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Portugal’s real estate market has been gaining popularity internationally since 2010. The launch of the Non-Habitual Resident, a favourable tax status for foreigners and the Golden Visa program fuelled the market.
Whether you are an individual looking to buy a property for you to enjoy or generate an income or an investor looking at creating a property portfolio in Portugal, it’s essential to understand the requirements, differences, and complexities of the Portuguese property market. In this article, we will delve into the nuances of buying real estate in Portugal, including the differences between buying as a resident or a non-resident, insights into the property market in the three main regions of interest for most, Porto, Lisbon, and the Algarve but we’ll also talk about some rural towns, towards more people are starting to look at for more affordable properties. As well as the overall requirements for purchasing property in this beautiful Southern European country.
Requirements for Buying Real Estate in Portugal
Anyone can purchase real estate in Portugal assuming they have the funds or access to some financing.
Aside from that, you need to provide proof of ID and have obtained your NIF.
- Proof of Identity: You will need to present a valid passport or identification document when buying property in Portugal.
- NIF (Número de Identificação Fiscal): To buy property in Portugal, both residents and non-residents need to obtain a Portuguese tax number known as NIF. This number is essential for conducting any financial transactions in the country, including purchasing real estate.
Non-residents are required to appoint a fiscal representative when purchasing property in Portugal. This representative will act on your behalf for tax-related matters.
Buying as a Resident vs. Buying as a Non-Resident
The main difference between buying as a Portuguese tax resident vs. a non-resident is that you get easier access to financing at a Portuguese bank and you pay slightly less taxes on the purchase of the property. As a non-resident, most local banks will only lend you up to 50% of the property value which will be defined by the lending institution.
Non-residents may face more bureaucratic hurdles, such as the need for a fiscal representative and potential restrictions on certain types of properties. However, they can still buy property in Portugal with relative ease and benefit from the country’s Golden Visa program, which grants residency to investors who meet certain criteria. Nowadays, Golden Visa programs through property purchase are limited to a handful of programs as the government put a halt on this type of Visa.
Complexities of the Portuguese Property Market
Like any investment, one should run their due diligence process and probably seek some legal representation. Not knowing the language and without a good understanding of the customs, legal framework and ways of working are factors not to be underestimated.
All property transactions in Portugal must be registered with the Land Registry (Conservatória do Registo Predial) which does not mean that every property on the market is worth the asking price or fully registered.
Several documents must be provided to by the current owners and duly verified before signing the promissory contract (CPCV stands for “Contrato de Promessa de Compra e Venda”). The CPCV is the most important step when buying a property as it is the contract that will define how the transaction will be conducted and set up responsibilities for each party until the delivery of the property.
It is your responsibility as a buyer to ensure that the property has been duly registered and that all is legal. Documents such as the Caderneta predial Urbana (or Rústica), the Certidão Permanente, the Licença de Utilização, the Direitos de Preferência, the Distrate from the bank (if there is a mortgage on the property), are examples of documents that you must request from the owners.
Making sure that you have requested and verified the integrity of all the necessary documents is even more important when buying from our capital, not requesting financing. Indeed, banks like to cover themselves and will verify the documents carefully before granting the loan. This can play in your favour as it is an additional checkpoint. If you are buying without financing, make sure that the agent representing you or your lawyer have done all the checks.
Unlike other countries where the notary will verify all these documents, in Portugal, the role of the notary is limited to register the transaction, not verify the legality of the property. International buyers, beware that what you buy actually exists within the city hall plans!
Market Insights
Portugal is not a densely populated country, most buyers are interested in the Southern part of the country, the Algarve, or by one of the two most populous regions, Porto and Lisbon.
More recently, the Silver Coast that stretches between Porto and Lisbon has been attracting more international buyers. The popularity and the quality of its golf course is a reason and the HBO series, 100 Foot Wave has propelled the sleepy town of Nazaré to a must visit during your trip to Portugal.
Porto, Portugal’s second-largest city, has seen a surge in property prices in recent years, particularly in the city centre, along the riverfront and the Foz do Douro area. The market in Porto is competitive, with high demand from both locals and foreigners looking to invest in this vibrant city.
Lisbon, the capital city of Portugal, offers a diverse range of properties, from remodeled apartments and brand new development in the city centre to more property choices in the outskirts and surrounding towns. The property market in Lisbon is dynamic, with prices varying greatly depending on the neighborhood and proximity to amenities. Nearby Cascais and Estoril are home to premium property development and prices there can be higher than in the Capital.
South of Lisbon is the town of Setubal which is attracting more buyers for its nice climes and beautiful surrounding nature, Setubal has it all. A charming historical town centre, cobbled streets, bright colourful painted facades, beaches at walking distance, a famous covered market and the Arrabida mountain chain around the corner.
The Algarve, known for its long sketches of sandy beaches and golf courses, is a popular destination for both tourists and property investors. Property prices in the Algarve can be higher than other regions in Portugal, especially in sought-after areas like Quinta do Lago and Vale do Lobo.
But Portugal is more than that! In the rest of the country are many rural towns and villages settled in beautiful varied landscapes. Expect less on offer but peace and quiet which is attractive to some. Portugal offer a more affordable alternative to the bustling cities and coastal regions. Properties in rural towns are often more spacious and come with larger plots of land, making them ideal for those looking for a quieter lifestyle away from the urban centres.
Price Comparison
In the Algarve, property prices can vary significantly, with average prices ranging from €2,000 to €6,000 per square metre, depending on the area and proximity to the coast. Prices are higher for the high-end luxury market.
In Porto, the average price per square metre is around €3,000 to €5,000, depending on the neighborhood and property type.
In Lisbon, prices can range from €4,000 to €7,000 per square meter, with luxury properties in prime locations fetching even higher prices, up to € 10,000 or € 12,000 per sqm.
In rural towns, property prices are more affordable, with average prices ranging from €1,000 to €3,000 per square metre, making them an attractive option for budget-conscious buyers.
Buying real estate in Portugal can be a rewarding investment, whether you are a resident or a non-resident. Understanding the requirements and the complexities of the property market in Porto, Lisbon, the Algarve, and rural towns is crucial for making informed decisions. By considering these factors and conducting thorough research, potential buyers can navigate the Portuguese property market with confidence and find the perfect property that meets their needs and budget.
Remember to consult with local real estate experts and legal professionals when buying property in Portugal to ensure a smooth and successful transaction, protecting your interest.
Happy house hunting in beautiful Portugal!