Portugal has developed in recent years as an excellent alternative to other European real estate markets. Buying a property in Portugal has become very popular among international investors for various reasons:
We at Pearls of Portugal offer the leading buyer’s agent service for buying a property in Portugal and always have selected offers on our website. We are the market leader for accompanying international customers in Portugal.
If you have any questions, please do not hesitate to contact us!
When buying a property in Portugal, it is advisable to have a lawyer accompany the purchase process in case of any ambiguity. We cooperate with several trustworthy lawyers. The costs for the most important lawyer services are included in the fixed price when working with us.
Our lawyers examine the legal situation of the properties. The focus is on the legitimacy of the seller, the existence of encumbrances, and the completeness of the documents. In addition, it is checked whether the property even officially exists in the form visited. It can also be checked in advance whether the basic requirements for a later tourist rental are met. When buying a property in Portugal, it is always advisable to have a survey carried out before the purchase. This can be included as a separate clause in the preliminary contract.
The Portuguese land register (Registo Predial) contains the legal registration of the property and provides information on how the property is constructed. However, you can also obtain information about the legitimacy of the seller and the financial encumbrances of the property. The Caderneta Predial is the extract from the tax register with information about the tax situation and tax obligations associated with buyng the property in Portugal.
The checks are included in the pre-contract of sale (Contrato de Promessa de Compra e Venda – CPCV) that is customary for the purchase of a property in Portugal. The preliminary contract is legally valid even without notarial involvement. It is also possible to register the preliminary contract at the Land Registry office in Portugal, but this is not common. If one decides to do so, the real estate transfer tax IMT of the regular purchase must be paid already to the preliminary contract. If the purchase does not take place, the tax is refunded within 30 days.
It is customary to pay a deposit of around 10% of the total amount. In the preliminary contract, the seller must already provide the necessary energy certificate of the property. The same applies to an extract of the land register entry. The preliminary contract must include the corresponding registration numbers of both documents, which should always be checked. In addition, houses built after 1951 should have an official license of use (Licença de Utilização) that corresponds to the actual structural conditions. The same applies to additions, outbuildings, or garages. It often happens that not all documents are complete. This is per se not a serious matter and will be dealt with accordingly by your lawyer.
The CPCV usually contains a time clause that obligates the buyer to complete the notarized purchase contract. Normally there are 2-3 months for scheduling the notary appointment. However, this period is negotiable and does not have to be completely exhausted. Important clauses or conditions for the purchase are also included in the preliminary contract. Otherwise, claims for damages are usually formulated in case the actual contract does not materialize. The buyer is liable with his down payment of approx. 10% of the purchase price if he withdraws from the purchase without justification. Sellers are required by law to pay back to the prospective buyer twice the down payment (i.e. the down payment plus the same amount as a penalty) in the event of non-compliance with the preliminary contract. In the preliminary contract, the seller must also disclose or list existing tenants.
The subsequent purchase contract requires a notarial form. The contract is formulated by a traditional notary or solicitor and does not contain essential clauses agreed between the buyer and the seller. These are part of the preliminary contract. In contrast to other countries, the usual registration of the buyer in the land register is not required for the actual change of ownership, so the buyer becomes the owner of the property in Portugal upon the conclusion of the notarial purchase contract. However, the registration has to be done by a lawyer or the notary at the latest two months after the purchase. The registration costs about 250 EUR.
The real estate is always paid for with a Portuguese bank check (cheque bancário). One must open an account in Portugal for this check. A prerequisite is the possession of a Portuguese tax number (NIF), which can be applied for in Portugal at the tax office or the Portuguese embassy for a small fee. The tax number is issued on the same day of application. For further information please contact us!
In addition to buying an existing property in Portugal, buying a plot of land in Portugal is an increasingly popular alternative. You can often find an old house on the plot, which can be renovated or removed. You can buy fantastic estates, especially in the interior of the country, for very reasonable prices. On the coasts, especially in the Algarve, this is much more difficult. If you are interested in buying a property in Portugal, you should plan your purchase well despite the low prices and take various aspects into account when choosing. To what extent the renovation is worthwhile compared to the new building should be checked beforehand. The new building of houses is often profitable because the construction costs are relatively low, and you can realize your personal ideas.
The cost of land with a building permit varies by area. In rural areas close to major cities, prices range from €20 to €40 per square meter, whereas on the Atlantic coast, prices can go up to €120 to €180. In the Algarve, prices can even range from €400 to €1000 per square meter (and more) for a first-class property. Inland, the costs are significantly lower, and in rural areas, agricultural land can be purchased for a few euros per square meter. Depending on the quality and location, the construction costs range between €400 and €1,600 per square meter. The real estate transfer tax (SISA) is 6.5%.
Buying a property in Portugal should not be underestimated despite the lower prices. The most crucial point is that the investor has the necessary building permit (Terreno Urbano) and that the property is large enough for the construction of a house or for the building you are considering. If there is already an old building on the property that was legally built, the process is much easier. Therefore, make sure that the housing inventory has been officially registered in the land register.
You should also check what exactly has been entered. It can happen that only a part of the property was legally built or auxiliary buildings were converted into living space, which can become a problem when you would want to sell the property later. It is also possible to build on agricultural land. However, there are strict limits for land and buildings. You can get this information from the local Town Hall (Câmara Municipal). Some properties are not suitable for construction because they are too steep or protected. Make sure that there are no restrictions through high-voltage lines, water lines, or rights of way that could affect the planning of the building. Keep in mind that the cost of providing real estate services in a remote rural area can be more expensive, and a reliable water supply is required. When buying land in Portugal, you should make sure that the purchase contract is dependent on obtaining the necessary building permit.
You should get a written confirmation that the property is correctly entered in the local land register. Also, check whether the right building permit is available. Some of the plots are offered in sections for sale, although the division has not yet been officially approved. The approval should be available upon purchase or be part of the preliminary contract as an agreement. It is also always advisable to have the property officially measured before buying it. If the building permit is incorrect or the old building has already been built illegally, you can expect high penalties. A new building usually has to be demolished again.
Note that it can take a long time to get a building permit in Portugal. Most of the time, it takes about six months until you get approval. Most construction companies offer package deals that include the land and cost of construction for your home. However, it is not always advisable to buy the building land in Portugal from the construction company. It is advisable to compare the different land and building costs and look out for other offers. If you decide to buy a complete package from a contractor, you should insist on separate contracts for the plot and the property. In the best case, you will receive the title deed before signing a construction contract.
Visiting properties in Portugal is not much different than in other countries. One difference, however, is that larger companies, in particular, can have their visit to the property logged with a signature. This often triggers irritation among buyers, as you are asked to sign something that you might not understand yet. However, the background of this signature is an internal process and not bad intentions. If in doubt, sign with “Mickey Mouse.” We have put together a series of tips in a checklist to make it easier for you to view properties in Portugal:
As in other countries buying real estate brings along another cost besides the actual price. Some of these costs are obligatory, other costs are optional. We are happy to help.
Obligatory costs (Continental Portugal):
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