With an attractive climate, beautiful coast and friendly communities, Portugal is a top destination for expats looking to relocate, either for work or retirement.
If you're planning on moving to Portugal you'll need to find a place to live. Around 74% of people own their own homes in Portugal¹, which is higher than average homeownership rates in many other countries around the world. There are no restrictions to buying a home in Portugal as a foreigner², and the real estate sector is well developed.
Many foreigners have settled in Portugal, or invested in a second home there. If you’re thinking of doing the same, then you’ll need to know a bit about how to buy a property in Portugal as a foreigner, and how the process typically works. Here’s a handy guide, covering everything you need to know.
Portugal’s housing market has, like other nations worldwide, been affected by the COVID-19 health crisis. Before the pandemic, house prices were steadily climbing - with prices in Lisbon, Porto and the Algarve seeing the biggest increase. In fact, property prices in the Algarve shot up by 50% between 2016 and 2020.
The property market in Portugal has not emerged unscathed from the pandemic, as prices have dropped slightly - by 3% in Lisbon in 2020, for example. But with the world beginning to open up again and demand from foreign buyers increasing, it’s hoped that the market will pick up considerably in terms of both buying activity and property prices.
There are no special requirements nor paperwork for foreigners wishing to buy property in Portugal, so you shouldn’t have any issues.
You must have a fiscal number (Numero de Contribuinte) to purchase a property in Portugal. You can get this through the local tax office or it's issued when you open a local bank account.
The good news for prospective property buyers is that Brits can still buy property in Portugal. This is because as we’ve mentioned, there are no restrictions on foreigners buying houses, apartments and land in Portugal.
And as non-EU citizens, British expats may also be eligible to apply for Portugal’s Golden Visa scheme. We’ll look at how this works next.
One of the reasons Portugal is such an attractive place for foreign buyers is its Golden Visa program.
If you buy a home in Portugal as a third country national (which is what UK citizens are after Brexit) and you spend at least €500,000⁵, you might be entitled to a Golden Visa. This grants you up to five years residency, after which you may be entitled to permanent residence status⁴.
If you’re thinking of buying a property in Portugal, the price you pay will be influenced significantly by where you want to live. The capital and the Algarve coastal areas are the most popular places for expats looking to settle in Portugal.
To give you an idea of property prices in Portugal, let’s take a look at costs per square metre to buy an apartment in a range of popular locations:
|Location||Apartment price per sq.m - in city centre⁶||Apartment price per sq.m - outside city centre⁶|
As you can see from the table above, the city of Braga and surrounding areas is one of the cheapest places to buy property in Portugal. This northern city is not only a great spot for a bargain home, but it’s also regularly voted Portugal’s happiest city⁷.
Thanks to its affordable real estate prices and many other attractive qualities, Braga is a good choice for young families and retirees⁷, as well as those looking to start a business.
However, if you do want to live near one of the big cities like Lisbon or Porto - look just outside the city centre. As you can see from the table, property prices drop dramatically when you search outside of the centre.
There are several avenues you can take to find a property in Portugal:
- Through an estate agent (imobiliaria) - all agents should display a license number (Associacao de Mediadores Imobiliarios)
- Through an online portal which puts sellers in touch with buyers directly
- Through word of mouth.
An estate agent, if used, generally works on behalf of the seller. The estate agent fees are likely to be between 3% and 5% of the price of the property², and will be covered by the seller.
The best way to get a head start on finding a place to buy in Portugal is to look online. There are both national and smaller local agencies, so it's worth checking out local realtors too. Great national websites to find a house or apartment to buy include:
- Century 21: This site has English language ads, and can be accessed simply using their app
- Rightmove: UK based site offering property intended for the expat market - prices reflect this
- ERA: Search using the detailed form, and find your perfect home.
One of the main pitfalls to avoid when buying property in a foreign country is scams. Luckily, there are a number of things you can do to avoid them.
Firstly, make sure your chosen real estate agent is properly registered. All agents have to be registered with the proper body (known as the Associacao de Mediadores Imobiliarios) and hold a licence number. Check out your agent’s credentials by talking to the Instituto da Construção e do Imobiliario (the body responsible for construction and realty).
When it comes to finding your own independent solicitor it’s also important to do your research carefully. You should know that there are both professionals known as a solicitador and an advogado in Portugal. A solicitador is a conveying specialist, and an advogado is a qualified lawyer.
In most cases, an advogado, although more expensive, will be the better choice when arranging your house purchase. Don’t feel you have to take the recommendation of your broker or the seller - your lawyer will work for you, so you must find someone who you’re comfortable with.
You'll have a wide choice of apartments, houses or even land if you want to build your dream home in Portugal yourself. Naturally, you'll find more flats available in built up areas and cities, with houses and villas more readily available in newer developments in the suburbs, and in towns and villages.
Following an increase in new construction in the cities and the coastal areas along with Algarve in particular, you'll find a good mix of older properties and new-build condos here.
