When buying real estate there are always a number of criteria that should be considered. Personal preferences are particularly important when investing in a property for your own use. Choosing a preferred region in Portugal is particularly important. The logic “region before object” always applies in order to make a good selection.
If you are not quite sure about the region or see the purchase as a financial investment, you should consider trends and developments on the market for 2021 in your selection. We have summarized the most important experiences from our work in a small overview for you. We look forward to your comments and suggestions!
Rural retreats wanted
Many tourists and buyers are no longer looking for the classic “all-inclusive / all-entertainment” stay, but prefer regions and accommodations with a strong tranquil character. Terms such as “life deceleration” or “digital detoxing” give this development additional names. Due to the stressful everyday life and constant digital availability, people are increasingly looking for an opportunity to switch off in remote places. This trend was significantly reinforced by Corona, as protection of one's own health can be better guaranteed in the more rural remote places.
The north is in fashion
Due to the mild weather in winter and hot summers, the south of Portugal and the Algarve have long been the top destinations for buyers from abroad. But you don't have to leave Northern Europe anymore to enjoy a hot summer. The south of Portugal has become even hotter and drier at the same time. The trend is clearly moving away from hot regions towards more balanced climate zones like Northern Portugal. Therefore, more and more buyers are looking for properties in the north, especially the region between Porto and the Spanish border. The climate there is also very mild. However, there is significantly more water, precipitation and varied vegetation. Property prices are also lower in the north than in the south. Here you pay approx. 100-200 thousand EUR less than for comparable properties in the south.
Don’t follow the herd
If you look at the holiday resorts along the Mediterranean coast of Portugal, you quickly notice that the respective nations have gathered here in small communities over the past decades. In Silves you can find e.g. many German property owners while Albufeira has welcomed many British buyers. In the past, people sought to be close to their own compatriots and made purchases accordingly. The development on the market is clearly moving away from this and for many investors it is a purchase argument if the property is located in an authentic Portuguese community. With the new communication and information options, buyers no longer need to rely on “swarm intelligence”. In addition, there has also been a noticeable increase in the willingness to integrate into Portuguese society.
Renovated beats new
In Portugal, especially in rural regions, there are very often older properties or ruins that need to be renovated. Many buyer are finde the style and charm of old buildings more attractive compared to e.g. new energy-saving houses. In the past, the need for renovation was always an exclusion criterion, since costs and especially processes were scary in a foreign country. What was more of a shortcoming in the past is increasingly becoming the preferred option for man buyers. With better access to craftsmen and international construction companies, many more investors are confident enough to take the step towards renovations. Corresponding properties are significantly cheaper than directly habitable properties. Portuguese banks do not grant loans for renovation work, which causes properties in need of renovation to lose value. In addition, the costs for craftsmen are considerably cheaper than in other countries. The step to renovation therefore not only saves costs but also gives the opportunity to "redesign" the property according to its own ideas.
Medium-sized cities are booming
Lisbon in particular has seen very rapid demand and corresponding price increases over the past four years. The real estate market must therefore be treated with great caution due to additional political decisions. Porto has not yet reached this point, but the prices have also increased significantly. Medium-sized cities such as Braga offer very good development opportunities in terms of appreciation and income. The prices are still a long way from being as high as the two big cities. Demand for rental apartments is very high in medium-sized cities, as these, in addition to the general lack of living space, are also experiencing a very large influx of Brazilian immigrants and students. In addition, the medium-sized cities also offer very good living conditions and infrastructures.
When buying real estate in Portugal, the focus is mostly on private use as a holiday home or as a year-round living space. Portugal is also an excellent location for a good investment. In addition to the returns from tourist renting, there are also excellent conditions to rent out living and commercial spaces. You can find out which alternatives are best suited for you on our website. We would be happy to advise you on the various investments.
In contrast to other European countries, tourism and the provision of tourist accommodation have a positive reputation in Portugal. Accordingly, this is also promoted by the communities. As a private person, you can easily register a small business for rental and apply for the licenses. Usually, this does not take longer than five working days.
In Portugal, however, there have also been clear rules for leasing for some years, which should be taken into account. From an investment perspective in Portugal, apartments in the centers of Porto and Lisbon are particularly suitable, but also classic holiday regions such as the Algarve or Alentejo. With apartments in cities, there are precise requirements for successful letting. The flats should be centrally located, with good access to public transportation. Also, an old building apartment offered for rent must be in excellent condition. In Lisbon and Porto, there are now some districts where rental to tourists is limited.
You can find more on this in the chapters on Porto and Lisbon below. Established apartments generate an average of €25.000 - €45.000 per year. A professional property management takes care of all essential rental tasks and will be paid with 20-30% of sales. After taxes, the landlord has approximately 65% of the turnover as a profit. The investment price for corresponding apartments is around € 250.000.
