Buying Property in Portugal: The Complete Guide for Expats

The Portuguese real estate market is on the rise. Thanks to Portugal's delightful climate, high living standards, exceptional cuisine, and robust healthcare and education systems, international families and individuals have increasingly chosen to invest in property.

This comprehensive guide will provide you with all the information you need to purchase real estate in Portugal with confidence and clarity, helping you find your dream property.

Here's what we'll cover:

• Why buy property in Portugal
• An overview of the Portuguese real estate market
• Insights of the property purchase process in Portugal
• Where to buy property in the country, and more.

 

Why buy property in Portugal?

There are many reasons why Portugal has become a hot destination for real estate investors. Here are the top ten reasons to consider Portugal's real estate market for your next investment:

• Owning property in Portugal for at least five years can qualify you for Portuguese residency and citizenship.
• Portugal offers year-round sunshine and excellent weather conditions.
• The cost of living in Portugal is one of the lowest in Europe.
• Real estate investment in Portugal promises high rental yields.
• Portugal is a safe country with political stability.
• The country boasts of unspoiled nature and beautiful beaches.
• Portugal offers a very high quality of life.
• The country has excellent tax incentives through the Non-Habitual Resident (NHR) scheme.
• Portugal is easily accessible from Europe, Africa, and the US.
• Public infrastructure such as healthcare and transportation are widely available and accessible.

See: Pros and Cons of Living in Portugal as an Expat.

 

Can foreigners buy property in Portugal?

Yes, you can buy property in Portugal as a foreigner, and there are no issues with foreign property ownership. In fact, the Portuguese government encourages foreign real estate investment via the Golden Visa program.

Non-EU/EEA citizens investing in Portuguese property of a certain value can qualify for this program, which grants a residence permit allowing you to live, work, and study in Portugal and travel freely across the Schengen area. After five years, this can lead to permanent residence or even citizenship in Portugal.

The Portugal Golden Visa Program

Foreign investors who want to obtain residency in Portugal could do that through the Portuguese Golden Visa. 

The Portugal Golden Visa Program is an attractive five-year residency-by-investment scheme that allows all non-EU, non-Swiss, and non-EEA nationals to get Portuguese residency in exchange for making an investment in the country.

Among the various investment options offered by the Golden Visa Program, buying Portugal real estate stood out as an attractive choice.

However, the Portugal Golden Visa program has undergone substantial changes. The new legislation, which took effect in October 2023, eliminated the purchase of real estate and real-estate-related funds as qualifying investment options for the program. 

Several attractive investment routes still maintain their eligibility for the program. To learn more, please refer to our comprehensive guide: Golden Visa Portugal: The Definitive Guide 2023.

 

Overview of the Portugal Real Estate Market

Like many countries, Portugal suffered the economic ripple effects of the 2008 global recession, with the real estate market experiencing a downturn between 2011 and 2012, resulting in an average home value loss of around 11 percent.

Fortunately, the market began its recovery in 2013, with significant progress noted between 2013 and 2014. From 2015 onwards, the market has seen steady growth. The health of the real estate market closely reflects the overall Portuguese economy. Since 2016, for example, Lisbon's real estate market has grown at an annual rate of around 2.5 percent. However, some areas like Santa Maria da Feira have reported an astounding yearly growth rate of about 12 percent.

The golden rule in real estate is location, evident in Portugal's diverse market. Not all areas have seen the same levels of growth, with towns like Coimbra and Guimaraes growing at a rate of 0.9 percent annually. In the following sections, we'll delve into property costs in various areas of Portugal.

 

Real Estate Prices in Portugal

Property prices in Portugal can vary greatly based on the location you select. Keep this in mind during your property search. Your reasons for buying will significantly influence your choice of location. For instance, individuals looking to retire may gravitate towards coastal areas such as the Algarve, while younger professionals might find bustling cities like Lisbon or Porto more appealing.

