Buying real estate in Portugal might sound overwhelming, but it doesn’t have to be. This guide helps you figure out Portugal real estate with a step-by-step strategy.
Portugal real estate: an overview
It’s no wonder that Portugal is burning hot in the European property market sphere. Despite prices rising, the Portugal real estate market remains a top choice for investors and buyers largely due to its great value compared to other European capitals.
Prices have been rising as a consequence of the tourism boom, and a growing economy. The investor-friendly schemes Portugal has implemented like the NHR and Golden Visa programs have definitely played a role in stimulating the foreign investment and consequently rising real estate prices. However, even with the rise in prices, the Portugal real estate market shows no signs of slowing down.
Who is it that is buying up Portugal real estate, you might ask? A mix of immigrants and the Portuguese themselves — some who intend to use the property as a permanent residence and some for a second home.
The nationalities that are most active in the new Portugal real estate markets are French, Brazilian, Chinese, and British.
Step one: Decide what you want when buying real estate in Portugal
A good place to start when embarking on your Portugal real estate journey is to define what your priorities and goals are. This is obviously a highly personal issue, so it’s good to think this one through before taking to the internet and having a plethora of options thrown at you.
With these considerations, you should define your budget. How much you can afford to invest in real estate in Portugal should factor in costs of moving, property taxes, and — if you’re selling property elsewhere — how the timing will work best for you.
Once you have defined these personalized considerations, you can start with the fun parts – like location. Where would you like to consider buying real estate in Portugal?
With locational decision making, certainly prices are high on the list of priorities. The hot spots for Portugal real estate are Lisbon, Cascais, Porto, and the Algarve. We’ve put together a brief overview on each area below:
Lisbon, Portugal real estate
While Lisbon real estate prices are amongst the highest in Portugal, it is also the capital and has more tourists year-round than any other city in Portugal. If you’re considering buying real estate for holiday rentals, Lisbon could be your best option. The city is a great place to wander up and down cobblestone hills, admire historical architecture, and enjoy fantastic pastries and seafood.
Cascais, Portugal real estate
Cascais is a popular place to live amongst wealthy Portuguese, and a popular vacation spot for tourists too. The big benefit here is the unspoilt sandy beach at the edge of the town, and fantastic restaurants and bars. The stunning but windy Guincho Beach is not far from Cascais’s town center by car, and it’s a fantastic beach for surfers. Prices are similar to Lisbon, but slightly lower as its about 30 minutes outside of the city.
Porto, Portugal real estate
Real estate prices in Porto are lower than in Lisbon, and it’s a beautiful old fishing town, too. Porto is up and coming in the Portuguese real estate market, as many tourists include the city as a stop during their travels in Portugal. There are some beautiful hotels, restaurants and bars in this city too. Check our Porto guide to hotels here.
Algarve, Portugal real estate
The golden coast of the Algarve is a great place to buy real estate in Portugal if you are considering Portugal beach real estate. With beautiful long stretches on unspoiled beaches, and dramatic rock formations, the Algarve region is hugely popular with tourists in the summertime. Year-round temperate weather conditions mean it’s a lovely place to spend time in, even out of season. Prices in the Algarve are much lower than the major cities of Lisbon so you can probably snatch up a bargain here.
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What to look for when buying real estate in Portugal
Here are the key things you’ll want to focus on as you get serious about your search:
- Lifestyle: Are you looking for a rural or urban lifestyle? Do you need to be near schools, or doctors?
- Residency: Are you considering to be a full-time resident in Portugal, or just a part-time resident with a second home here? Will the property be a holiday rental?
- Timeline: For which length of time are you planning to own Portugal real estate? Is there another property sale in the chain that buying a real estate in Portugal will be tied to?
- Condition: Are you looking for a ready remodeled place or for a place that needs renovation? New builds will often lack traditional charm whereas old houses can be quaint but will need an awful lot of work.
The secret to finding the perfect spot in Portugal is to be realistic about what you want (and need) from a house’s location, price, condition, and amenities.
Step two: Bring in experts to help with the process
Particularly if you don’t speak the language, we would advise using experts to ease the process of Portugal real estate purchases. It’s not an easy DIY project to go through, so you should seriously consider seeking independent legal advice in your home country and in Portugal, in addition to working with an experienced real estate agent.
Going it alone can be hard, so if possible, find a buyer’s real estate agent in Portugal. These aren’t as common as in the US, so try to get recommendations through friends or online communities, like Facebook groups for expats in Portugal.
Of course, organization is key in purchasing real estate anywhere, as is communication. Outline and clarify the buying process with your real estate agent, in terms of the timing, responsibilities, expectations, and the costs associated.
Step three: Start your search
Be prepared; this process can be lengthy, so start your search earlier than you think you’ll need to. The Portuguese property market is a busy and fragmented industry, with quite literally hundreds of agents and brokers out there. Even searching for the right real estate agent in Portugal will be time consuming.
If you’d rather not use a real estate agent, you can also search for Portugal real estate on a whole bunch of websites. Or, you can contact private sellers through Facebook or private consultants.
Websites to search for Portugal real estate
Step four: Found the perfect real estate in Portugal? Make an offer
Once you have found a property that meets your criteria, it’s time to consider making an offer. Here, like anywhere else, one should question if the price is right. If the property is priced correctly, in a red-hot property market like Portugal, it’s likely to go quickly. Don’t wait too long if it’s a place you’re sure you want to buy.
There are definitely a lot of overpriced properties in Portugal as well, particularly in Lisbon, as there has been growing interest in real estate for homeowners and investors. The bubble-like feel to the market is one more reason to work with a seasoned professional who knows the Portugal real estate market. No matter who you’re working with, do be discerning, an make sure you’re paying a fair price, even if it is love at first sight!
What’s a CPCV, and why should I have one?
In Portugal, a (pre-) buy and sell agreement is called a CPCV. This documentation is common practise to carry out before the final contractual agreement for the purchase of Portugal real estate, anywhere in the country.
In order to put together a CPCV, you will need:
- Identification of both the seller and the buyer, including their full names, taxpayer ID numbers, and marital status
- Identification of the property: a description of what is included, including the home, land, and outbuildings
- Assurance that the property will be sold free of charges and encumbrances
- A deadline to execute the definitive and final contract
- An agreed given price and signed value put down as an advance
The CPCV is not mandatory, but it is helpful in making sure the next binding steps take place quicker and helps both parties in organisation where formalizing the transaction is concerned.
The final legal and contractual step in the buying of Portugal real estate is the completion or closing of the final deed (escritura de compra e venda). This step will mark the transferring of legal ownership.
This final signing stage must take place through a notary office (notário), so it can be legally witnessed and signed in accordance with Portuguese law.
Step five: Offer accepted? Set up financing for your Portugal real estate
Now your offer is accepted, you will need to pay for the property in Portugal. In order to do so you will need a bank account in Portugal itself and a NIF, which is the Portuguese tax identification number. Read how to attain a NIF here.
If you are not in the country, you can still open a bank account as a foreigner, through someone acting on your behalf. To know more about opening an account in Portugal, read our article here.
There will of course, like in any other country, be transaction costs associated with the buying or selling of real estate in Portugal.
These will of course vary with the price of the property. These costs will be:
Transfer tax (IMT) and stamp duty
These taxes are paid to the Portuguese government on all buying and selling real estate transactions. Stamp duty is around 0.4-0.8%.
The lawyer safeguarding your interests at all stages of the buying process is a key service in the buying of property in Portugal to make sure all contracts are correct and that there are no problems in the sale. This is an essential part of buying property in Portugal as a foreigner. These fees might come to 1-2% of your buying final offer.
The Notary is the official governmental department that is able to legally witness and co-sign the legal documentation involved in purchasing Portugal real estate.
Mortgage stamp duty
If you choose to take out a mortgage in Portugal, you’ll also pay a mortgage tax.
The registry for land must record you as the new legal owner of the property and this will incur a fee. The registration fee + notary fees might come to 1-2% of the sale price of your new property.
Step six: Congratulations! You’re ready to move to Portugal
Now all the contractual issues are out of the way, you’ll just need to plan the usage of your new place appropriately.
If you’re planning to rent out your property, you might want to consider whether it will be long or short-term holiday rentals and reach out to appropriate agencies to assist you in that effort.
If you are planning to use the real estate as a second home or move permanently to Portugal to live in your new home, welcome! All that is left is how to make the most of your time in Portugal.
What properties qualify for the Golden Visa program?
You qualify for the Golden Visa Program if you make an appropriate real estate investment in Portugal. This requires a minimum investment of €350,000, and many people choose to do this through the real estate route.
How do I find a lawyer to help me buy real estate in Portugal?
Before you choose a lawyer, always look for recommendations. If you have any friends who have been through the buying process or online groups and communities to consult regarding finding a lawyer – do so.
Can I finance a house in Portugal through a US bank?
You will need a Portuguese bank and NIF to purchase a house in Portugal. Not to worry; you can get your NIF and open a bank account before you even visit the country in person. To facilitate this process, there’s a third-party provider called GETNIFPortugal who take care of the whole NIF application on your behalf. All you need to do is apply online.
What Portuguese banks can help with a mortgage?
All banks in Portugal will be able to offer assistance with mortgages.
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