Buying Property in Portugal

 

 

Real Estate Market in Portugal

The Portuguese property market is becoming increasingly professional and specialized by the day. Aided by technological developments and better management practices, everything from a property search, viewing, legal advice, agency services and the actual purchase have witnessed qualitative improvements. 

 

Home Search Services in Portugal

Leave it to the professionals to find a place that meets your budget and preferences. They know the city best.

Enquire Now!

 

Dealing with Estate Agents

The best way to look for property in Portugal is through an estate agent. When opting for an agent ensure that he is professionally qualified and licensed (mediador autorizado) and is a member of an association like Associação de Mediadores Imobiliários (AMI), Sociedade de Mediação Imobiliária or the Associação dos Mediadores do Algarve (AMA). Members of international organizations like the European Federation of Estate Agents offer greater protection. Agents in Portugal are required to be licensed, but they are not regulated. Foreigners seeking to sell a property in Portugal also require a license. There are no government controls on agents commission, and it is usually around 5-10% of the sale price and is paid by the vendor. If you pay any deposit to an agent, ensure that it is deposited in a separate account.

Costs Likely To Be Incurred

Buying property in Portugal attracts a variety of fees that are 10-15% more than the purchase price and are higher among other EU nations. Most of the fees are calculated as a percentage of the declared or fiscal value (valor tributa'vel) of the property. Following are the fees payable:

Legal fees, deed registration charges, notary fees, surveyor's fees, selling agent's fees, transfer tax (resale properties only), VAT and utility fees (new properties only) and mortgage fees. Transfer taxes, notary, and deed registration fees are not applicable when you buy property owned by an offshore company.

Legal Advice

Do not sign any documents or pay anything without consulting your lawyer first. Talk to your lawyer about the conditional clauses in the sale deed and see that things are settled to your satisfaction.

Process and Contract

The process of buying property in Portugal begins by the signing of a promissory contract (contrato de promessa de compra e venda) which outlines the details of the contract such as detailed description of the property, the identity of the owner, registration and tax numbers, purchase price, deposit and date of completion. You may get the notary to draw up the sale deed (escritura) without having a promissory note in case you are not paying a deposit.

If you are buying an ‘off-plan' property which is still to be built or which is partly built only, it is customary to pay a small holding deposit to reserve a property until a promissory contract is signed which happens about four weeks later.

If you are buying a resale or a newly finished property, you will have to sign a promissory contract (contrato de promessa de compra e venda) and pay a deposit (sinal). The deposit is usually around 10-20% of the agreed purchase price (negotiable). The balance is paid at the completion when the deed of sale (escritura) is signed. A deposit is refundable under certain conditions only. All contracts of sale usually contain certain conditional clauses which if not met can result in annulment of the same.

Completion is the signing of the final deed (escritura de compra e venda) and is usually done one or two months after signing the promissory contract as per stipulations in the contract.

Completion involves the transfer of ownership legally, payment of balance amount and other payments towards notary's fees and registration as well as signing of the deed of sale. Payment of SISA must be carried out before signing of the escritura and the receipt of the same must be presented to the notary at the completion and is retained by him.

It is necessary to consider tax and inheritance consequences for those in whose name the deed will be registered and carry out final checks on the state of the property before registering the title deed.

The last stage in the entire process is the signing of the escritura in the notário's office. The notário checks whether all the conditions contained in the contract have been fulfilled before the deed is signed. It is customary for all parties to be present when the deed of sale is read, signed and witnessed by the notário. If someone is unable to attend in person, he or she can give someone power of attorney (procuração público) to represent them.

Use of a banker's draft or bank transfer must be made to pay the balance of the price. If both the seller and buyer are both foreigners, they may arrive at a consensus that the balance can be paid in any currency and payment can also be made abroad. The deed of sale must necessarily state the sale price in Euros and fees and taxes must be paid on this price. At the time of signing the deed of sale, parties to the contract are required to declare that payment has been made in the agreed foreign currency, in which case the payment should be held by a lawyer in the seller's or buyer's home country.

After signing the deed of sale ensure that you have adequate copies of your records as the original papers will be filed in the notary's office. The notary produces a certified copy of the same at the land registry (conservatória do registo predial). Registration could take several months. The purchase must be registered with the tax office (reparticão de finanças). The buyer's tax number and a copy of the initial pages of his passport will be required at this point. The buyer should transfer all utilities in his name after completion.