This guide will walk you through the essentials of buying property in Portugal, from understanding the market to envisioning life in this beautiful country.
What’s Portugal's real estate market like?
Portugal’s real estate market has been booming in recent years, driven by a combination of factors such as stable economic growth, foreign investment, and favourable tax policies. Many cities have seen a surge in demand, which has led to rising property prices.
However, while coastal areas have become pricier, there are still plenty of affordable options in the country’s interior regions and lesser-known parts of the North. Portugal’s property market caters to all types of buyers. Mortgage rates remain relatively low, and property laws are clear and transparent, making it a straightforward process for foreigners to invest in the country.
What’s it like to live in Portugal?
Portugal needs no introductions: high quality of life, friendly locals, and a strong sense of community.
Portugal boasts over 300 days of sunshine per year. It is also known for its rich history, cultural diversity, and affordable cost of living compared to other Western European nations. Healthcare and education systems are highly quality, with public and private options available.
English is widely spoken in tourist areas, though learning some Portuguese will enhance your experience and integration into the local community.
Additionally, Portugal is famous for its cuisine, with fresh seafood, local wines, and pastries like the iconic pastel de nata. Whether you're drawn to the vibrant city life of Lisbon, the historic charm of Porto, or the tranquil beauty of the countryside, Portugal offers a welcoming environment for expats, retirees, and investors alike.
How to buy a property in Portugal?
The process of buying a property in Portugal follows a few stages:
1 - NIF/NIPC: you must have a tax identification number to sign a purchase contract in Portugal. Please note that if you intend to buy the property through a company, it must have an NIPC. Foreign nationals (non-EU/EEA) must have a tax representative in Portugal when buying a property. Given the dynamic nature of the Portuguese real estate market and the possibility of multiple offers for the same property, we recommend obtaining your NIF in advance, even before identifying the property you wish to purchase, to prevent any delays when making an offer.
2 - Bank account: While it is not mandatory to have a Portuguese bank account to purchase property in Portugal, our team highly recommends opening one. Typically, the property's value is paid at the time of the deed using a bank cheque issued to the seller, a method that safeguards both parties' interests. Although an escrow account could be used, this is uncommon in Portugal. Additionally, having a local bank account will make it easier to manage utility payments and taxes once you own the property.
3 - Choosing a property: Identify the property you want to buy with the help of a reliable estate agent. Depending on the type of property you are looking for, it may be important to have a specialist with you to check that the property is in a condition to be sold, that the documents are up to date and that the land registry records are in order. We also advise that you get help from a local partner to ensure the contract terms protect your best interests and wishes.
4 - Choice of acquisition model: You can acquire a property in your own name or through a company, Portuguese or foreign. This option is not without its tax implications. It will have to consider various factors such as the use to be made of the property, the flexibility you want when it comes to a possible sale or the mere structuring of the investment. Consultation with a tax specialist is recommended to make the best decision.
5 - Promissory contract of sale: After negotiation, both parties sign this contract, where the buyer pays a deposit (usually between 10% and 20% of the property's value).
6 - Public deed: This is the final contract, signed before a notary, in which the buyer pays the remaining amount, and the property is transferred into their name.
7 - Essential services: Once you've signed the deed, you can subscribe to essential everyday services such as electricity, water, internet, gas and more.
8 - Commercial activity: If you want to use your property as a source of income, namely by renting it out, there are some mandatory formalities, such as obtaining licences, complying with safety requirements and registering your activity for tax purposes.
NEWCO, as your local partner in Portugal, can take care of all these steps, from obtaining your NIF and bank account to helping you choose the property and the deed and subscribing to basic services.
Buying a property in Portugal - Frequently asked questions
Can foreigners buy property in Portugal?
Yes, foreigners can buy property in Lisbon without restrictions.
How long does it take to buy a house in Portugal?
The time required to buy a house in Portugal can vary, typically ranging from 1 to 3 months, depending on the speed of document preparation and whether financing is involved. For foreigners, it's essential to address legal and tax considerations. With the support of a local partner, the buying process is usually straightforward.
What are the property prices in Portugal?
Property prices in Portugal vary according to location and type of property. In bigger cities such as Lisbon, Porto, Funchal, Coimbra, and other popular areas such as the Algarve, Comporta, and Cascais, prices are higher than in more unknown regions such as Alentejo or Trás-os-Montes, for example, which have more affordable values per square metre.
Where is the best place to buy a property in Portugal?
It's impossible to pinpoint a single best place to buy property in Portugal, as the ideal location depends on your individual preferences and needs. The best approach is to consult a knowledgeable real estate agent who understands Portugal's diverse cities and regions. They can help match your desired lifestyle with the right property in a location that suits you.
Is now a good time to buy a property in Portugal?
Portugal's property market is highly attractive, with strong demand from both locals and foreigners. While prices have consistently risen, the country still presents exciting opportunities for buyers and investors. For those considering a property as a long-term investment, Portugal holds significant potential for appreciation, particularly in emerging and less explored regions. However, it's essential to evaluate the market carefully and seek expert advice to make an informed decision.
Keep this in mind!
In investment and immigration, having a knowledgeable and reliable local partner is invaluable.
NEWCO is your local partner in Portugal. We have 30 years of experience and a versatile and multidisciplinary team that accommodates all your demands:
· Obtaining a NIF, bank account and residence permit
· Real estate
· Personal and business accounting and tax compliance
· Tax consulting and tax advice
· Business setup and management