If you’ve fallen in love with Portugal, you may have decided that it’s time to buy a property here. That might be a second home that you’ll visit occasionally, a rental property that you’ll use as an investment or a house or apartment that you’ll make your main residency.
Buying in Portugal is similar to many other countries, perhaps with the exception of how the promissory contract (CPCV) works. Another issue is the potential legal and structural pitfalls you need to be aware of (for example: swimming pools and parts of the property may not be completely legal and some properties may have been built on land that’s not designed for residential use). Most first-time buyers have no problems, but it’s always a good idea to work with a lawyer and to consider working with a buyer’s agent as well.
The property buying process
Although everyone’s experience will differ slightly, the buying process in Portugal looks a little like this:
- Work out what you can afford
The first step is to work out what your budget is. If you need a mortgage, this typically involves speaking to a broker or, at the very least, using a mortgage calculator to get a rough estimate. Regardless of whether you’re buying with cash or with a mortgage, it’s important to factor in property buying costs which are usually between 6% and 10% of the property purchase price, although 6-8% is more common.
- Research properties & find one you like
Research the market, work out your budget, and then look through sites like Idealista to find properties that meet your budget.
- Attend viewings
View any properties that you’re interested in, either alone or with a buyer’s agent. Some people also request a survey be done, although this can happen later on in the process too.
- Put in an offer
Once you’ve found a property that you like, put in an offer. Some agents may ask you to pay a reserva to take the property off the market, but it varies from agent to agent.
- Sign the CPCV or promissory contract
Both parties come up with their terms for the promissory contract, which could involve terms like the deal is contingent upon the survey not bringing up any serious problems. It also includes details about both parties and when the date for signing the escritura is likely to be. At this point, the buyer will typically pay a 10% deposit, which is non-refundable if the buyer backs out. However, if the seller backs out, the buyer has to be paid double.
- Await the bank’s decision and mortgage evaluation (if applicable)
If you’re getting a mortgage, the bank will normally need to visit the home as part of their valuation.
- Pay the IMT and IS, arrange home insurance, and transfer the utilities
Just before you sign the deeds, which takes place in front of a notary, you will normally need to pay the IMT and IS. Home insurance is also recommended, and typically a requirement if you’re getting a mortgage. It’s also a good idea to begin transferring the utilities.
- Sign the deeds & pick up the keys to your new home
The deeds or escritura are signed by both parties. The buyer pays the remaining balance and the seller hands over the keys. There are still some small tasks that need to be done – the property needs to be registered into the Land Registry (Registo Predial) and with the local tax office (Finanças), for example, but often a lawyer can help with these or at least point you in the right direction.
Once you know how much you have to spend, or you’re just ready to look around, it’s time to look for properties.
The main property website in Portugal is Idealista.pt and this is a great place to start. It’s not the only property website, and you will probably need to look at others once you get serious, but the majority of properties are posted here.
BuyProperty.com is an interesting portal that combines properties from many different websites and gives you some data on how fairly priced the property is based on similar properties in the same area.
Besides Idealista and BuyProperty.com, a few other websites to look at include:
- Custo Justo
- PurePortugal.co.uk (particularly focused on rural properties and land)
- BeEverywhere (for properties for sale by owner, which are usually also listed on green-acres.pt)
Some international property portals also have a section for international properties.
It’s worth noting that there isn’t one website that lists all the available properties in Portugal. Some are listed on multiple sites, but this is done manually by the estate agent, and many properties are only listed on one. Some properties aren’t listed online at all: some estate agents just list their most desirable properties (sometimes even after they’ve sold) as a lead generation method and then let prospective buyers know about their other properties once they contact them. You probably don’t have to worry about all of this just yet, but once you’re seriously ready to buy, you’ll want to pay attention to multiple property websites. If you’re using a buyer’s agent, they will often do this work for you (for free) which can save you a considerable amount of time and work.
Working out your budget
Although there’s no harm in looking at property websites to get a feel for what’s available, it’s important to know how much you have to spend. Estimating this will depend on whether you’re a cash buyer or planning to get a mortgage.
If you’re a cash buyer, this step will be easier: just take the full amount and be sure to allow around 6-8% for purchase fees. For example, if you’re looking for a property that costs around €500k, be sure to allow between 6% and 8% (or between €30k and €40k) for fees.
Need a mortgage?
If you’re likely to need a mortgage, a good place to start is with our Portuguese mortgage calculator, followed by a chat with a mortgage broker.
