Are you looking for a sunny location near the water in Europe? Then purchasing property in Portugal may be the best option for you. However, before you begin your property search, make sure you have all of the necessary information on the Portuguese property investment and purchasing process.
To assist you, we’ve put up this detailed guide that has all of the information you’ll need.
Many ex-pats consider Portugal to be their second home. Portugal is a fantastic place to relocate because of its beautiful coast, nice people, and exceptional climate. Lisbon, the capital, stands out as one of the most cost-effective European cities.
Lisbon has a population of roughly 500,000 people. It has a certain appeal due to its tiny size and population. But don’t believe for a moment that it lacks the comforts and amenities of a booming European metropolis. The cities of Porto and Amadora, as well as the Algarve’s picturesque coastal towns and villages, are popular with tourists. Whether you’re seeking the thrilling intensity of a larger city or the magic of a peaceful rural hideaway, Portugal has something to offer any ex-pat.
Homeownership In Portugal
Portugal has an extremely high proportion of homeowners, accounting for over 75% of the population. This is roughly 10% higher than the United States and the United Kingdom. Portugal already has a considerable number of international residents. There are overseas professionals, retirees, and digital nomads among them. Many of them decided to buy a second house in Portugal’s real estate market. Let’s have a look at the entire foreigner’s guide to buying property in Portugal.
In a nutshell, the answer is YES! One of the most exciting aspects of Portugal is that foreigners who want to buy a home there have no restrictions. Furthermore, under the Golden Visa program, the Portuguese government encourages foreigners to invest in real estate in Portugal.
You may be eligible for a Golden Visa residence visa in Portugal if you are a non-EU citizen who invests in property worth a specified amount. This visa permits you to live, work, and study in Portugal while also allowing you to freely travel throughout the Schengen area. You can also apply for permanent residence or citizenship in Portugal after five years. In this tutorial, we’ll go over the history of the market, as well as the locations and legal requirements involved in purchasing a home in Portugal.
Portugal, like the rest of the world, has had its share of economic difficulties in the past. The worldwide economic slump of 2008 had an impact on the real estate market. Between 2011 and 2012, the average home lost almost 11% of its value.
Fortunately, the market began to rebound in 2013 after a low point in 2012. Between 2013 and 2014, the market recovered successfully, and from 2015 onwards, the market began to rise steadily. The real estate market in Portugal closely reflects the country’s overall economy. Since 2016, the value of real estate in Lisbon has increased at a rate of roughly 2.5 percent per year.
However, this is not the most significant market growth in Portugal; some regions, such as Santa Maria da Feira, have experienced yearly growth rates of around 12%. The trick to real estate purchases, as you may know, is location, location, location. Some sectors of the Portuguese real estate market did not do as well as others in terms of growth. The cities of Coimbra and Guimaraes grew at a rate of only 0.9 percent each year. We’ll talk about property costs in different parts of Portugal in the next section.
The price of a home in Portugal varies greatly depending on where you choose to purchase. Choosing where to buy is, of course, determined by the aim of your purchase. Retirees, for example, frequently choose beach towns like Cascais or the Algarve, whilst young professionals prefer cities like Lisbon or Porto. The average price of various neighborhoods per m2 is shown in the table below.
We are full-service investment immigration and financial advisory firm. In a number of countries throughout the world, we provide end-to-end solutions for residence and citizenship by investment programs.
Through our local office, we have assisted hundreds of clients in finding the ideal property in Portugal.
Let us set your mind at ease if you’re debating whether to spend less and live in a smaller town or pay more and live in a larger city. Let’s take a look at some of the most popular destinations in Portugal and how the market operates there.
Lisbon is Portugal’s heart and soul. It is one of the most affordable European capitals, attracting both investors and foreigners. Many tech companies and entrepreneurs began to relocate to Lisbon, transforming it into a thriving economic center. Lisbon’s real estate market is booming. With the influx of demand, the value of several areas of the city, such as Avenida da Liberdade, Lapa, and Baixa Chiado, skyrocketed. Despite this, many buyers and investors are still interested in these desirable areas. If you want to save money, moving out of the city center is a good idea. The neighborhoods of Amadora and Benfica are two notable examples. Cascais and Estoril are popular destinations for young professionals. Being based in these seaside towns makes a lot of sense because they are only 30-40 minutes by car from Lisbon and have lower property prices.
This enigmatic fishing town is a fascinating combination of history and urbanism. Many Americans who relocate to Portugal favor Porto, primarily because it overlooks the Atlantic and has some excellent beachfront real estate. The property market is showing signs of improvement, and the city is both a tourist and a commercial center, making it a good spot to invest. Porto is unusual in that it offers a wide range of property kinds to choose from. You can choose the Foz Douro area, for example, which has some of the nicest Atlantic beachfront properties available. If you’re looking for commercial properties, though, the Ribeira neighborhood is a good place to start.