Purchasing commercial spaces has not been a widely spread investment in recent years. The acquisition costs for good locations are, therefore, around €1000 per square meter. However, the market is still attractive. Due to the lack of living space, the regulations for converting commercial space into official living space have been made significantly easier.
According to our estimations, this can lead to a sharp increase in renovation work and thus to a shortage of offers. Besides, commercial real estate such as shops are attractive because you can buy real estate with a small budget. In big cities, smaller shops cost around €30.000 - €40.000. The gross return on such properties is about 8-10%, which generates a solid return compared to more expensive investment opportunities. Also, commercial space can be rented for long-term periods and does not have high renovation costs.
Similar to other European countries, Portugal has a very severe shortage of housing in metropolitan areas. The ratio of condominiums used to be 95%. In recent years the market has developed into a robust rental market. In particular, smaller apartments in classic residential buildings are in demand, which is not in the center but with good connections to the city centers. The starting prices for apartments with 2-3 rooms are around €130.000 and are therefore significantly more affordable than in other major European cities. The rental prices are usually between €10 and €13 per square meter. With an investment of €280.000, the gross rent is around €1.800 per month.
Portugal is a classic holiday destination with a rapidly increasing demand for foreign tourists. The market for hotels and the range of hostels is correspondingly large. Properties with 10-20 beds can already be purchased for € 300.000 - € 400.000. Smaller real estate can also be cheaper.
Many investors concentrate less on a classic main building than on the construction of mobile units, through which the capacity can be gradually expanded. It is also worth renovating buildings in the cities and dividing them into different rooms. In addition to the efficient management of the hotel and its location, the concept of it is crucial to be successful in the long run. There are many classic hotels in Portugal. In order to assert itself on the market, it is necessary to occupy a niche or a unique feature on the market, which should already be considered when buying.
For smaller budgets, there is also the option of building a hostel in a bigger city or a pilgrim hostel in the north of Portugal. We would be happy to help you plan the right investment!
As a buyer, it is advisable to first choose a region that suits their personal needs in the first place. Many customers like to look at a map and try to justify their choice rationally with e. g. travel times to bigger cities. But listen to your stomach and not your head. With the beautiful weather and frequent visits, you spend a lot of time in the surrounding area. Once the preferred region has been determined, you can start looking for a property in Portugal.
However, the price differences are very high - especially between the cities and the rural regions towards the Spanish border. Besides, emigrating to Portugal is different from spending a few weeks on holiday in the country. Accordingly, it would be best if investors considered what requirements they have for the region and infrastructure to be able to lead their normal day to day life as desired. Factors such as beaches and the isolated location are less important for more extended stays. Therefore, when choosing the regions, alternatives in the interior should also be taken into account.
The capital of Portugal and the largest city in the country is, like Porto, located on the Atlantic coast. In contrast to Porto, Lisbon is a much more lively metropolis. Here you can find a combination of tradition, modernity, and liberal thinking just like in other European cities. Lisbons unpretentious charm and cosmopolitan character make it increasingly popular among foreign investors.
The city has no internationally known figurehead like the Berlin Wall or the Eiffel Tower. Nevertheless, it convinces with its great variety of different attractions, cultural offerings, and infrastructure. It also offers ideal excursions to nearby destinations such as Sintra, Cascais, Mafra, Obidos, or Sesimbra. The beautiful beaches at the Tejo estuary can be reached within 30 minutes from the center of Lisbon. The demand for apartments and houses has increased significantly in recent years. In particular, the rental to tourists by private individuals has increased so much that even politicians are concerned with the effects this might have on the city. In some parts of it, renting as an Alojamento Local has been suspended. This means that no more licenses are issued. Old permits remain valid. An overview of the city of Lisbon about the districts without new licenses can be found here.
If you want to buy real estate in Lisbon, you should take a close look at the location within the city. Realtors are not always the best source of information for purchasing a property in Lisbon. At Pearls of Portugal, we always ask the city directly whether an apartment is affected by the license restriction or not. In the middle and upper price segments, however, the range of real estate is still very diverse, the performance is stable, and the prices are still below the European average. Even in the very trendy suburbs of Sintra, Cascais, and Sesimbra, you can buy affordable houses and villas. Feel free to contact us
The port city of Porto is Portugal's second-largest city after Lisbon. It is located at the mouth of the Douro River, which defines the picturesque setting of Porto. The region is famous for the production of port wine. The labyrinth of narrow streets of the Ribeira district is charismatic for the city. You can easily get lost in one of the countless cafes or restaurants and spend a few lovely hours.
The entire center is characterized by antique houses, narrow cobbled streets, and many street vendors. The flourishing cultural scene, in particular, is valued by many visitors and residents, as well as the vast range of shopping opportunities. In addition to the fixed "Bolhão" market hall, there are several other weekly markets and shopping centers where you can buy local food as well as international fashion. Porto has become one of the most popular tourist destinations in the world in recent years. The city has been recognized several times as the best tourist city in Europe.
