Why Buy in Portugal?
Approximately 50,000 British nationals now permanently reside in Portugal and many more have chosen to buy a second home in the country. Portugal ranks among the top three countries chosen by us Brits, along with France and Spain.
Portugal is very safe and, in particular, safer than Britain. It has an exceptionally low crime rate: Lisbon was judged the safest capital in the EU in a survey by the UN and Gallup (London was judged the most dangerous).
The choice of landscapes is endless; from mountains and vineyards in the north to sandy beaches on the southern shores of the Algarve. For years this southern coast has been one of Europe’s most popular holiday destinations and is the place of choice for most British second homes. However, the shores of the Atlantic, north of Lisbon on the ‘Silver Coast’, are now attracting an enormous amount of attention amongst buyers looking for more rural retreats away from the tourist hubs of the Algarve – at more realistic prices.
Portugal has many enchanting religious festivals, pilgrimages, carnivals and fairs. In fact, given Portuguese friendliness, you will find yourself part of these festivals as you are carried along by the warmth and enthusiasm of the crowds – sometimes literally!
Most people are also attracted by the relaxed and unstressed way of life in Portugal and the culinary delights are legendary… and affordable. Overall, there are countless reasons that have influenced people’s decision to buy property in Portugal.
Getting Started – is it possible for you to buy in Portugal?
Anyone can buy property in Portugal. However it is important to note that non-residents need to appoint a Fiscal Representative and obtain a Fiscal Number or Número Fiscal de Contribuinte from the local tax office. This number is used on all documents relating to the purchase of the property. Also important is that married couples should both obtain a Fiscal Number or the Tax Department will not accept payment of the transfer tax or Imposto Municipal sobre Transmissões.
Finance – how much does it cost to buy a property in Portugal?
Here is a brief list of what you may expect in the way of purchase costs. Please be aware that these costs have changed dramatically over the last few years and you need to make sure exactly what they are when you buy. At time of writing they are as follows:
- Fiscal representation: Companies usually charge an initial fee of approximately €250, and an annual fee of approximately €250 for services as outlined above.
- Estate Agent’s Fees: These are paid by the vendor.
- Legal Fees: Solicitors typically charge between 1-2% of the purchase price plus VAT.
- Municipal Transfer Tax or IMT (Imposto Municipal Sobre Transmissões Onerosas de Imóveis): This is basically a purchase tax, payable by the purchaser when a property’s title changes ownership. IMT varies considerably from 0.2-0.8% depending on the nature of the property.
- Land Registry Fees: Land Registry charges are 0.5% of the purchase price.
- Property Registration Fee: You will have to register the purchase with the Property Registry Office (Conservatória do Registo Predial) of the area in which the property is located, and at the Tax Office (Repartição de Finanças). The costs are as follows:
- Registration of purchase is a fixed value of €250.
- Registration of mortgage is a fixed value of €250.
- Extras usually do not exceed €100.
- Stamp Duty or Imposto de Selo: This is 0.8% of the purchase price.
- Notary fees: When the Notarial profession was privatised, Notary fees changed substantially and now depend on the office where the Escritura is signed. The Escritura Pública de Compra e Venda (to give it the full name) has to be drawn up; signed by both parties in front of a public notary and lodged at the local Land Registry (Conservatoria do Registo Predial), with copies issued to the involved parties.
- VAT (or IVA): 20% on all new properties (normally included in the price, but check this).
Legalities – should you use a lawyer in Portugal?
There are many pitfalls that a prospective buyer can encounter when buying a home in Portugal. There are also ways in which a legal advisor can structure the purchase so that it is beneficial to the buyer, so getting a lawyer or advogad involved in your property purchase in Portugal is a must.
An advogado is the equivalent of a lawyer, barrister or solicitor in the UK. They can be held responsible for their actions and advice and are subject to strict scrutiny from the Portuguese Bar (Ordem dos Advogados). Make sure to check that your lawyer is qualified, and to obtain their registered number (cédula number).