It’s a smart idea, though not required by law⁸, to get a survey done on any property you choose, before you commit to buying it. Older houses in particular can have hidden problems which are costly to fix. Your solicitor can help you find a registered surveyor.
Buying a property in Portugal isn’t too dissimilar to buying a home elsewhere in Europe or North America. You’ll need to²:
- Decide which mortgages might suit you, and get an offer in principle so you have a budget in mind
- Find the property you want to buy
- Engage an independent solicitor to help check contracts and make sure the property is surveyed
- Make an offer the seller agrees to
- Go back to the bank and finalise the mortgage
- Sign the Contrato de Promessa de Compra e Venda (sale contract) with the notary
- Pay your deposit and agree a completion date with the seller
- You're now liable for property transfer tax (Imposto Municipal sobre Transmissões)
- The last step is to sign the Escritura Publica de Compra e Venda (Deed of Purchase and Sale) and have the property registered in your name.
One of the most important legal requirements for buying property in Portugal is to use a notary.
The notary is different to your independent solicitor, as they work as a middleman on behalf of the state, taking responsibility for things like checking the Land Registry (Conservatória de Registo Predial) and Inland Revenue (Repartição de Finanças) to make sure the property can be legally sold and check for any restrictions on its use.² You'll then sign the contracts with the seller, witnessed by the notary.
Portugal has a sophisticated banking system with plenty of choice in local and international banks. The largest banks include Santander, Novo Banco, BBVA and Bankinter. You might recognise the brands as many have a global presence.
For example, global banking giant Santander has a Portuguese operation, offering many of the same accounts and deals that you can get elsewhere in the world. If you have an account with them already, you may find it easier to switch to their local business in Portugal.
In general, Portuguese banks usually only offer loans of between 65% and 75% of the purchase price to non-residents⁹.
When you’ve chosen the mortgage product that works best for you, you’ll need to make your application. As in most places, this’ll mean that you have to arrange a stack of paperwork and visit the bank in person to get approval. When traveling to inspect the property in person, you could save on your local travel spending using the Wise travel money card.
In many cases you’ll have to pay a hefty application or ‘commitment’ fee (in the region of €600 or more⁹) to secure your mortgage. Each bank will operate slightly differently, so call your local branch to get the details. You should also check if there’s an English speaking staff member who can help you, as this isn’t always the case.
It’s worth getting a mortgage agreement in principle before you go on too far with your property search, as this will give you a more solid idea of what you can afford.
You’ll pay a deposit of at least 20% of the sale price² at the point of signing the initial agreement to purchase your new home (Contrato de Promessa de Compra e Venda). This agreement must also be notarised before you can move on with the process.
If you’re not yet in Portugal, you might have to pay your deposit from abroad. This might mean making an international money transfer to cover the deposit amount. If you’re transferring a large amount of money across currencies, it’s important you get the best deal available.
One smart option is to get a multi-currency account from Wise. With this, you can hold multiple currencies all in one account (including GBP, USD and EUR). It’s like having a local bank account which you can use to pay like a local, wherever you need it.
Although you're liable to fees as a buyer, these vary according to the circumstances. The main cost is IMT transfer tax, which is scaled according to the purchase price of the property. However, you won’t need to pay IMT on the first €92,407 if the property will be your main residence². Talk to your solicitor about the costs likely to be levied in your circumstances.
Fees and taxes include:
- Stamp duty: 0.8% the value of the home²
- Property transfer tax: Imposto Municipal sobre Transmissões (IMT): This is calculated on a sliding scale depending on the cost of the home, from 2-8%². A higher tax is payable if the property is a second home.
- Notary and land registry fees: These are usually combined and come in at around 0.2% to 1.2% of the property cost¹⁰.
Estate agents fees are usually paid by the seller.
If you’re arranging your property purchase in Portugal while still in the UK, you’ll need a safe, reliable and preferably low cost way to send over fees, deposits and other payments.
If you use your bank, you could be stung by high international transfer fees and unfavourable exchange rates - which means your new Portuguese home costs you more to buy.
Here’s a better solution. The Wise multi-currency account is up to 7x cheaper than banks, with tiny fees and the real, mid-market exchange rate (so no expensive markups) on every transaction. Wise is FCA regulated and uses sophisticated anti-fraud and other security measures to keep your money safe. You can even track your transfer to check it arrives safely.
Buying a property is a big and exciting step, but navigating the system in a new country can be a challenge. Luckily, buying your dream home in Portugal should be fairly straightforward if you follow the tips and info in our handy guide, and source the right local help if you need it.
Good luck with finding, buying and settling into your new home in Portugal.
Sources used for this article:
- Trading Economics - home ownership rate
- Expatica - buying property in Portugal
- IMI Daily - Portugal’s real estate market during Covid-19
- Proper Star - how to buy property as foreigner
- Proper Star - buying property in Portugal after Brexit
- Numbeo - property prices in Portugal
- Idealista - living in Braga
- Total Buying Abroad - surveyors
- Expatica - mortgages in Portugal
- Get Golden Visa - why buy property in Portugal
Sources checked on 19-July-2021.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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