Many tourists visit Porto for a city trip or use the location as a starting point to visit other cities in northern Portugal, such as Braga, Guimarães, or Coimbra. Day trips to the neighboring wine region or the Espinho or Matosinhos beaches in the Porto area are also popular. A few years ago, it was still possible to buy dream properties in the center of Porto for less than €1000 per square meter. Prices have gone up over the last few years, but are still significantly lower than in other European cities or in Lisbon.
In general, it is advisable to buy an apartment if you want to move to the city center. The best areas for touristic rentals are the districts of Cedofeita, Santo Ildefonso, Sé, Miragaia, São Nicolau, and Vitória, as visitors usually first look for accommodation in the city center. Gaia still offers low prices for Porto and also has excellent connections to the metro. Although this area also has beautiful beaches, locals tend to buy properties north of the Douro. For personal use, it is still possible to get good bargains here. As in Lisbon, there was a high demand for tourist rental licenses. In some districts of the city, the license reissue has also been suspended. You can find an overview here. We would be happy to advise you!
The Algarve is the southernmost region of Portugal and is known for its beaches, cliff landscapes, and bubbling tourist centers. The coastal region is densely populated with an alternation of charming fishing villages and small towns. The area is also known for its excellent golf courses, which attract many international players every year and which offer corresponding hotel facilities.
The Algarve has the most sunny days throughout Europe, which makes properties especially attractive for permanent use, even in winter. Summers are hot and dry, and winters are very mild. The temperatures rarely drop below 10 degrees in this season and can sometimes reach up to 20 degrees. The best and most famous beaches in Portugal are in the Algarve. There are over 15 big beaches that can be reached quickly and easily by car. The beach Odeceixe is lined with imposing cliffs, with the sea on one side and the river on the other. It is ideal for families or grandparents with grandchildren, as the younger children can enjoy the peaceful river while the adults can enjoy the sea. The Algarve is very popular amongst tourists. Therefore, the region has an extensive range of restaurants, cafés, bars, shopping, and leisure offers. The densely populated coastal strip "Litoral" forms the tourist center of the Algarve.
Renting a property is particularly attractive in summer. Popular places to buy property are Tavira, Monte Gordo, Vale de Lobo, Vilamoura, Albufeira, Carvoeiro, and Ferragudo. Properties in the Algarve lie in the middle to upper price segment for Portugal. Above all, we are looking for detached houses with a pool for personal use. If you rent and only want to use the property yourself occasionally, an apartment in the small towns can also be attractive. We are happy to provide you with further information.
Portugal's Atlantic coast stretches almost 700 kilometers on the entire west side of the country. The coast offers a wide variety of landscapes, cities, and cultures. Each region on the coast has a distinctive character and attracts tourists with cliffs, sandy beaches, and lots of nature. In the past, the area was primarily shaped by summer guests from Portugal.
Despite the cooler sea temperatures, many people enjoy the great weather on the famous main beaches in summer. Meanwhile, however, many international tourists have discovered the region for themselves. This primarily includes visitors with interests in surfing, fishing, or hiking. But you will not find any mass tourism, like in the Algarve. In addition to smaller villages, many small maritime towns stretch along the coast, the visit of which entails a short journey through time into a significantly decelerated world. Here are a few examples. An internationally undiscovered city is Esposende in the north of Portugal. The city is also often compared to Lagos in the Algarve due to the beautiful sea channels. In terms of landscape, the region is similar to the Baltic Sea but has a significantly warmer climate. Investors are drawn to the region because the summers are not quite as hot as in the south of Portugal but nature is as strong as in northern Europe.
The city of Aveiro is about half an hour south of Porto and is also called the Venice of Portugal. If you are looking for a city with lots of water and traditional architecture, this is the place for you. In the suburbs of the small town near the beach, modern properties can be purchased for less than €200.000. The beach town of Nazaré is known worldwide for its extraordinary surfing conditions. Many world records have been set here, and its fishing traditions fundamentally shaped the place itself. The long, crescent-shaped beach is known for its beauty and pure white sand beach.
A little town further south is the town of Sines. It has a historic old town with a castle and a large port facility. The city's most famous son is the seafarer Vasco da Gama. Due to the strong refinery facilities, the town was previously avoided by investors. Due to the very sustainable politics in the last decade, the environmental conditions around the city have normalized significantly. This brings the beautiful and traditional character of it back to life. These are just three examples of attractive towns on the Portuguese Atlantic coast.
Alentejo is a large region in Portugal, which is located above the Algarve and extends to the capital Lisbon from the coast to the Spanish border. The landscapes and villages are correspondingly diverse. But they all have one thing in common. If you want to escape the hustle and bustle of cities and tourist centers, Alentejo is the place for you.
