of buying? Or will this class of land be fairly safe and it may just be the standards that you build to that change and have to be met as time goes on?

Re the taxes and costs - the IMT for land seems to be 6.5% if urbana. Would this fall into 1% bracket if I bought a ruin with land?
Many thanks for taking the time to reply.
Re the taxes and costs - the IMT for land seems to be 6.5% if urbana. Would this fall into 1% bracket if I bought a ruin with land?
Not necessarily just because it has a ruin it doesn't mean that it's 1%?? it's 5 or 6.5% it depends on the land classification Rustica 5%, Urbana 6.5%, a mixed plot would be 5% on the Rustic Article or m2 and 6.5% on the Urban Article or the m2 element, just because it has a ruin doesn't mean you can definitely build or rebuild, it is not as straightforward as that..

Derek makes a very valid point the outline permission will have a life and any changes in law could affect the possibility of building after it expires and I think his advice is very sound, if you don't intend or can't start the build procedure within that time frame, wait to buy until you can.
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