The table below illustrates the average price per square meter pricing in various cities, as of June 2023 (according to Numbeo).

Homeownership in Portugal

Portugal has an unusually high homeownership rate, with about 75 percent of the population owning their homes. This figure is significantly higher than those of the US and the UK. A considerable number of foreigners, ranging from expat professionals to retirees and digital nomads, reside in Portugal, many of whom have invested in Portugal real estate.

 

Where To Buy Property in Portugal

Which are the most expensive areas to buy property in Portugal?

Which areas are cheaper?

If you're in search of affordable properties and excellent deals in Portugal, consider venturing inland, particularly in the central region. Here, you'll discover a plethora of budget-friendly homes and expansive land offerings. Additionally, the Silver Coast presents an appealing option for those seeking reasonably priced properties, including beachside residences. Renowned for its stunning coastlines, the Silver Coast serves as a compelling alternative to the Algarve for prospective buyers.

Popular locations to buy property in Portugal

There are many places to buy property in Portugal, and the best place for you will depend on your budget and the type of property you're interested in. You may find property prices in Portugal quite reasonable compared to other European countries. Each region is unique, offering different advantages. Let's explore some popular locations.

Lisbon

Lisbon, Portugal's capital and economic hub, is a beautiful city steeped in history that has seen a rise in tourism and commercialization in recent years. This makes it an ideal place to buy a property for commercial purposes or living. However, property prices in Lisbon have sharply increased, making it more expensive than in other parts of the country. The most costly properties are in areas like Avenida da Liberdade, Baixa, Chiado, and Lapa.

Porto

Porto, often called Portugal's second city, is one of the oldest European centers. A bustling commercial city with a rich historical and cultural heritage, it's known for its famous Port wine and is a popular tourist destination. The property market in Porto offers good bargains in many of its districts, such as Ribeira, Foz do Douro, Vila Nova de Gaia, and Vila do Conde.

The Algarve

The Algarve is popular among retirees, second homeowners, and investors. As one of Portugal's most popular holiday destinations, it's known for its sunshine, stunning coastline, fresh seafood, top-class golfing, and innate natural beauty. Its accessibility from the UK and the number of English-speaking homeowners make it an attractive location for purchasing property, such as holiday homes, villas, and beach houses.

The Silver Coast

Cascais, often referred to as part of the Silver Coast, has seen a significant influx of Europeans and non-EU nationals buying property. Considered a popular alternative to Lisbon due to its relaxed environment, it boasts beautiful architecture, free museums, carefully maintained parks, and access to beautiful beaches and other amenities.

 

Types of Property in Portugal

Portugal real estate is thriving, with various property types. From eclectic farmhouses to trendy warehouse-style apartments, beachfront condos, luxury houses, commercial properties, and luxurious villas, you'll surely find something to suit your preferences.

• A "casa" or "moradia" typically denotes a standalone home, often featuring a backyard or patio and enclosed by a wall with a front gate.
• A "casa geminada" translates to a semi-detached house.
• "Condomínios" or condos consist of individual apartment units with shared spaces. While they may incur a monthly condo fee, they offer elevated levels of care and security, often including amenities like swimming pools and gyms.
• "Quintas" are charming rustic homes or farms, typically situated inland, though some can be found in bustling suburban areas.
• "Terreno" translates to "land" in English. Some expatriates choose to purchase land to construct their own homes. If pursuing this option, it's advisable to verify with the local city hall (Câmara Municipal) that the land is designated for residential use rather than agricultural purposes.

 

Apartment Terminology

When it comes to buying property in Portugal, there are certain terms you'll need to get accustomed to:

• A "Casa" or "Moradia" refers to a typical detached home, with some houses having a backyard or a patio and most having a wall around them with a front gate.
• A "Casa Geminada" means a semi-detached house.
• "Condomínios" or condos are individual apartment units with shared common spaces. These properties often come with a monthly condo fee but offer a premium standard of care and safety in return.
• "Quintas" are rustic houses or farms. These are usually located more inland, although some can be found in bustling suburban areas.
• "Terreno" means 'land' in English. Some expats opt to buy a plot of land and then build their own homes.

