Portugal has being a hot and trendy tourist destination also have been enjoying a lot of interest from foreigner investors and many of these are individuals that want one of three things: i) take advantage of the so-called Golden Visa program (ARI – Autorização de Residência por Investimento), ii) Get on board with the Non-habitual resident program (“NHR”) or iii) simply get a fair return for their investment and diversify the risk in a stable European market.
This being previously explained; we want to say that this article is for those who are seeking guidance on basic steps on how to purchase a property in Portugal. There are many other specifications when we talk about purchasing a property in Portugal since our aim is not to be exhaustive and talk about all situations possible when we talk about buying a property. We will only refer to “a vacant apartment”.
Therefore, to be more specific and objective, on this first article we will just refer to vacant apartments, and if you need any other clarification regarding these issues please contact us or any other professional about this.
If you just landed in Portugal and want to be part of the property market in Portugal and you don´t know where to start, this is the Guide you need. Here you will find some tips and secrets on how you can also get out of the frantic market.
Who can buy property in Portugal?
Anyone! And it can be bought individually or through a company created for that purpose.
- The rules are the same for Portuguese, EU and non-EU. The only difference is that you will, as a foreigner, have a longer processing time for your mortgage application and a slightly smaller loan. For foreigners, the banks usually request for a 20% deposit and only loans 80% of the property.
- The buying process is quite straight forward. However, most of the documentation will be in Portuguese, which may be a challenge for a foreigner wanting to buy without any professional assistance.
When should I buy an apartment?
Maybe you should ignore what the media and the “vox populi” is saying says about a property bubble. If you buy in a good location or with a fair price, you will be least affected by an economic downturn (that eventually it might happen).
It really depends on the motivation you are buying, if it´s for a golden visa purposes, if it´s to diversify your investments or to enjoy a great life in Portugal, but you should always make your independent research on how is the market at that given time and you can do that easily by check some property website like idealista (https://www.idealista.pt/en/ ) or Imovirtual (https://www.imovirtual.com/en/#) .
An interesting saying I heard some time ago is “what´s expensive today is cheap tomorrow and what´s cheap today is very expensive tomorrow”, so it really depends on your timeline of the investment, 1 year, 5, years, 10 years, or to secure a nice return through rental or short-rental for your retirement.
The Buying Process
- 1s Step: Is to identify what type of property do you look for. The building, Apartment, Store or a land plot.
- 2nd to define which areas do you want to invest, the city centre, outside the city, what type of neighboured you want to buy in, and those sort of decisions.
- 3rd to visit as many properties as possible to get the real feel on what you are looking into.
- 4th: After you identify your target property, it is imperative to do the appropriate due diligence on the property. We suggest you hire an independent legal professional do this, and not just take a word of the seller for granted. Typically, the basic documents that are requested are:
- Caderneta Predial / Tax Certificate of the Property,
- Certidão do Registo Comercial / Land Registry,
- Licença de Utilização / License of Use (it might not have if the property is built before 7 of Augusto 1951),
- Certificado Energético / Energy Certificate,
- For properties built after 2004, it is also necessary the ficha técnica de habitação / Technical Document with the specifications of the property,
- Other documents might be requested.
- 5th: Signature of the Promissory Contract, this is not legally necessary, but usually to be done and a down payment / deposit is performed by the buyer at this time, usually 10% of the buying price. Payment of this deposit can be performed by bank transfer or by a bank cheque, depending on what´s agreed between both parties.
- 6th: Book the final contract or public deed signature. There might be applicable the obligation of the seller to publicize a “legal preference right” in a public website, and in this cases, there is a 10 working days period mandatory for all the public institutions to exercise its preferential right and buy the property for the same conditions originally set.
- 7th After the deed is signed the notary or lawyer who drafts the final contract will send to the Land Registry to change the registration of the property to the new buyers’ name as well is going to send to the tax authorities in order for them to the registry the property in the buyers’ name.
What is the return on investment that is usual
This is a very common question, and this will vary depending on the location and type of property you are buying, however, in Lisbon city centre you can expect to earn 3%-5% gross return on investment. If you look outside of Lisbon this return might get a little bit higher, however, as it is well known the higher the return the higher the risk.
- Appliances & furniture: If there are appliances and furniture in the property, keep a list and photographs of what will stay in the property after and is included in the price.
- Insurance: If the condominium doesn´t have insurance for all properties in the building, you will have to have one just for your property;
- If the property was bought with a Loan, the bank always will make you have mandatory insurance.
- Land Registration: Public officials have up to 20 days to make the registry in your name
- Tax Department: It is always advisable to inform the tax authorities that you bought the property.
Regarding the other types of properties (commercial, land plots, buildings) you will have to wait for the next articles or contact us if you have any questions or doubts.
This article is for informational purposes only and is not intended to be exhaustive in relation to the matters covered here or constitute of legal advice. However, if you are still not completely clear and continue with doubts or if you want our help, do not hesitate to contact us through firstname.lastname@example.org.
The information presented in this article is shared for generic and entertainment purposes only. Forecasts, estimates and certain information contained here should not be considered as investment advice or a recommendation to invest. Past performance is not indicative of future results. The Law Firm in no way guarantees any specific outcome or profit. Investments can lose money over short or even long periods of time. You should consult your financial advisor before making an investment or purchase decision.