Despite the end of most incentives, including tax breaks and the golden visas for property, there’s no stopping international buyers in Portugal. But what’s the continued appeal of Portugal for international retirees and holiday homebuyers? And where and what are they buying?
Start chatting to property people in Lisbon, Porto and the Algarve and it won’t be long before the subject of Americans arriving comes up. Encouraged by a stronger dollar in recent years, and possibly driven out by a divisive period in US politics, the ending of the property element of the golden visa has proven no barrier.
The Algarve, still the top choice for international buyers
Americans are not the only ones buying homes in Portugal – now dubbed the ‘California of Europe’. The country remains firmly on the radar of international buyers, who rate the lifestyle and practicalities of living there amongst the best in Europe. Here’s why relocating to Portugal still makes perfect sense in 2024 and beyond…
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Residency at reasonable rates
Portugal is one of the most affordable lifestyle destinations in Europe in terms of required income for residency. To qualify for its non-lucrative D7 visa, which does not allow gainful employment, applicants from outside the EU need to prove a passive income equal to Portugal’s minimum wage.
In 2024, this is just €956 a month (€820 when calculated over 14 months). A partner pays a further 50% of this. Spain’s equivalent non-lucrative visa requires a monthly income of €28,800 (or €36,000 for a couple) and Italy’s elective visa around €31,000 (€38,000 for a couple).
Alternatively, the D2 visa allows you to run a business in Portugal and the D3 is for skilled professionals. Since October 2022, there is also the Digital Nomad visa for expats who can work remotely fulfilling contracts or trading outside of Portugal!
Crucially, the residency status that comes with any of these visas brings borderless travel within pretty much all of Europe (all Schengen Area countries). Which is a bonus for Brits and other non-EU citizens.
Golden visa – still worth its weight?
Eleven years after launching its golden visa, a flexible type of investment visa for wealthier non-EU citizens, October 2023 saw a major change to the scheme. Now, applicants can no longer qualify for the visa – and get Portuguese residency status for the whole family – through purchasing property. This had accounted for 65% of applications.
But the golden visa offers other investment routes, so don’t discount it too quickly. Applicants could qualify by donating towards qualifying cultural projects or investing in research carried out by public or private scientific institutions. They can start a company that employs at least 10 locals (or eight in a low-density area) or invest in government-approved private equity or venture capital funds.
New tax incentive scheme
Another of the Portuguese government’s moves that affects foreigners financially has been the phasing out of the tax regime that offered a flat 10% rate on foreign sourced pension income for 10 years.
The good news is that a spin-off of the NHR regime is launching, called the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program. It’s designed to benefit high-value professionals and entrepreneurial directors of start-ups. Qualifying applicants will enjoy a 20% flat tax rate on employment and self-employment income, as well as generous exemptions on foreign-sourced income.
Even without the benefits of these special tax regimes, Portugal is not a high tax jurisdiction and there are ways of minimising tax on pensions – speak to an international financial specialist for more information.
Low living costs, low crime
World-class leisure resorts are not lacking in Portugal, especially in the Algarve, home to places like Quinta do Lago, Vale do Lobo and Vilamoura. There, prices for property and enjoying the amenities do not come cheap. Outside of these pockets though, typical Portugal in fact offers a very affordable way of life compared with other comparable lifestyle destinations.
This is especially the case when you shop and eat out where the locals do.The 2024 Cost of Living Overseas Index by Property Guides ranks Portuguese the third most affordable country out of 13 popular expat destinations and calculates a £510 saving on monthly bills compared to the UK.
We know from readers’ responses in Property Guides surveys that Portugal’s low crime rate and friendly people are another of its big draws. That goes especially for US and Canadian buyers, who make up around 10% of our readers. In our survey, it was the most common point made when asked the appeal of Portugal.
They will be pleased to know that Portugal this year ranked as the 7th safest and most peaceful country in the world and the 5th safest in Europe in the Global Peace Index (Institute for Economics and Peace).
Let’s hear it for healthcare
For foreign citizens coming from countries with no or limited healthcare where expensive medical insurance is required, Portugal’s quality state healthcare is a godsend. It’s a major draw for Americans in particular, for whom medical insurance is a significant annual expense.
Over the past decade, annual premiums in the US have outpaced overall consumer prices, according to health system trackers. By comparison, once a foreign national is registered as a Portuguese resident and has their tax number, they can gain access to the Portuguese state health service (SNS), which they can complement with a choice of affordable private medical insurance.
Numbeo’s 2024 Health Care Index ranks Portugal 19th globally for the quality of its healthcare system, up from 25th place in 2023. Expats can expect excellent and affordable services meeting a wide range of clinical and wellbeing needs, with both free state and private healthcare options available.
Market hotting up
A series of reports points to now being the ideal time for to buy property in Portugal. The housing market is picking up pace in 2024, with leading Portuguese property analyst Confidencial Imobiliário reporting transactional activity rose 4.9% in the second quarter compared to the previous quarter.
The Royal Institute of Chartered Surveyors (RICS) also points to the Portuguese market being ready for an uptick, with Senior Economist Tarrant Parsons observing: “Strong economic growth forecasts, supported by rising disposable incomes in tandem with improving consumer and business confidence, should begin to feed into the housing market over the coming months.” Restricted supply could also be driving house price growth, adds the most recent Confidencial Imobiliário survey.
Noted amongst Portuguese agencies right now is strong American demand. One stated that US buyers of high-end homes in the Algarve have increased from a pre-pandemic market share of just one per cent to a “substantial percentage” today. Current estimates show Americans accounting for 10% of all foreign buyers.
What and where are we buying?
In Property Guides survey, there were clear differences between US and UK buyers, with North Americans looking for higher end property than their UK and Irish counterparts. Only 37% of British buyers had a property budget of over €300,000, compared to almost 60% of Americans.
There were differences in locations too. Although the Algarve was the most popular choice all round, American buyers were more interested in buying in Lisbon, Porto and the Silver coast between the two, whereas the Brits were looking at inland areas. Given their preference for the cities, no surprise that Americans are less interested in having a garden and a swimming pool.