The Algarve is a popular destination for foreigners looking to invest or buy property in Portugal. The world-famous Golden Coast has a wide range of homes to choose from, including villas, luxury residences, and flats with ocean views. Vilamoura is the most expensive area in the Algarve because of its reputation for luxury residences and villas. Lagos and Albufeira, for example, are both on the higher end of the pricing scale. You can find some cheaper options in rural locations like Alcoutim or Monchique. Remember that investing in the Algarve is always a good choice since it has consistently grown as a tourist and economic pillar in Portugal.
Many people are unaware that the Algarve isn’t the only place in Portugal with beautiful beaches and a breathtaking coastline. Between Lisbon and Porto is the Silver Coast, which boasts some beautiful beaches and villas. If you want a beachfront house but don’t want to pay the Algarve’s expensive ticket prices, the Silver Coast towns of Tomar, Peniche, Obidos, and Nazare are ideal.
Portugal is a highly developed country with an equally advanced real estate industry. Apartments in Portugal range in size from studios to five bedrooms and larger. When purchasing property in Portugal, you should be aware of the following terms:
- A typical detached dwelling is referred known as a Casa or Moradia. Some of the houses include facilities such as a backyard or a patio, and the majority of them are surrounded by a wall with a front gate.
- A semi-detached house is referred to as a Casa Geminada.
- Individual housing units that share shared areas are referred to as condominiums or condos. These are more expensive, but they provide a better level of care and safety.
- Quintas is traditional rustic homes or farms. Those are mainly found in the country’s inland areas, while some are found in suburban areas.
- Terreno is a Spanish word that means “land.” Some foreigners prefer to purchase land and construct their own homes. If you decide to do so, you must first check with the city hall (Câmara Municipal) to ensure that the land is registered for residential use rather than agricultural use.
When looking for an apartment in Portugal, you may come across perplexing numerals such as T0, T1, T2, and so on adjacent to the advertisements. These numbers refer to the number of rooms available. A T1 would be a one-bedroom apartment, whereas a T2 would be a two-bedroom apartment. T0 denotes a one-bedroom unit. A +1 next to the type, such as T2+1, indicates that this is a two-bedroom apartment with an additional windowless room.
It’s usually a good idea to consult an experienced real estate agent when buying a house in Portugal. These are known as Inmobiliaria in Portugal. Make sure it’s a property registered agency with a Portuguese Association of Real Estate Agents license number (Associacao de Mediadores Imobiliarios).
We’ll take you through the process step by step now that we’ve covered the real estate market and where to seek a house. To begin, you’ll need to obtain a Portuguese Tax Identification Number (NIF). This is available at any government finance office.
Here’s what you’ll need to do when you’ve identified a suitable location and completed a successful house visit:
- Find the best mortgage for you
- Try to bargain or negotiate
- Put down a deposit (about $6,600).
- Put your signature on the contract (Contrato Promessa De Compra e Venda – CPCV)
- Make a record of the property transaction.
You’ll need a notary witness to sign the sales deal. You may also require a Portuguese tax number, which can be obtained from any local tax office. In addition, you will require the following documents:
- Identification with a photograph
- Contrato Promessa De Compra e Venda
- Energy certificate for the property
- Payment of the stamp
- Caderneta Predial or land register
It’s usually a good idea to figure out your mortgage early on in the buying process so you can figure out how much you can afford and how much you’ll have to pay each month. When it comes to mortgages, there are numerous factors to consider.
Many large Portuguese lenders are happy to grant mortgages to qualified persons, including foreigners, who seek to invest in Portuguese property in order to support the economy. If you’re a resident, most banks offer loan lengths of up to 50 years. For non-residents, the time limit is reduced to 30 years. However, depending on the mortgage provider, there is a maximum age at which the loan can be paid off, which varies between 70 and 80 years old.
Borrowing amounts range from 60% to 80% of the property value, depending on the lender. This is why you’ll need to put down a 20% deposit. You have a variety of mortgage alternatives to select from, including variable and fixed-rate mortgages.
The European Central Bank (Euribor) establishes a margin that is connected to the rise or fall in interest rates on a variable rate mortgage in Portugal. The rate is determined daily by a panel of European banks, and it serves as a general measure of the rate at which European banks will lend to one another. A variable rate mortgage has an early redemption penalty of 0.50 percent, which is mandated by the Bank of Portugal.
Because the rate will not increase for the life of the fixed-rate period, which can range from 0 to 30 years, a fixed-rate mortgage allows you to budget more effectively. Unless the agreement specifies that the rate will be fixed for the whole term of the loan, your mortgage will immediately become a variable rate. A fixed-rate mortgage carries a 2% early redemption penalty, which is mandated by the Bank of Portugal.
When banks evaluate your mortgage application, they look at two things: your financial situation and the value of your home.
The bank will need proof of your income or wages to analyze your financial situation, such as:
- Wage income
- Return on investment
- Dividend payments
- Pension income
- Rental revenue
The bank will examine each applicant’s net income and will also inquire about any prior debts and employment history. This information is used to reassure the lender that you will be able to pay your mortgage on time each month.