Real estate in Portugal - everything you need to know and leading buyer agent services

In recent years, Portugal has developed into an excellent alternative to other European real estate markets. Even in prime locations like Porto, Lisbon, or at the Algarve, the prices per square meter vary between €1000 and €4000.

 

On our website you will find all you need to know about real estate in Portugal and a lot of useful tips on renting, buying property, or building a house yourself. We will provide you with all the necessary information regarding the buying process, the best investment options, the different regions, touristic rental, and the cost of buying and financing in Portugal.

 

Besides, we will explain how to plan visits for properties, what the Portuguese energy pass is, what kind of insurance you will need, and how the property tax system works. We will inform you where to get your tax number, how to find reliable artisans, opportunities for pensioners, and also about the sea level in Portugal in 2040 due to climate change.

 

We at Pearls of Portugal offer the essential broker services for the purchase of a property in Portugal and always have current and selected offers on our website. We are the market leader for accompanying international customers in Portugal. With us by your side, buying a property in Portugal can be easy!

 

If you have any questions, please do not hesitate to contact us!

Contents

Property Search

Property purchase


Buying a House or an Apartment in Portugal with an Independent Real Estate Agent in Portugal

Buying real estate in Portugal is not easy for international investors. There are a plethora of online portals and thousands of brokers that can be used to research real estate. Many interested buyers do not speak Portuguese. The legal legislation and standards in the marketing of real estate are very different compared to other countries. 

 

We of Pearls of Portugal are the leading buyer agent in Portugal that finds the best real estate for our clients and makes the purchase as safe and cheap as possible. 

  • We work always independently of the selling price. We work on the basis of a  fixed and performance-based fee
  • We offer you all the services related to your property purchase!
  • We provide extensive legal services to make the purchase as save as possible
  • We do not market off-the-shelf properties - our portfolio is the entire market. This way we have the best market transparency and can select the best real estate options for you.

We Broker Unique Properties With a Strong Price-Performance Ratio in Portugal

PG7: Dream House in Lisbon Mafra - 10 Min. to the beach

  • 518 sqm area and 1800 sqm private land
  • Big pool and high-end equipment
  • 5 bedrooms and 5 bathroom
  • 2 additional store rooms and 2 living rooms

Price: 695.000 EUR



Types real estate as investments in Portugal

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.

Tourist Renting (Alojamento Local)

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.

Commercial Spaces

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.

Classic Rental

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.

Hotel and Hostels

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!


Regions for purchasing properties in Portugal

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.

Lisbon

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

Porto

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!

Algarve

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.

Atlantic coast / Silver Coast

Portugal's Atlantic coast stretches almost 700 kilometers on the entire east 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

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.

 

 

North Portugal

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.


Prices for a property in Portugal by region

The most expensive regions

Source: idealista.pt – basis of comparsion 5 bedroom apartment – 2018

Lisboa (cidade) 3.010 € pro m2
Cascais 2.333 € pro m2
Oeiras 2.000 € pro m2
Loulé 1.948 € prp m2
Lagos 1.787 € pro m2
Albufeira 1.709 € pro m2
Tavira 1.686 € pro m2
Porto 1.612 € pro m2
Lagoa 1.538 € pro m2
10º Funchal 1.534 € pro m2
11º Odivelas 1.523 € pro m2
12º Algarve 1.523 € pro m2
13º Vila do Bispo 1.485 € pro m2
14º Faro 1.454 € pro m2
15º Vila Real de Santo António 1.447 € pro m2
 
   

The cheapest regions

Source: idealista.pt - basis of comparsion 5 bedroom apartment – 2018

Pampilhosa da Serra 144 € pro m2
Penamacor 175 € pro m2
Freixo de Espada à Cinta 177 € pro m2
Mértola 185 € pro m2
Sernancelhe 196 € pro m2
Almeida 203 € pro m2
Vila Velha de Ródão 220 € pro m2
Figueira de Castelo Rodrigo 229 € pro m2
Trancoso 244 € pro m2
10º Monforte 244 € pro m2
11º Moimenta da Beira 247 € pro m2
12º Nisa 253 € pro m2
13º Gouveia 262 € pro m2
14º Calheta 265 € pro m2
15º São João da Pesqueira 266 € pro m2
 
   

Sea levels in Portugal

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.

Which regions will be affected most by rising sea levels?

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:

  • Aveiro
  • Figueira da Foz
  • Samora Correira region
  • Comporta
  • Lagos (Algarve)
  • Alvor
  • Portimão
  • Vilamoura
  • Faro
  • Olhão

North Portugal sea levels 2040 (simulation)

Source: Climate Control

Middle Portugal sea levels 2040 (simulation)

Source: Climate Control

South Portugal sea levels 2040 (simulation)

Source: Climate Control


Buying a plot of land to build a house yourself

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.