You might also come across terms such as T0, T1, T2, etc. These numbers represent the number of rooms in a given property, with a T0 representing a studio apartment, T1 a one-bedroom apartment, and so on.

 

Where To Find Property in Portugal

Several online property portals and real estate agencies advertise properties for sale in Portugal. Some property websites include:

• IMO – https://www.imovirtual.com/en/
• Casa Sapo – https://casa.sapo.pt/en_GB/
  

Facebook can also be a valuable resource for finding properties for sale. Real estate agents, known as "imobiliaria" in Portugal, can also assist you in your search. Verifying that your agent is registered with the Portuguese Association of Real Estate Agents (Associacao de Mediadores Imobiliarios) is always a good idea.

Buyer's Agents can also be of great help to foreign buyers. These professionals usually have access to properties for sale that are not advertised on the market and sometimes can secure lower prices for residential properties too.

 

Key prerequisites for buying property in Portugal

Portuguese tax identification number (NIF): Anyone looking to buy a property in Portugal, resident or not, must have a Portuguese fiscal number (número de contribuinte), also known as the tax identification number (NIF). This is obtainable at any local tax office (Finanças) by presenting proof of address and a passport. You will also need this number to open a bank account.

See: What Is the Portuguese Taxpayer Number (NIF) and What Is It Used For?

Valid identification: Buyers must provide an acceptable form of identification, which could be a passport or a Portuguese ID card (Cartão de Cidadão).

Portuguese bank account: It is recommended to open a Portuguese bank account when purchasing property to avoid the complications of fluctuating exchange rates.

See: How to Open a Bank Account in Portugal.

The process of buying property in Portugal, the necessary documentation, and associated costs:

Buying Process

After settling on a price with the seller, proceed to finalize the purchase as follows:

1. First step: Engage a local lawyer or solicitor, if you haven't already.
2. Second step: Review the Promissory Contract terms with your solicitor.
3. Third step: Both seller and buyer sign the Promissory Contract, and the buyer pays a deposit, typically 10 percent. The deposit will be lost if the buyer withdraws from the deal.
4. Fourth step: Upon meeting the Promissory Contract terms, the buyer and seller (or their representatives) meet before a notary for the final act of sale. The buyer pays the remaining amount and receives the key from the seller.

 

What is required to buy real estate in Portugal as a foreigner?

To formalize the sales contract, you’ll need to have it witnessed by a notary. You might also need a Portuguese tax number, which can be obtained at any local tax office. Furthermore, you will need to prepare several important documents including:

• ID Card or Citizen Card
• Duplicates of the last three payroll documents
• Floor plan of the apartment or house in Portugal that you intend to buy
• Documents about other incoming sources (if relevant)
• Credit Report
• Last Income Tax Return and its Notice of Settlement
• Plan of the building
• Bank Statements (in Portugal and overseas)
• Employment confirmation letter
• A valid residence permit if you’re a non-EU/EEA citizen

 

Step-by-Step Guide to Buying a House in Portugal

Navigating the real estate market and finding a suitable property are only the first steps in purchasing a house in Portugal.

After acquiring your Portuguese Tax Number (NIF), which can be obtained from any local tax office known as Finanças, and after you've found a property that fits your needs and completed a successful house visit, there are several additional steps you'll need to follow.

Here's a simplified version of the steps you'll need to follow for a successful property purchase:

1. Decide whether you need a mortgage and find the plan that suits your needs best.
2. Attempt to bargain the property's price with the seller.
3. Once the price is settled, secure it with a down payment.
4. Finalize and sign the Contrato-Promessa De Compra e Venda (Promise to Purchase and Sell Contract).
5. Officially sign and notarize the Escritura Publica De Compra e Venda (Public Deed of Purchase and Sale).

