How to Purchase Real Estate in Portugal

Buying a house is a big step for every common mortal in their life. It is the beginning of a new era and a reason to celebrate. For many people, it is a dream come true.

Naturally, something so big like buying a house requires endless decisions, predictions and strategies on the part of the buyer. Since something with such a financial impact, whether it is in the moment you buy it as in the future, it deserves all the attention.

Therefore, we shall see the benefits of buying real estate in Portugal and how to go through the easiest and effective process to have the key in your own hand.

buy house in portugal

Why buy a house in Portugal?
The Portuguese motherland has various benefits for those who live there. It is a country that receives everyone with open arms, with a real hospitality. Its natural beauty, architecture, history and gastronomy are unique and incomparable to other nations.

Also, Portugal is considered the most safe country than 99% of the rest of the world. The climate is seen as one of the best in Europe, with some people saying that there is not a sky more blue than the sky in Portugal.

Besides that, comparing to other countries, Portugal is cheap. It is estimated that 70% of the European capitals have a cost of living much higher that the Portuguese capital. In London, for example, buying a house costs five times more than it would cost in Lisbon.

How is the real estate market in Portugal?
Since the Portuguese economy recovered, the real estate market followed the same path and it was known as the goose with the gold egg. Turism was the big leader of this recovery and this influence it is predicted to continue.

The general rule is that the search stays higher than the offer. In other words, the prices have become higher and big raises have occurred, due to 2018. Consequently, the rents have gone up too.

Lisbon has shown to be the bigger and most important on the real estate market, being individually responsible for 30% on trades of the country, referring to the first semester of this year. The most central areas of the country - Aveiro, Leiria, Viseu and Coimbra - contribute with about 19%, at the same time, on the north - Porto, Vila Real, Braga and other cities - contribute with 30% and with Algarve 21%.

Different areas, different investments The investment size of any house is naturally conditioned by its location. Accordingly with the real estate portal Idealista, the investment on a house in Lisbon in 2019 is about 2874€/m2, at the same time that in Algarve is about 2064€/m2 and in the north region is 1704€/m2.

With or without raises in this sector, buying a house in Portugal, whether is to live or rent, is at this time described as a good investment.

Can foreigners buy a home?
It is no secret that many expatriates have left their origins to live in Portugal, namely English, French, German and Dutch. Not only because Portugal is a desirable place to drop everything and stay, but also because there are no special requirements or bureaucracies when buyers are foreigners. There are even valuable benefits for foreigners who can invest over € 500,000 in a house in Portugal, namely a golden visa that offers up to 5 years of residence. Even if they do not make this investment, foreigners with a home bought in Portugal are tax exempt from the income they earn abroad for ten years. French people living in Portugal, for example, can save up to 45% in taxes. The same is true for Norwegians, Austrians, Swiss, Swedes, Germans, Belgians, Dutch, Danes, English and Finns.

Although it is not difficult for foreigners to buy a home in Portuguese lands, they need to have a Taxpayer Number. The same is true when the buyer opens an account with a local bank.

How to find a house?
Firstly, the location chosen should be very clear. Decide if you are going to live in the house, or if you want to rent it to other people, it requires different types of strategy. Renting a house means that it should be well located, preferably in central areas, touristic places or near colleges. The same is not necessary when the buyer also wants to be the resident, and in this case the most certain is that it will buy the house in the surroundings of the center, where are prices are nicer.

Whether your goal is to live or to profit, it is important to take into account that you are doing an investment and in the future, you can always sell your property.

Usually, the search and finding of a house or abode in Portugal can be made through online portals, real estate agencies or the famous word of mouth.

At DAI we have a vast offer of real estate in Portugal, you can search in our website or using selling portals online and real estate portals, CustoJusto, Imovirtual, OLX, Idealista, etc.

Buy a house
Buying a house in Portugal it is not very different from other European countries. When you find the house that you wish, the next step will be to guarantee that you have all the documentation of the property ready to be accepted. For that it is advisable to have the help of a lawyer and a solicitor, mainly to avoid schemes. The purchase and sale of any property requires the examination of all the documentation, being crucial that everything is valid and regulated. Then, you make an agreement with the seller, you deal with the mortgage at the bank and you sign the Contract of Promise for the Purchase and Sale of a building. When the negotiation gets official, certain sellers require the signature of a reservation with an advanced payment or a caution. Finally, you sign the Final Public Deed of Purchase, in the presence of a public notary.. From that moment, the property stays in the name of the buyer.

Loans and taxes
For someone who does not have their own capital, naturally will ask for a loan to the bank. The goal here is to have a mix of a lower TAEG and the general conditions of a loan. That work in Portugal is made by an official intermediary of credit.

Portugal has a vast choice of banks, either national or international, like Bankinter, BBVA, Novo Banco and Santander.

About other taxes, the regular is that the buyer will pay between 2.40% and 10.80% of the total value of the property. It is advisable to save 10% of the price of the house that you want to buy to liquidate all of the taxes, although the probability of reaching that value is small.

To summarize Yes, it is a long process, but it could not be any other way. After all, is about buying a house and not a car or a sweater. Predictions and simulators are not enough to help you through this journey. The most reasonable will be:

  • To talk to an official realtor
  • To compare all of the offers
  • The realtor will conduct you to an intermediary of credit, in case of using a bank loan to have the best offer on terms and conditions.
  • Decide with responsibility

Buying a house is a mind-blowing event, but doing it in another country can be a challenge. Portugal gives a clear system that helps a foreign to make their own real estate investment and at the end of the day, will have the key on their hand and a house on their name. When that happens, the next step will be enjoy your new house and everything that Portugal has to offer.