Property costs

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%

Land purchase

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.

Construction companies

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.

Construction contract

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:

  • A detailed building description (down to the last detail such as light switches and power connections) and a list of materials to be used (in respect of the architect's plans)
  • The exact location and orientation of the building on the property
  • The construction and payment plan, which must be done in stages depending on the construction progress
  • A penalty clause for late completion
  • Maintaining a percentage (e. g. 5% to 10%) of construction costs as a guarantee against defects
  • How disputes will be settled
  • All costs - including architectural fees (unless otherwise agreed)
  • The landscaping
  • Registration of the new building
  • The connections of utilities (water, electricity, gas, etc.) to the house and not just to the construction site
  • Insulation (against heat and cold) and protection against moisture

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.

Guarantees

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).


The buying process

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


The costs of buying

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):

  • Notary fees: They are between two and three percent of the purchase price and are incurred during the actual purchase
  • Real Estate Transfer Tax (IMT): The tax is staggered and a maximum of eight percent is due. For real estate under 92.407 Euro, there is no transfer tax. You can simulate the tax here
  • Property tax: This tax differentiates depending on the region and must be paid annually. The rate is between 0.3 and 0.8% of the property value according to the land register entry. One should therefore not be surprised if the registered information on the value and size of the real estate usually deviate strongly from the reality
  • Application for a tax number (NIF) approx. 12 EUR
  • Land registry entry (about 250 EUR)
  • VAT on new real estate
  • Stamp duty: This is paid at the tax office and must be presented to the notary when signing the purchase contract. This is 0.8% of the purchase price

Optional costs:

  • Legal fees: If you hire a lawyer, the costs are between 2-3% percent of the purchase price. These costs are included in our services.
  • Brokerage commission: . If you hire a  Portuguese broker, you pay up to 5% of the purchase price

 


Financing options

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.


Portuguese Tax Number (NIF)

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.


Energy certificate

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

What is an Energy certificate?

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.

What determines the Energy class in Portugal?

Several aspects are involved in determining the energy class:

  • Location of the property
  • Year of construction
  • Whether it is a house or an apartment
  • The condition of the property (walls, roofs, floors, and glazing)
  • Technical equipment such as air conditioners and heaters

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.

What are the Costs of an Energy Pass in Portugal?

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

How long does it take to receive the Energy Pass?

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!


How to do viewings

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:

  • You can use Google to explore the house and the surrounding area before your visit. Use this opportunity to get a picture beforehand and to cancel the appointment if necessary.
  • Check the photos in the advertisements in advance for mold problems. A lot of damage or wall discoloration can already be seen in the pictures.
  • Be punctual on time on the agreed date. Even if you are on vacation and it is a southern European country, the broker will leave after a while and will not come back so quickly.
  • If you like the property, you should first keep this to yourself. We have often seen customers run euphorically through the house and later wondered that price negotiation was complicated. Stay cool.
  • The taste of furniture is customary in Portugal. Some customers consider the furnishing style more than the nature of the house. Focus on the house and not the furniture.
  • Ask the broker everything that is important to you. In case of doubt, you should not rely on the statements of the broker or the owner. You should clarify many points such as construction options, neighboring properties, etc. with the city administration through a lawyer.
  • Pay attention to moisture damage on the walls. The areas around the windows and weather sides, in particular, are often weak spots. In Portugal, there are usually no moisture barriers installed, which can be seen in the areas of the baseboards.
  • Also, review places in the property that may not be immediately accessible. If the house has access to the attic, be sure to take a look at it. Look behind closets if possible. In the basement, it usually looks rather untidy. However, you should still look in the corners to see if there are any building defects or moisture. Wrong restraint is out of place here
  • Take enough time to visit and take pictures if necessary. We have often seen buyers walk through the property, and questions remain unanswered later.
  • Take your time to explore the area around the house. Take a long walk or drive through the city by car. If necessary, it is worth returning to the property at a different time of day and getting a second impression. Rule out that nothing is bothering you significantly, such as loud dogs, street noise, or hotels in the area.
  • Check the sun orientation when visiting the property. Everyone has their preferences here. Some like it very sunny and some more sheltered.
  • Some houses are already in tourist rental and are advertised as such. In these cases, be sure to get an overview of the rental income and read the comments of the visitors. Both can be done over portals such as Airbnb or Booking without much effort

Property tax (IMI)

The property tax Imposto Municipal Sobre Imóveis (IMI) is levied 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.


Property insurance

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.


Artisans in Portugal

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


Portugal life quality

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.