You can go directly to a bank instead, but the benefit of speaking to a mortgage broker that specialises in Portuguese mortgages is that they can compare multiple mortgages and explain simply how mortgages in Portugal work. (Note: most banks won’t offer mortgages on properties overseas, so you will need to get your mortgage through a Portuguese bank).
If you just want a starting point, residents (those that live in Portugal) will typically need a deposit of between 10% 20%, and non-residents (those that don’t legally live in Portugal) will typically need a deposit of around 20% and 30%. It’s sometimes possible to get lower rates, but as a safe estimate, residents should assume they’ll need around 28% in cash as a downpayment while non-residents should assume they’ll need around 38%.
That’s just one part of the mortgage puzzle, however. The broker will also need to assess how much you can afford to pay back per month, taking into account your earnings, current monthly outgoings, and the mortgage term. As a general rule, your fixed outgoings (e.g. other mortgages, credit card repayments, etc.) cannot be greater than around 35% of your net income. This means that if you earn €1,000 per month after tax, your fixed outgoings, including this mortgage, cannot be more than €350 per month. It’s slightly complicated which, again, is why it helps to work with a broker.
Read more about getting a mortgage in Portugal
Challenges of buying in Portugal
Every year, thousands of internationals buy property in Portugal. Buying a property here is similar to many other countries, but it’s definitely not identical and it can sometimes be a bit of a minefield for first-time buyers.
- It’s not unusual to find properties that have had rooms, swimming pools, or external buildings added without proper planning permission
- The construction quality of some properties can be poor, leading to noise and damp problems
- Some people list properties without any real intention of selling – or they want to sell, but the property is jointly-owned by multiple siblings and they won’t be able to convince the others to sell
This may sound scary, but most (if not all) of these problems can be avoided entirely by working with a good lawyer who can check the paperwork, make sure everything is legitimate, and put appropriate terms in the promissory contract. A buyer’s agent, which is an agent that represents you, can add an extra layer of protection and, due to the way most work, this is typically at no extra cost to yourself. Finally, an increasing number of buyers request a survey from an engineer or specialist property inspector, which can help highlight any structural problems you might not have spotted.
Property & residency
An important thing to consider is how much time you plan to spend at the property. Are you moving to Portugal (or already living here) and planning to use this as your main residence? Will it be a second home that you visit for a few weeks or months of the year? Or will the property primarily be a rental property, either on a long-term basis or to tourists?
Simply buying a property in Portugal doesn’t grant you the right to stay indefinitely, and whether or not you need to apply for a residency visa will depend on where you’re from and how much time you expect to spend at the property.
Those from the EU/EEA/Switzerland aren’t subject to the Schengen Visa rules. However, after spending three months in Portugal, you should apply for residency. In practice, many, including many that own properties in Portugal, don’t as this is rarely monitored, but the law does state that you should.
Rest of World
Those in the rest of the world (such as the UK, USA, and Australia) are typically subject to the 90/180 Schengen Visa rule, which means that you can spend 90 days in the Schengen Area in every 180 days. This potentially means you could come for two three month stints per year, which for many people is more than enough time. If you want to stay for longer, however, you’ll need to consider applying for residency.
For those from outside of the EU/EEA/Switzerland, obtaining residency means applying for a residency visa such as the D7 or golden visa. The golden visa is worth considering at this point as one of the routes to qualifying for the golden visa is through purchasing an eligible property.
For a residential property to be eligible for the golden visa, there are two main things to consider: location and price.
Golden Visa Location Criteria: As of January 2022, residential properties purchased in certain areas (basically coastal Portugal, including Lisbon, Porto, and most of the Algarve) are no longer eligible for the golden visa. Properties purchased in most of the interior and the islands of Madeira and the Azores still qualify.
Golden Visa Price Criteria: Typically for a property to qualify for the golden visa, it needs to cost €500k or more. However, there are some exceptions where it can cost less.
- €400k if it’s in a low population density area
- €350k if the property is at least 30 years old or in a designated urban rehabilitation area
- €280k if the property meets the criteria for the €350k price and is also in a low-density area
The €280k and €350k price points can include the cost of renovation, but this needs to be already paid and documented at the time of application if it’s to be factored into the golden visa application.
The D7 visa doesn’t require you to purchase a property to qualify – the focus is generally on passive income such as a pension, although it does ask for an address in Portugal which could be a property you purchase but equally could be a rental. If you do decide to apply for the D7 and also purchase a property, there are currently no restrictions on where the property can be.
Once you’ve found a property (or several properties) that you like, it’s time to set up some viewings. If you’re using a buyer’s agent, it may be best if they contact the agent directly. If not, you can go ahead and contact the agent or owner directly.
The first viewing is an opportunity to get a feel for the property more than anything else. Does it feel like somewhere you might want to live? Does it match the pictures? Are there any obvious issues (cracks in the wall, signs of damp, or noise issues).
If you decide you like a property, you can then come back and really start to assess whether it’s a good buy or not. You can also ask for important documents like the energy certificate, recent utility bills, and condominium minutes, if the property is an apartment. Your lawyer can also begin looking at other documents, such as the Certidão de Teor (Land Registry Certificate) and Caderneta Predial (Title Certificate) to make sure there are no legal or financial issues to be concerned about.
At some point, you may want to arrange an inspection. Traditionally, this isn’t the norm in Portugal, but it is common among expats. If you’re getting a mortgage, your bank will also want to visit the property, although they may not do this until after you’ve signed the promissory contact or CPCV.
If you notice any issues, be sure to raise them. It’s not unusual for issues to go unmentioned in Portugal but if you ask, the estate agent is obliged to answer your questions honestly.
Making an offer
There’s an art to making an offer in Portugal as going too low can offend the seller so much that they refuse to even speak to you again.
So how do you know how much a property is worth? As there’s no registry of what properties sell for, this is challenging to estimate. The price is set by the seller’s agent, someone who has an interest in selling the property for as much as possible, if only to keep their client happy.
A buyer’s agent can help here, especially one that has access to software like Casa Safari, as they can access the price-per-square-metre of similar properties and determine how long the property has been on the market and whether it has always been listed at that price. BuyProperty.com, which is free to use, similarly attempts to estimate whether a property is worth the asking price.
Generally speaking, however, aiming around 5% or 10% lower is normal. In parts of the country where property is booming, properties may go for more than the asking price, but this is unusual.
Note: Some agents may require you to pay a reserva or reservation fee (typically around €6,000) to take the property off the market, but this isn’t traditionally the norm.
The Promissory Contract
A very important stage within the property buying process is the Promissory Contract or CPCV, which is discussed in more detail in this article. It’s at this stage you put down a deposit (normally around 10%) and commit to buying the property.
Signing the Promissory Contract differs from putting down a deposit in other countries as it’s much harder to pull out:
- If the buyer pulls out, they stand to lose their deposit
- If the seller pulls out, they have to pay the buyer back their deposit and give 10% as well
Of course, you can pull out after this if you have a good reason but it’s important to get those reasons stated in the Promissory Contract. For example, your lawyer might put in a clause that you can pull out if you were unable to obtain a mortgage.
Between the CPCV and Escritura
There’s a bit of time between the Promissory Contract (deposit) and Escritura (deeds) stages, which could be anything from around two weeks to a few months, depending on the particulars of the sale.
There are a few things that you can expect to happen at this point:
- If you’re buying the property with a mortgage, the bank will normally visit the property at this stage
- You will need to pay the Imposto Municipal Sobre as Transmissões Onerosas de Imóveis (IMT) and Imposto do selo (IS), which is the property transfer tax and stamp duty
- You (or your lawyer or buyer’s agent) should notify the utility companies that you’re taking over the property
- You may want to request a final check of the property
- You should arrange the final payment, which is normally paid as a banker’s draft (and which you’ll normally have to ask the bank to arrange in advance)
Although there are one or two small tasks, the big final task is to sign the deeds or Escritura. This is where you will hand over the final payment and the seller will hand over the keys.
This exchange normally takes place at the notary’s office and unless you or the buyer are being represented by your lawyers through power of attorney, it’s common for both the buyer and seller to be present along with each party’s lawyers.
The Escritura will be read aloud (in Portuguese) and both parties can comment and confirm that they’re happy and that any terms placed in the promissory contract have been met. You will need a translator if you don’t speak Portuguese, although this could be your lawyer if you’re happy with that.
Now that you have the keys, you’re ready to move into your new home.
There are still a few things that you will need to do, such as:
- Register the property at the local Conservatória do Registo Predial (Land Registry Office) and Finanças (local tax office)
- Make sure you have a copy of important documents like the escritura, energy certificate, and land registry certificate
- Update any banks, companies, or government bodies with your new name and address
- Register your mailbox (or buy one) if it’s a house in a rural location