8 things you should know before buying a property in Portugal

August 14, 2021

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You want to buy a property in Portugal but you have many questions ? Buying a house is always stressful and it can be even more stressful when you buy a property in another country than your own, sometimes with a language you don’t master. So today I’m going to tell you 8 things you should know before buying a property in Portugal.

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1 : The quality of real estate in Portugal

If you want to buy a property in Portugal, the quality of the property will probably be one of your criteria. Whether it’s an old property, a modern building or a renovation, properties in Portugal are often of high quality.

The equipment is also generally high quality: kitchen, bathroom, carpentry … Not too many bad surprises to expect.

There is also a lot of choice in materials, equipment, finishes, which allows you to customize your property to your desires. Beware, there are still architectural restrictions but not a lot. Even if there are some funny restrictions like the obligatory bidet and the access to gas even if the house has no gas!

On the other hand, sometimes the finishing touches are a bit sloppy. One should not make generalizations but it can happen. It is therefore essential in the context of construction / renovation to pay attention to this. If you are not on the spot, I strongly advise you to call upon a close relation or a company to “inspect the finished work” in order not to have bad surprises. Without generalizing, it can be useful to foresee a small budget for finishing: joints, complaints, paint touch-ups…

buying a property in Portugal

2 : Delayed work

You must also keep in mind that it is not always easy to find craftsmen to renovate or build your house in Portugal. To find a craftsman, I strongly advise you to recommend him. Word of mouth is the best way to get quality service. Once you have found the craftsmen, you must set up precise deadlines in your contract with fees if they are not respected. Why should you do this ? Because very often, the craftsmen accept several work sites, and too many work sites. So they start yours, put it on stand-by to start another, then another and another … which can cause major delays for your construction or renovation work. I invite you to read my article on renovation to learn more about this.

buying a property in Portugal

3 : Real estate prices in Portugal

I talked about it in my last article : Real estate prices in Portugal, these have been increasing steadily over the last 10 years, between 7 and 10% increase per year, and even in the last two years despite the pandemic. Prices may still be relatively low in some areas but it is important to keep in mind that demand is strong in the Portuguese real estate market. No, no ! You are not the only one who wants to buy a property in Portugal and therefore prices are not as low as they were 5 or 10 years ago ! They have gone up and continue to go up because of this strong demand from foreign investors but not only … Contrary to popular belief, nationals are also buying real estate in Portugal, a trend that has become even more apparent in the last two years of the pandemic. (See my last article).

Algarve, Lisbon and Porto are unsurprisingly the most expensive regions. But the other regions also increase in value every year. Lisbon, Porto and their regions, despite their higher prices than other regions, remain “good investments” since they are regions where demand is (and will continue to be) increasing.So, if you are attracted to a region and you find the property of your dreams, don’t delay too long in positioning yourself because demand is high and prices are on the rise. It often happens that a buyer loses the opportunity to buy the house of his dreams by taking too much time to think. If you have a crush, I advise you to make an offer.

buying a property in Portugal

4 : Get support

We must distinguish between a real estate agent and a real estate hunter. If you contact a real estate agent to buy a property in Portugal, you will take the time to specify all the details of your research but the risk is that in the end the agency will take you to visit properties that have nothing to do with your criteria. What a pity! This type of situation is quite recurrent. Why is this ? Agencies try to sell the properties for which they are mandated, they are at the service of the seller.

The real estate hunter is at your service, at the service of the buyer and not at the service of the seller, he does not have any property to sell and will therefore offer you more properties that really correspond to your criteria.

5 : Diagnostics

In Portugal, there are no compulsory diagnoses. There are no lead, asbestos, termite, etc. diagnoses. There are no diagnoses on flooding, seismic risks, etc. It is up to you to check … as you can … On the other hand, the energy certificate is mandatory.

6 : Insulation

A recurrent problem of houses in Portugal is that they are sometimes poorly insulated, with single-glazed windows and in the old buildings, a heating system rarely present. Despite the mild winters in Portugal, a heater is still necessary to live there unless you like to walk around the house with your grandma’s big knitted sweater. Be sure to look for heating equipment when you visit houses. Older renovated properties often have reversible air conditioning systems installed. And if there is nothing planned, plan a budget to install the heating. Several solutions are available to you (prices are indicative):

the simplest : a reversible air conditioning. This will cost you between 6,000€ and 10,000€,
electric radiators, the difficulty will be to access the electrical outlets, but it will cost about 5,000€,
underfloor heating with heat pump is about 100€ / m2 (can only be done during construction),
the electric floor heating that can be installed during a renovation. Also around 100€ / m2.

buying a property in Portugal

7 : Capital gains on real estate in Portugal

If you sell a property in Portugal, even if it is your main residence, your capital gain will still be taxed. The tax is 50% of the capital gain. For example, if you have realized a capital gain of 50,000€ from the sale of your house in Portugal, then 25,000€ will be taken into account in the calculation of your IRS. You can be exempt from this tax if the capital gain is reinvested in the acquisition, construction or work on a new home as your primary residence.

The reinvestment must be made within 3 years of the sale of the property.

8 : Formalities for buying a house in Portugal

In Portugal, the role of the notary is quite different from the role in France, his role is only to authenticate the signatures during the final sales contract. It is mandatory to go before the notary or the lawyer for this act of sale in Portugal called “Escritura”. The deed of sale is therefore often quicker but can be more risky as all documents must be checked. Generally, it is up to you and/or your lawyer and/or your real estate advisor to check the different documents. Villa Feria, for example, takes care of this.

Know that if you make a credit to the bank in Portugal. This one will take care of these verifications and it does it well in general since it is also to secure itself ?

Conclusion

If you have read this article it is that you are considering buying a property in Portugal and I can only wish you the best in this adventure. Think about :

Get to know the region you are interested in,
Do not forget that some rules are different between Portugal and your country,
Take the time to visit several times the house you want to buy,
Take the time to read and reread all the documents related to the purchase,
Be well accompanied,
Enjoy your new life in Portugal.

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