A beautiful, warm and friendly country famous for its family values and ranked as one of the top three happiest places to live for expats, Portugal is a dream destination for many. On Thursday 27th August, hundreds of attendees joined us for our second successful Worldwide Wanderlust Webinar Series with Charles Roberts from Fine & Country Portugal revealing everything you need to know before buying property in Portugal.
As a resident of 35 years and an expert estate agent, Charles takes us through what life in Portugal has to offer, how estate agency operates slightly differently, intriguing tax benefits to living in Portugal, and how you could secure a Golden Visa. Charles was joined by host, Nicky Stevenson, Managing Director of Fine & Country UK.
To begin your exciting journey of relocating or investing in property in Portugal we reveal all you need to know.
Overview of the Portuguese market
As expected, the market had low activity from mid-March due to the effects of the pandemic. Now, there is an abundance of of activity in the Portuguese property market and Fine & Country Portugal have had the third best July they have ever had. August appears to continue to be very strong and there is confidence that the next 18 months will continue in the same fashion.
The benefits of buying in Portugal
The quality of life
Portugal is a very comfortable place to have a holiday home or a second home as it is very affordable in terms of living costs and property costs, benefits from very good weather year-round, low crime rates and plenty of leisure facilities including golf, equestrian, surfing, sailing, tennis and more.
Healthcare in Portugal is excellent. In fact, a new centre just outside of Lisbon is the leading Oncology centre in whole of Europe. There are lots of private and public hospitals – not only is the private healthcare great, but the public health system and dentistry is excellent. Bupa and other health insurance can be claimed in Portugal very easily.
Lisbon in particular is an eclectic city full of culture, music and arts. In fact, both Lisbon and Cascais have a very cosmopolitan feel, with eight international schools.
Portuguese residents willingly welcome visitors from all around the world and the English language is spoken extremely well across the country.
Portugal is well served by both international and budget airlines and there are direct links from Lisbon to Sydney, Chang Hai, Brazil and more.
How estate agency works in Portugal
When buying a property in Portugal, you can be sure to have peace of mind when in the hands of an estate agent, as all agents in Portugal must be Government licenced, and receive regular training courses and have public reliability insurance.
The buying process in Portugal
Estate agency in Portugal is subject to Napoleonic Law. Once someone has chosen a property and the final price is agreed, the buyer reserves the property with a deposit, which means the seller must take the property off the market for approximately 30 days. During this time, the relevant due diligence will take place on the property being purchased.
After, there is normally an exchange of contracts and the purchaser will pay about 20-25% of the cost of the property. The buyer and seller are then in a legally binding contract whereby both parties are legally permitted to buy or sell that property. If the buyer denies the purchase, the deposit will be lost. If the seller pulls out, they must pay double the deposit back to the buyer.
The transfer of title will then take place along with the usual occurrences of a buying process, such as paying property tax.
Property purchase tax
Buyers will pay property taxes associated with the property. The property purchase tax will normally be six per cent of the sales value.
Notaries and lawyers
The entire buying process takes place in front of a notary, who ensures there are no mortgages or debts associated with the property. The buyer’s lawyer will also be looking over the process.
Buyers outside of Portugal usually give their lawyers power of attorney to arrange and sign-off documents, enabling buyers to stay in their home country for most of the process.
Notary fees and land registry fees normally account for 2% of the property price. Lawyers’ fees can vary, depending on type of purchase or sale and the individual circumstance.
In some countries, agency fees or agency commissions are charged on top of the price of the property, but this is not the case in Portugal.
If you are selling a property in Portugal, the agency fees are 5% of the property price plus VAT. Fine & Country Portugal provide the highest level of marketing, including videos taken with drones and professional photography. If you would like to know more, get in touch with Fine & Country Portugal today.
There is only one type of ongoing tax that is the equivalent of council tax. These council rates are charged at 0.4% of the rateable value of the property. The rateable value of the property is assessed after the sale and is usually about 60% of the sale price.
Are there delays when purchasing property in Portugal?
Normally the buying process is straightforward. Newbuilds and renovation properties can sometimes run into delays of two or three months, so it is best to keep this in mind.
Anyone buying a property in Portugal can get a mortgage of usually 50-60% of the total price of the property and interest rates are very low.
Income tax declarations are necessary to be granted a mortgage and candidates with a life insurance policy are preferred, but it is still easy to get a mortgage if you can show the relevant income.
There are no schemes similar to the buy-to-let scheme in Portugal.
Non-habitual tax residency
The non-habitual tax residency is a scheme introduced by the Portuguese Government to attract high net-worth individuals.
When you apply for your tax residency to be moved to Portugal you will receive special tax treatments, which is guaranteed for a period of 10 years.
Candidates will be taxed at 10% or less in Portugal and will no longer pay tax in their home country. For residents of Sweden taxed at 58% and residents of France taxed at 72%, there are serious benefits.
In order to receive these benefits, you must spend at least 182 days per year in Portugal or own your main home there. Requirements to be eligible for this includes having your own private medical insurance and no criminal record, but it is available to anyone fulfilling all the requirements.
When Portugal was struggling in a recession, a scheme was introduced to grant investors and their families a five-year residency permit in Portugal. Non-EU nationals are able to attain a Golden Visa by investing in a Portugal Golden Visa Investment Fund or make a qualifying investment in real estate. At end of the sixth year, the investor can apply for a Portuguese passport. This scheme can be either combined with the non-habitual scheme or not.
Until 2021, residential property buyers could purchase a property costing 500,000 EUR or more to be eligible for the scheme. Since the scheme was introduced in 2012 and since the Covid-19 outbreak, the Portuguese government have revised the terms of the scheme to include restrictions on real estate investments.
"Properties in Lisbon, Porto, and other high-density coastal towns will not qualify for property investments under the Golden Visa scheme. Applicants have until the end of 2021 to take advantage of the current Portugal Golden Visa scheme."
The scheme has been popular with high net-worth individuals and with those in countries that are religiously or economically unstable. The Golden Visa is often used as a “plan B” for many people in South Africa, China, the Middle East, the USA and the UK.
Rental income: You must do a tax return to Portugal if rental income is received in Portugal or to London if you are receiving it in London.
If you have further questions on the topics covered in our webinar or would like to begin your property search in Portugal, contact Fine & Country Portugal today.
Find out when our next webinar will take place by contacting your local agent today or keep an eye out on our social channels, as we will be announcing the details of our next webinar about the buying process in Germany on our Facebook, Instagram and Twitter pages soon.