On the coast there are many fishing villages and small towns that have remained natural. The coastal landscape from Tróia to Zambujeira do Mar has even been incorporated into the Southeast Alentejo Natural Park. The interior of the region is known as the main cultivation area of cork oaks, which also characterize many landscapes with their charismatic form. The beautiful landscapes are compared by many travelers with Italian Tuscany.
One of the most important cities of Elvas has been classified by UNESCO as a World Heritage Site. There you can visit the Temple of Diana and see how culture and spirituality have a unique character.
Tourism is the region is not developed, but this in turn makes the attraction of the region. Land prices in the region are very low and real estate is reasonably priced. If you would like to purchase real estate with a lot of land, you will be able to invest successfully in this region even with smaller budgets.
For between 100.000 and 200.000 EUR you can already buy very beautiful houses with land. Many interested investors also opt for the renovation of an older property such as a farmhouses. The prices for such houses are usually with land between 10,000 and 30,000 EUR. The low labor costs for craftsmen make this an interesting option, not just for artisanal buyers.
The more up north you go within Portugal, the more you immerse yourself in the Portuguese society. Nature is much denser than in the south, and here you can still find many spots that social trends of acceleration and digitization have so far overlooked. Contrary to some rumors, the north is not cold but in comparison colder than the south.
In the north, you will find many small towns that have retained their charm and, in whose restaurants you will in vain, ask for an English menu. Cities with such a character include Ponte de Lima, Vila Verde, Braga, Arcos de Valdevez, Guimarães or Viana do Castelo. At the same time, the cities have a good infrastructure. Here you can find the best hospitals in the north of Portugal. Due to the not very touristy infrastructure and the beautiful landscapes, the north or in particular the Peneda-Gerês National Park has developed as a popular holiday area for hikers and nature lovers.
Thanks to the mild climate, the region offers ideal conditions for extended tours all year round. In addition to shady forest trails, the circular walks also offer challenging mountain trails and impressive panoramic views. The complex mountainous landscape is a habitat for many wild animals such as wolves, wild cats, or wild horses. In the valleys, there is lush vegetation and forests, especially oak, Prunus, and the globally protected tree species Albergaria and Cabril.
Regarding real estate, you can still find reasonable offers for houses and especially land in Northern Portugal. When choosing the region, a distinction should be made between personal use and rental to tourists. Hiking tourism takes place in the national park, and accordingly, the right real estate can be found here. If you don't want to rent, you can find absolute dream properties in the north for excellent price conditions.
Source: idealista.pt – basis of comparsion 5 bedroom apartment – 2018
Source: idealista.pt - basis of comparsion 5 bedroom apartment – 2018
Many buyers of real estate in Portugal also consider the proximity to the coast when choosing the right region. An increasing factor is the rising sea level due to climate change. Unfortunately, we have to deal with this, even if the effects will only show in a few decades. Worldwide, sea levels can rise up to 82 cm by the end of the century. By 2050, the world climate experts forecast an increase of 17 to 38 centimeters.
The 2013 World Climate Change Report also points out that rising water levels could be associated with ocean storms. One can assume that the effects of rising sea levels in Portugal will not be as severe as for other nations in Europe. Portugal has already started to remove many buildings that were built too close to the water in coastal regions. This action caused a lot of displeasure among the owners, but from a geopolitical and environmental perspective, it makes sense.
The scientific organization Climate Central provided simulations for the coming decades of the global increase in the seas. Of course, these simulations are not entirely accurate and there are many other effects on the actual sea level. Nevertheless, we would like to provide the results of a simulation for Portugal in 2040, as they can be a useful guide for buying a house.
The most affected regions in Portugal according to Climate Central are the coasts of:
Source: Climate Control
Source: Climate Control
Source: Climate Control
In addition to buying an existing property, buying a plot of land in Portugal is an increasingly popular alternative. You can often find an old house on the plot, which can be renovated or removed. You can buy fantastic estates, especially in the interior of the country, for very reasonable prices. On the coasts, especially in the Algarve, this is much more difficult. If you are interested in a property in Portugal, you should plan your purchase well despite the low prices and take various aspects into account when choosing. To what extent the renovation is worthwhile compared to the new building should be checked beforehand. The new building of houses is often profitable because the construction costs are relatively low, and you can realize your personal ideas.
The cost of land with a building permit varies by area. In rural areas close to major cities, prices range from €20 to €40 per square meter, whereas on the Atlantic coast, prices can go up to €120 to €180. In the Algarve, prices can even range from €400 to €1000 per square meter (and more) for a first-class property. Inland, the costs are significantly lower, and in rural areas, agricultural land can be purchased for a few euros per square meter. Depending on the quality and location, the construction costs range between €400 and €1,600 per square meter. The real estate transfer tax (SISA) is 6.5%
The purchase of a property should not be underestimated despite the lower prices. The most crucial point is that the investor has the necessary building permit (terreno urbano) and that the property is large enough for the construction of a house or for the building you are considering. If there is already an old building on the property that was legally built, the process is much easier. Therefore, make sure that the housing inventory has been officially registered in the land register.
You should also check what exactly has been entered. It can happen that only a part of the property was legally built or auxiliary buildings were converted into living space, which can become a problem when you would want to sell the property at a later time. It is also possible to build on agricultural land. But there are strict limits for land and buildings. You can get this information from the local town hall (câmara municipal). Some properties are not suitable for construction because they are too steep or protected. Make sure that there are no restrictions through high-voltage lines, water lines, or rights of way that could affect the planning of the building. Keep in mind that the cost of providing real estate services in a remote rural area can be more expensive, and reliable water supply is required. When buying land in Portugal, you should make sure that the purchase contract is dependent on obtaining the necessary building permit.
You should get a written confirmation that the property is correctly entered in the local land register. Also, check whether the right building permit is available. Some of the plots are offered in sections for sale, although the division has not yet been officially approved. The approval should be available upon purchase or be part of the preliminary contract as an agreement. It is also always advisable to have the property officially measured before buying it. That costs about €800. If the building permit is incorrect or the old building has already been built illegally, you can expect high penalties. A new building usually has to be demolished again.
Note that it can take a long time to get a building permit in Portugal. Most of the time, it takes about six months until you get approval. Most construction companies offer package deals that include the land and cost of construction for your home. However, it is not always advisable to buy the building land in Portugal from the construction company. It is advisable to compare the different land and building costs and look out for other offers. If you decide to buy a complete package from a contractor, you should insist on separate contracts for the plot and the property. In the best case, you will receive the title deed before signing a construction contract.
When looking for an architect and construction company, the best option is to get recommendations from local friends that you trust. However, keep in mind that local real estate agents are not always the best contacts, as they usually receive a commission. Just ask your future neighbors or representatives in the town hall.
Many Portuguese architects speak English, and there are also architects from other EU countries who work in the main holiday areas. Architects' fees are usually calculated as a percentage of the total cost of construction, normally around 5%. Often architects are interested in higher construction costs. Talk about the topic clearly before the commissioning and, if necessary, set a limit for compensation. The most important aspect when building a new house is not only the reputation of the construction company but also its financial position. The construction company must conclude a guarantee of completion (garantia de conclusão).
To make sure you are choosing the right construction company, visit other houses that they have built and maybe talk to neighbours and ask if they had any problems during the construction process and if they are satisfied with the results. Building standards in Portugal vary considerably, so you should never assume that the lowest offer also has the best price-performance ratio.
It would be best if you got written quotes (citaçãos) from several builders before signing a contract. This process can sometimes take a while, and you should plan about 2-3 months for this. The following points must be included in any contract:
Before accepting an offer, it should be checked by a construction consultant. They can confirm whether it is a fair contract. You should also check if the offer (which must include a 19% VAT share) is an estimate or a fixed price, as the cost can sometimes rise sharply due to contract clauses and changes during construction. A contract must be examined by a lawyer as building contracts are often very distorted in favor of the client and grant the customer few rights.
Under Portuguese law, construction companies are responsible for minor defects up to one year after completion and structural defects for up to five years. It is not uncommon for problems to arise during construction, particularly regarding material defects. If you have issues, you usually have to be very patient and persistent. A completed building should be checked by a construction engineer for possible defects and have a problem report drawn up afterward.
If there are any deficiencies, the appraiser must determine who is responsible for it. Architects and contractors in Portugal are legally obliged to take out liability insurance. After completion, the builder must arrange a visit by the council to ensure that the house was built in accordance with the plans and building codes. After a satisfactory inspection, the municipal council issues a residence permit (licença de habitação). When this is completed, a property must be registered with the local authority, the tax office (finanças), and the local land registry (conservatória de registo pridial).
If you are unsure about buying a property in Portugal, it is advisable to have a lawyer accompany the purchase process. We work with several trusted lawyers. When working with us, the costs for the lawyer are included in the fixed price. Our lawyers examine the property's legal situation. The focus here is on the seller's position of ownership, the existence of charges, and the checking of basic security. Besides, they will check if the property officially exists in the form in which it will be sold later. Also, we would be pleased to check whether the conditions for a possible tourist rental are met.
In the case of land, it is always advisable to measure it before buying it. This can be included as a separate clause in the preliminary contract. The Portuguese land register (registo predial) sets out the legal valuation of the property and provides information on how the property is structured. You can also obtain information about the legitimacy of the seller and the possible encumbrances of the property. The caderneta predial is an extract from the tax register with information about the tax situation and tax obligations associated with the property in Portugal.
The inspections, which represent routine work, are incorporated into the pre-sales contract customary for the purchase of property in Portugal (contrato de promessa de compra e venda). The preliminary contract is legally valid, even without notarial participation. The usual payment is a deposit of around 10% of the total cost. With the preliminary contract, the seller must already present the necessary energy pass for the property. The same applies to an extract from the land register entry. The preliminary contract must contain the corresponding registration numbers of both documents, which should always be checked for security. Besides, houses after 1951 should have an official license (licença de utilização), which corresponds to the actual structural conditions. This document explains the purpose for which the property was built and also ensures that the building is being used legally.
The purchase agreement (Contrato de Promessa Compra e Venda - CPCV) usually contains a passage that obliges the other party to execute the notarial purchase contract. Typically, a deadline of 2-3 months is set for the appointment of the notary. However, this period is negotiable. Relevant clauses or requirements for the purchase are also included in the preliminary contract. Otherwise, claims for damages are usually formulated if the actual agreement does not materialize for other reasons. As a rule, the buyer is liable with a down payment of approx. 10% of the purchase price. By law, sellers must repay the interested party twice the down payment if they do not fulfil the purchase agreement.If the buyer does not fulfil the purchase agreement, the seller can keep the down payment.
In the preliminary contract, the seller must inform or list existing tenants. The subsequent purchase contract requires a notarial form, taking into account inheritance law, family law, and tax law aspects. The contract is usually formulated by the notary and does not contain any clauses that are agreed between the buyer and the seller. These are part of the preliminary agreement.
In contrast to other European countries, a customary registration of the buyer in the land register is not necessary, so that the buyer becomes the owner of the property in Portugal upon conclusion of the notarial purchase contract. However, the registration must be registered by a lawyer or the notary not later than two months after the purchase. Usually, real estate will be paid with a bank check (check bancário). For this, you need a Portuguese bank account and the Portuguese tax number. You can apply for the number at a small fee in Portugal at the tax office or the Portuguese embassy. You will receive it right after your application
As in other countries buying real estate brings along other cost besides the actual price. Some of these costs are obligatory, other costs are optional. We are happy to help.
Obligatory costs (continental Portugal):
Even as a non-Portuguese citizen or when you are not a tax resident in Portugal, you can have your property financed by a bank in Portugal. As in the rest of Europe, interest rates are currently quite cheap. The financing can be linked to a fixed or variable interest rate. The variable interest rate is based on the Euribor. The Euribor is an interest rate set daily by a group of European banks. You can see the current rates here.
The interest rate on a Portuguese variable rate loan is linked to either the 3 or 6 month Euribor rate. The banks, in turn, increase this rate by their current margins. At the end of each period, the bank adjusts the interest rate to the average of the previous months. As a rule, non-resident buyers in Portugal can have up to 60-80% of the property value financed. The terms are up to 30 years with an age limit of 70 years. As in other European countries, bank offers differ not only in interest rates, but there are also many differences in repayment options and ancillary costs. The commissions for early repayment are fixed at fixed interest rates (2%) and variable interest rates (0.5%). You should therefore get information either from an independent financial advisor or from the individual banks.
We recommend that you do not only deal with one bank when it comes to financing. Within 2-3 months after the preliminary contract for the purchase of property in Portugal has been signed, the buyer must attend the notary appointment. Banks need about six weeks to make the final decision on a loan. In the course of the process, it is not uncommon for the bank to worsen the conditions that it initially guaranteed. In order not to depend on just one bank, buyers should speak to 2-3 banks at the same time.
To purchase property in Portugal, you need a Portuguese tax number. You will also need this number to open a bank account in Portugal. We recommend our customers to apply for the NIF (Número Identificação Fiscal) when searching for property. The application for the tax number has no tax consequences, so you do not automatically become taxable in Portugal unless you provide a Portuguese address when registering. Applying for the tax number is relatively easy. To do this, contact a tax office in Portugal (Serviços de Finanças). It is not necessary to contact the tax office at the location of the property.
You can also go to the tax office near the hotel or the airport. You will get the tax number in each tax office after waiting for a while. The tax number can also be requested from the Portuguese embassy in your home country. Since the service of the embassies is not good, it is advisable to apply locally. The tax number is valid for a lifetime. You need the following documents to apply for the tax number in Portugal:
• A valid passport / ID card
• Proof of your address. If it is already on your ID card, this will be enough. Otherwise, it is possible to show a bill that shows your address
You will receive the tax number immediately. The cost is between €12 - €15 per person. If you do not want to be a tax resident in Portugal, you should give your home country address when registering. You will also receive all tax assessments in your home country, which is an excellent advantage if you do not use the property all year round.
Contrary to some opinions in forums, the energy certificate has been mandatory for the sale of new and old buildings in Portugal since January 2009. This obligation already exists when natural persons or brokers want to advertise the property. Most of the time, this is not the case. In such cases, it is crucial that the relevant document is available when the preliminary contract and the actual purchase contract are concluded and that the information is also recorded in the contracts
The energy pass is a document that rates the energy efficiency of real estate in Portugal on a scale from A + (very efficient) to F (inefficient). The pass is issued by an authorized specialist energy agency (ADENE). It also contains information on energy consumption properties such as air conditioning and hot water preparation. Measures to improve consumption are also listed. The document applies to residential and small commercial buildings for ten years.
Several aspects are involved in determining the energy class:
It is, therefore, worthwhile to take a look at the energy certificate before buying to find out more information about the property. This becomes even clearer as important documents such as copies of the building plan, urban building permits, registrations, installation plans and technical specifications of the building materials for the energy pass have to be submitted.
The actual registration and issuing fees for the certificate for a house vary from €28 (T0 and T1) to €65 (T6 or higher) plus VAT. The service price estimated by the technician comes on top. The price varies greatly depending on the technician, object type, and location. For apartments, depending on the size, the value is around €100 - €200. For houses, the cost is about €250 - €320 depending on the size.
In the event of non-compliance, natural persons will be fined between €250 and €3740. Companies can pay between €2500 and €44.890
As a rule, the energy certificate is issued within 2-3 days and must be available before buying property. Hiring an architect can take a little longer. You should plan four weeks here if you want to be given several offers. We are happy to provide you with information and contacts to certified architects!
The Caderneta Predial Urbana is a unique certificate for each property, as an identification document of the property. Issued by the Tax Authority (AT) and also called Matrix Certificate. This document contains all the tax information regarding the property.
For example, in the case of a property in a building, Caderneta Predial Urbana will include the following information:
It is necessary for:
How to get?
The Caderneta Predial Urbana can be requested:
at the branches of the Tax and Customs Authority (AT), through a determined fee. To do this, you just need to present your citizen card and reveal the property's number.
online and free of charge on the Finance Portal with your access code (the same one that you use to fill out the IRS). The document is valid for 12 months.
To consult your property book online, follow these steps:
1st step: Access the Finance Portal, at www.portaldasfinancas.gov.pt;
2nd step: Click on Tax services and then on Citizens, Consult, Real Estate and Property heritage;
3rd step: Make your authentication, inserting the Tax Identification Number (NIF) and the password to access the Finance Portal. After clicking on the “Enter” button, an updated list with your property heritage is displayed. Data related to the parish, article, year of matrix registration, initial value and current value of each building are indicated;
4th step: Select the booklet of the desired property. Then, a window with the document will open. You can save it in PDF format or print it out.
Only the legitimate owner of the property or his legal representative.
The property book is not given to third parties, and there is an option to purchase a simplified version of it, requesting a Certificate of Land Registration, the Technical Housing Form or the Housing License, at the City Council of the area where the property is located .
It is important to know how to read the urban property booklet, so you can make a correct management of the Property Tax Value (VPT) of the properties and the amount payable of Municipal Property Tax (IMI). Anyone can read it.
Two very important aspects: the Fraction Areas and the Age of the Property.
The Fraction Areas:
According to the Municipal Property Tax Code:
Private gross area (Aa)
Corresponds to the total surface, measured by the outer perimeter and axes of the walls or other separating elements of the building or fraction. Includes closed private balconies, cellars and private attics with identical use to the building or fraction (CIMI), bedrooms, kitchen, living room , hall, corridors, bathrooms. Excludes open balconies, terraces and any common areas.
Dependent gross area (Ab)
These are covered and closed areas for exclusive use, even though they constitute common parts, located outside the building or fraction, whose uses are accessory in relation to the use for which the building or fraction is intended. It is considered for that purpose, accessory locations: garages, parking, storerooms, animal facilities, attics or cellars accessible and balconies, as long as they are not integrated in the private gross area, and other private places with a function different from the previous ones.
The urban building book should be compared with the certificate from the land registry office. This is because in some cases the urban building book does not mention the real age of the fractions, being necessary its verification through the certificate of the land registry office.
How to change the data of Caderneta Predial?
When you want to sell your property, the value of the square meter is crucial. Because depending on this, the potential buyer will assess whether or not it is a good deal. In this case, the square meter is a unit of measurement of the areas present in the Caderneta Predial. These are: total land area, building planning area, gross construction area, dependent gross area and private gross area. All must be correct.
If there is an error, you must request its correction from the Tax Office. In turn, if the information present in the Land Registry of the Conservatory is not in accordance with those of the Land Register, you must change it in the Land Registry with the updated Land Register.
It is also important that the Current Asset Value (CIMI) is updated, as it is used in the calculation of IMI, in addition to IMI and IMT. In case you need to make your correction, you must complete the IMI Model 1, or go to the finance department or via the finance portal. However, before deciding on the correction of the CIMI, you should use the VPT finance simulator, as it may be beneficial or not in relation to the amount of taxes to be paid. Because in the revaluation of the equity value by Finance, the value of the VPT may decrease or increase.
