Why choose Portugal to buy a home:
- 300 days of sunshine and even in rainy weather a beautiful atmosphere.
- Most residents speak English and are open to communication.
- Flights to anywhere in the world.
- Government and European programs for business and start-ups.
- Gastronomy: seafood, wine, coffee, cheeses, cuisines from around the world.
- Good schools both private and public.
- Wide range of leisure activities: golf, surfing, soccer, yachting, horseback riding.
- Rich historical population.
Residential real estate prices have risen markedly since the pandemic and have continued to rise this year.
For example, in Lisbon the price per square meter is 3832 euros, in 2021 was 3543 euros, in 2020 – 3253 euros.
The cost of buying residential property in Portugal rose by 0.7% in June 2022 compared to May of that year.
The report on the state of the real estate market has provided the portal Idealista. This is not the official government statistics, but an overview of real estate listings that reflect the current state of the market.
Buying property in Portugal – whether it is an apartment, house, farm or just a plot of land – is a process that requires some caution and awareness and involves complying with the various requirements of Portuguese law. It is necessary to clearly understand how the process of buying property in Portugal works. In this article we will explain in detail and step by step how everything goes.
In order to begin the process of buying a home you first of all need to clearly understand what you really want to buy and for what purpose.
You need to determine the purpose of the purchase. You can choose to buy a home for investment, where the parameters that will bring maximum profit are important, or you can buy a home for yourself, to legalize it. New or secondary housing, location, square footage, infrastructure – all these parameters affect the value of the object.
Key stages of purchase:
- Determine the budget, taking into account all taxes and additional costs.
- Choose the location and the purpose of the purchase.
- Get your documents ready and open an account in a bank.
- Get a local tax number (NIF).
- Select your property.
- Make an appointment for a viewing.
- Make an offer and, if necessary, reserve the property.
- Conclude a preliminary home purchase agreement (optional and mostly used for credit purchases).
- Carry out the final transaction.
- Register the property.
- Draw up contracts for utilities.
To familiarize yourself with the offers, it is convenient to use real estate websites that will provide contacts of realtors and private sellers (idealista; imovirtual; casasapo; bpiexpressoimobiliario; olx; homesoverseas).
When viewing, carefully assess the condition of the home, neighbors and neighborhood. It’s no secret that Portugal has high humidity, and freshly painted walls can hide moisture and fungus.
Often after agreeing to buy on your part, you may need to make a reservation until the sale. Reservations are made for anywhere from 48 hours to one month – by agreement of the parties. This means that the seller removes the object from the sale and no longer shows it to anyone, and will wait for the preparation of all documents for registration. This stage is not obligatory, it is mostly used in case of purchasing real estate on credit.
The list of documents that the seller must provide:
- Certidão registo predial – reflects owners and encumbrances.
- Caderneta predial – contains information about the cadastral value and area.
- Certificado energético – shows energy efficiency.
- Planta do imóvel – plan of all rooms.
- Ficha técnica – technical description for residential properties, mandatory for buildings built or renovated after 2004.
- Licença de utilização – defines the purpose of the premises, such as residential or commercial.
What the lawyer verifies at the time of the transaction:
- Whether the owner has the right to sell the property.
- Whether someone else has the right to use the property (encumbrances).
- Does the property have use or legal restrictions.
- Whether there is an unpaid mortgage or tax debt.
- Whether the property is under attachment.
- Whether or not the condominium fee is owed.
- Whether the required licenses are in place.
- If there is a barrier to the transaction in the form of a priority right of purchase from the city or others.
Among the documents you will need:
- Citizenship card (cartão de cidadão) / residence permit (título de residência) and/or passport (passaporte).
- VAT registration number (número de identificação fiscal – NIF).
- Certificate of residence in Portugal, which can be obtained from the local town hall (comprovativo de morada) at your place of residence.
- Portuguese bank account (cheque for payment of the object, payment of taxes at the time of purchase).
- If you are married, the need for spouses to be present at the transaction depends on the mode of ownership of the property (joint ownership of the property acquired during the marriage (the mode applies in post-Soviet countries), separate ownership, completely joint property).
- Registration of NIF.
- Payment for the services of a notary – from 400 to 1000 euros.
- Registration of title – usually 220 euros for each deed.
Payment of taxes at the time of purchase:
- Property Transfer Tax (IMT – Imposto Municipal sobre a Transmissão onerosa de Imóveis) ranges from 0% to 8%. The value of the property is provided by two values: the cadastral value and the actual sale value. The exact percentage is calculated according to a system of tiered rates applicable to the highest of the aforementioned values. Before the transaction, we recommend obtaining tax advice for an individual calculation.
- Stamp tax (Imposto do selo – 0.8%).
The final transaction usually takes place at a notary, a lawyer or at the property registry office (Casa Pronta). There, the contract is read aloud and the parties sign it. At this stage, purchase taxes are paid (by bank card, at multibanco (ATM) or in a personal online banking). After signing the contract, paying taxes and handing over the check, the keys are handed over.
In order to respect all the peculiarities of the different stages of the sale-purchase process, preparation of the notarial deed of sale, payment of taxes, registration in the Land Registry and much more, it is recommended that both parties, buyer and seller, get appropriate advice from independent professionals – realtor, lawyer, accountant and/or insurance agent with competence in selling and buying property in Portugal, to avoid possible mistakes and subsequent problems.
The agent’s fee is 3-6% of the property value, mostly paid by the seller, the owner of the object. In Portugal it is very rare for a buyer to pay a commission to the agency, mainly paying only for the costs of the transaction.
There is an online purchase: all processes can be carried out remotely (showing, signing the contract and the transaction by proxy).