 

Mortgages and Down Payments

Before you get too far into the buying process, it's crucial to arrange your mortgage. This will allow you to know how much you can afford and calculate your monthly payments. Mortgages come with a lot of considerations.

You have the option to secure a mortgage either from a bank in your home country or from banks within Portugal. Several Portuguese banks, such as Santander, Novo Banco, and BBVA, are available to provide mortgage loans.

Typically, non-residents can obtain a mortgage with a duration of up to 25 years, while residents may qualify for a mortgage extending up to 30 years. Additionally, non-residents are typically required to make a deposit of 30 percent, whereas residents are asked for a lower down payment of 20 percent.

See: Mortgage in Portugal: Foreigners Guide to Property in Portugal.

What are the lending terms?

Many major Portuguese lenders provide mortgages to eligible individuals, including foreigners, to encourage foreign investment, in Portuguese real estate. Most banks offer loan terms up to 50 years for residents and 30 years for non-residents. However, there's a maximum age upon the loan's maturity, which varies between 70 and 80, depending on the lender.

What about the deposit or down payment?

The amount you can borrow generally ranges from 60 percent to 80 percent of the property's value, which means you'll need a minimum deposit of 20 percent. You can select from different types of mortgages, with variable or fixed rates as your primary options.

Variable Rate Mortgage

The European Central Bank (Euribor) determines the margin linked to a Portuguese variable rate mortgage's interest rates. A panel of European banks set this rate daily. There is an early redemption penalty of 0.50 percent for a variable-rate mortgage, as regulated by the Bank of Portugal.

Fixed-Rate Mortgage

A fixed-rate mortgage can help you budget better because the rate will not increase for the fixed-rate period's duration, which can be up to 30 years. After that, your mortgage will become a variable rate one, unless it's specified in the agreement that the rate is fixed for the entire loan period. An early redemption penalty of 2 percent is applied for a fixed-rate mortgage, as regulated by the Bank of Portugal.

How do I qualify for a mortgage?

There are two main criteria that banks will assess when processing your mortgage application: your financial position and the property evaluation.

Financial position

The bank will require proof of your income or earnings to assess your financial position, including:

• Salary income
• Income from investments, pension income, dividend payments, and rental income.

The bank will evaluate each applicant's net income and ask for information about any existing debts and your employment history. This is to ensure that you can afford the monthly mortgage payments.

Property evaluation

The bank will engage an engineer to evaluate the property you intend to buy. Portuguese banks currently lend between 60-80 percent of the property's value.

Required Documents for Mortgage

To apply for a mortgage, you will need to provide a range of documents:

• A copy of your Passport
• A copy of the Portuguese Tax Number (NIF)
• Proof of address (a recent utility bill, for example)
• Your credit report
• Recent payslips
• Recent bank statements
• Your most recent tax return

Acquiring home and life insurance is also required by law in Portugal when applying for a mortgage loan.

 

Renting or buying property in Portugal?

The decision to either rent or buy a property in Portugal is a significant one, deeply influenced by personal circumstances, goals, and preferences. There are distinct advantages and potential drawbacks associated with both options and understanding these can help you make a more informed choice that aligns with your future plans and lifestyle.

Renting a property provides the benefit of flexibility. If your stay in Portugal is temporary, or you are still exploring different cities or regions to settle in, renting can be a practical choice. It allows you to experience living in various locales without committing to a single place. Additionally, the property rental market in Portugal offers diverse options, from modern city apartments to charming countryside homes, suiting various tastes and budgets.

One of the most appealing aspects of renting in Portugal, particularly for those accustomed to different systems, is that the responsibility for home maintenance and repair costs primarily falls on the landlord. This factor can ease budgeting worries and remove the stress of dealing with unexpected home repair expenses, making your stay more comfortable.

However, if long-term stability, asset accumulation, and potential residency rights are your primary motivations, buying a property in Portugal can be an excellent financial investment decision. