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Portugal is a top tourist destination and
a firm favourite with the British. Portugal boasts a
spectacular Atlantic coastline, first class resorts and
fantastic leisure facilities.
Foreign nationals have
the right to buy property in portugal
without restrictions. |
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The buying process in
Portugal. |
Making an offer.
Property purchase in Portugal is a regulated process.
Once you’ve found the right property you’ll need to make
a formal offer through the selling agent.
Once a price has been agreed both buyer and seller sign
a preliminary contract, usually a Contrato de Promess de
Compra e Vende. This document will stipulate all terms
and conditions pertaining to the property transaction.
Instructing a solicitor.
A Government official (Notary) is responsible for the
legalities of the purchase itself and acts on behalf of
both the buyer and seller. Most purchasers feel it
essential to instruct an English-speaking solicitor to
act solely on their behalf to oversee the whole process.
You will have to apply for a fiscal number, (numero
fiscal de contribuente), the equivalent of a UK national
insurance number, from the local tax office. Your
solicitor can arrange this for you.
Exchange of contracts.
Once all conditions as set out in the original contract
have been met, the final deed is drawn up and signed by
both parties at a public notary office. You must pay a
transfer tax called IMT (Imposto Municipal Sobre
Transmissão Onerosa de Imóveis) before the purchase goes
ahead.
Completion.
The notary will witness the signing of the final deed
and the title is registered at the local land registry
office, and at the local tax office.
Most of us
will need to raise some finance to complete the purchase
of our Portuguese home. Nowadays both international
lenders and local banks are willing to consider mortgage
applications from foreign nationals hoping to buy a home
in Portugal.
Lending criteria.
Mortgages for property in Portugal are normally
available for up to 80 percent of the purchase price.
This generally means you’ll need to find a 20 percent
deposit and be able to prove your income. Self
certification mortgages in Portugal are not normally
available.
Lending criteria & rates vary between
mortgage companies so it’s worth contacting an
overseas mortgage broker for advice.
Mortgage term.
Mortgages in Portugal are
available over 5-30 years and lenders will not normally
take into account rental income when calculating
borrowing limits.
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Cost of buying in
Portugal. |
Compared
to other countries, property transaction costs in
Portugal
are low. You should set aside around 9-11% on top
of the property price for fees.
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Summary of
costs. |
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Buying
costs. |
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1. |
Mortgage fee
(including
valuation) |
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2. |
Property
Transfer Tax |
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3. |
Notary &
Land
Registry
Fee |
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4. |
Solicitor's
Legal fees |
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Total cost
budget |
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Selling
costs. |
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1. |
Agent's
commission |
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Total cost
budget |
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Legal costs for buying property in Portugal.
The Portuguese Notary fee is normally around 1% which
also covers stamp duty. The Legal fees depend on the
loan amount and purchase price, it is wise to budget
1.5% - 2%. Solicitor fees will be in addition to the
notary's fee.
Property transfer tax in Portugal.
IMT tax (Imposto Municipal Sobre Transmissão Onerosa de
Imóveiss) is calculated either on the value of the
property or is determined by a new tax level based on
type of property and status of buyer. It is worth
talking to your solicitor to establish exactly what your
liability will be.
Portuguese estate agent’s fees.
Like the UK the buyer does not have to pay estate agent
fees when buying a property in Portugal, but laws of
property disclosure may not be as strict as they are
here. It is worth noting that the agent acts on behalf
of the seller and is paid from commission once the
property has been sold. In Portugal if you sell the
property you will need to pay estate agents fees.
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