If there are other changes as in the case of transfer of property, sale, inheritance, donation or others, you will have to go personally to the Land Registry Office to change the ownership of the property.
Visiting properties in Portugal is not much different than in other countries. One difference, however, is that larger companies, in particular, can have their visit to the property logged with a signature. This often triggers irritation among buyers, as you are asked to sign something that you might not understand yet. However, the background of this signature is an internal process and not bad intentions. If in doubt, sign with "Mickey Mouse." We have put together a series of tips in a checklist to make it easier for you to view properties in Portugal:
The property tax Imposto Municipal Sobre Imóveis (IMI) is paid annually in Portugal as in other countries. You will receive the notification at the address registered for the Portuguese tax number. The tax for apartments and houses is between 0.3% and 0.45% of the building value deposited with the tax office. For buildings on agricultural land, the percentage is 0.8%. You can calculate the property tax here. The building value Valor Patrimonial Tributário (VPT) needed to calculate the property tax is entered in the Caderneta Predial. If you would like to find out about the property tax due before buying a property, it is worth looking at the document that must be available for the sale of a property. As a rule, the registered value is extremely low, and there are, therefore, only minimal amounts for property tax.
Building and homeowner's insurance is required by law in Portugal. The correspondingly combined policies are offered by all insurance companies under the name "Seguro Multirriscos." If you finance your property with a Portuguese bank, the conclusion of a policy is usually already included in the bank's contracts. The policyholder is responsible for keeping the insured capital of the building insurance up to date throughout the entire term of the contract.
You should focus on the costs for the reconstruction of the property, taking into account the same construction and other factors. As a rule, the leading insurance companies in Portugal offer very similar insurance terms. The buildings and household insurance are usually offered in three performance classes. The insured property value is particularly decisive for the price of the insurance. Here it would help if you chose a realistic amount in order not to risk underinsurance.
Values that are too high also make no sense, since insurance companies only finance a proportionate property in the event of damage. The costs for medium-sized buildings and homeowner's insurance are usually between €200 and €300, depending on the location and type of the property.
When buying a property in Portugal, there is always the question of how much work you still want to invest in the house or apartment after the purchase. It can be said that the costs for artisans or other services around the house in Portugal are significantly cheaper. It is therefore worthwhile to include renovations in the price negotiations.
For example, you can hire a painter for as little as €80 - €100 a day. This corresponds to hourly wages of approx. €10 - €15 for smaller jobs. You can get new windows for a freestanding house for around € 8,000 (e. g. SHC windows). It is, therefore, worth investing in real estate when buying, which needs to be renovated again. The advantage of this is that you can accompany most of the work yourself and of course, also design it according to your ideas. The disadvantage is the work involved. We are happy to support our customers with this. Most of the artisans and construction companies in Portugal usually do not yet have a large internet presence. This makes searching and comparing from a distance very difficult. As in many other Portuguese areas, it is always helpful to just ask around.
Especially in more rural areas, you can get the best tips and recommendations in the cafés, bakeries, or other local shops. Therefore, do not only rely on internet research. A reasonable broker should be able to provide you with initial contacts. Since these may not be completely neutral in the first effort assessment before buying the property, you should always get a second opinion. In Portugal, as in other countries, it is common to meet directly at the scene to discuss the work. After reviewing everything, have a written offer sent to you.
It may take 2-3 weeks for the offer to be sent in Portugal. However, pay attention to the availability of the artisans in advance. If you hardly get them on the phone, this will probably not change in the actual collaboration. In many craft fields in Portugal, you do not need any training or a master to be able to offer services on the market. Price and occurrence are not always reliable indicators of quality craftsmanship. It is therefore advisable to have past work by the craftsman shown for larger trades. If you have any questions about artisans, we will be happy to help you
Besides the advantage of getting a permanent visa in Portugal and Europe, Portugal offers also a lot of life quality. With an average daytime temperature of 14-21°C the weather is much milder than in UK or Germany with 4-12°C. Even in the winter you can find places like the Algarve where the temperature does not drop below 10°C.
In addition, the living costs in Portugal are about 25% lower than for example in UK or Germany, which is associated with a significant purchasing power of foreign income in Portugal. This is particularly noticeable in labour costs and local food.
Not to forget the traditional Portuguese cuisine, which is based on a great variety of fish and seafood, meat, vegetables, rice and of course high-quality wines.
Portugal has invested heavily in the modernization of its infrastructure. The result is an extensive transportation network connecting the main cities. The main airports of Portugal - Porto, Lisbon and Faro - are well connected in Europe and are prime destinations of all low cost airlines such as Ryanair.
As a result traveling to the easternmost country in Europe has become very cheap and time attractive. The road network in Portugal has been well developed. The main routes are covered by fee-based Autoestradas or toll-free Itinerários Principais (IP) or Itinerários Complementares (IC).
Despite the great care, we take over no responsibility for the topicality, correctness, completeness.