Buying property in Portugal

Buying a property in Portugal is exciting, but also a little daunting. Especially if you’re buying from overseas and in a foreign legal system, language and currency.

This comprehensive Portugal buying guide will help you understand the process, market conditions and key considerations, to help you buy a home in Portugal safely.

The experts you need

When buying a property in Portugal, you will need the services of certain professionals. Key professionals to get on your team include:

A trusted estate agent

Finding the right estate agent in Portugal makes a huge difference when you’re searching for your dream home. A good agent will not just find the right home for you but make the buying process stress-free. They will also ensure you make the best of the time you spend in the country on a viewing trip, including getting paperwork in place.

Ensure the agent you choose is properly qualified and reliable. You want personalised help with buying in Portugal, so your agent should be eager to service your needs.

You want an agent who:

• Is proactive and offers a good service.
• Answers questions promptly – send them a brief before you go out and see how quickly they respond.
• Understands the market and the politics and planning in making things happen.

An excellent agent will also be able to answer your questions on settling in, whether that is connecting utilities, suggesting a local doctor or whatever else you need.

The real estate industry is tightly regulated in Portugal. All agents must undergo training, be registered with the government and display an official Associacao de Mediadores Imobiliarios (AMI) licence number. You can also contact the Instituto da Construcao e do Imobiliario to check credentials.

An independent property lawyer

For such a significant transaction, it makes sense to invest in the services of an independent lawyer who has specialist property experience and local knowledge, speaks your language and is used to helping international clients.

The golden rule is that your lawyer is working entirely in your interests. That’s why we suggest finding an ‘independent’ lawyer, not one recommended by the agent or developer.

You should expect them to oversee the entire purchase process. In addition, they can advise you on vital tax, inheritance issues and any additional fees.

A currency specialist

When buying property in Portugal, the property price will be in euros. If your money is in a different currency you’ll need a currency specialist to make the transfer.

TOP TIP: Using a currency specialist can save you time and money as they’re better equipped for international transactions than your high-street bank. They also offer services that allow you to lock in an exchange rate for the length of your property purchase, avoiding the risks that come from volatile exchange rates.

You may also require the services of a visa & residency specialist, a mortgage advisor, an independent financial advisor and a removals company.

To be put in touch with a trusted expert, call our team today on 020 7898 0549.

Steps to buy a property in Portugal

There are no restrictions on non-Portuguese buying a property in Portugal. It’s best to be methodical and see buying property in Portugal as simple set of steps, none of which is particularly difficult. Before you know it you can own your own home in Portugal.

• Set a budget: Work out how much you have to spend. Read our guide, How to pay for a Portuguese property to see your options. Speak to Smart Currency Exchange about exchange rates and international payments. Get a mortgage approval in principle if required. Remember to allow for buying costs.
• Do your research: Research the best areas in Portugal for your particular budget, lifestyle, needs and interests. If aiming to move to Portugal full time, connect with an independent lawyer to discuss your residency and visa options. If hoping to rent a property out, check if this is legally possible.
• Online search: Once you know how much you have to spend in euros, you can start browsing available homes for sale in Portugal. Check out the appeal of different locations. Explore the area on Google Earth too, which will help you get an idea of the area. Make some enquiries on properties for sale in Portugal at Your Overseas Home. This will open a dialogue with recommended, English-speaking estate agents in Portugal.
• Book a viewing trip: When you have narrowed your online list as far as it will go, speak to an estate agent and book your trip to Portugal.
• Make an offer: When you’ve found a property you like, make an offer via your estate agent.
• Reservation contract & deposit: Once accepted, you may be asked to sign a reservation contract (Contrato de Promessa de Compra e Venda) and pay a deposit. Before you pay the deposit, we recommend speaking to a currency specialist who can help you lock in the rate for the duration of your property purchase, to avoid it fluctuating with the markets.
• Completion and signing final deed: The final contract when buying a property in Portugal is signing the final deed, known as the Escritura. This usually takes place at the notary’s office and both the buyer and seller must be present (or someone with suitable power of attorney). Once the funds have been transferred, the documents are read aloud and signed by both parties.
• Pay IMT: Once the Escritura has been signed, the notary will collect the property purchase tax from you, known as Imposto Municipal sobre Transamissoes (IMT). The rate is based on the value of the property up to 8%.
• Register the property: Once the steps above are complete, you must register the property with the local tax office and Land Registry (Registro Predial). Your independent lawyer can assist you with this. Once complete, the property in yours.

Understanding the Portuguese property market

Property prices in Portugal have generally risen each year over the past decade, fuelled by such proactive measures as the golden visa. This has now cancelled for residential property.

Anyone hoping to rent out a property should beware. Portugal’s government has sought to ease local housing shortages with a new law, “Mais Habitação”, which is intended to control short-term rental. It’s vital to check local rules.

Buyers have a choice of new build developments or resales, with plenty of new properties being built along the popular coastal regions of the Algarve and Silver Coast. With space limited on the coast, more affordable developments are going up a little further inland.

Property styles and average prices vary depending on location. Cities Porto and Lisbon are favoured by investors and buyers from outside Europe. They are both thriving tech hubs, appealing to digital nomads which is inevitably pushing up rental prices.

The most affordable homes in Portugal are found in the Centro region.

For more information on renting in Portugal, read our handy guide

The Algarve continues to be the most popular location for overseas buyers seeking a warm year-round climate, gorgeous beaches and an active lifestyle.

Beyond the Algarve, the Silver Coast north of Lisbon, the Alentejo coast and Madeira are all increasingly popular. However, resort properties in the most glitzy areas of the golden triangle are as popular as ever.

Key considerations for buyers

Getting a mortgage

While Portuguese nationals can often source a mortgage of up to 85% of a property purchase price, overseas buyers can usually obtain a loan-to-value less than this. You’re likely to require a deposit in the region of 40%, once buying costs are included. Bear in mind that you cannot get around this by moving to Portugal and renting — you need full Portuguese citizenship for a higher loan-to-value, not just residency.

Read more about getting a mortgage in Portugal as an international buyer

Do I need a survey?

Getting a building survey is less common in Portugal than the UK. However, it is possible and the UK-based Royal Institution of Chartered Surveyors (RICS) operates in Portugal. This will certainly offer peace of mind for those buying an older home that could have hidden structural issues.

If you’re buying a new-build home will have building guarantees with the purchase.

Learn more about getting a building survey in Portugal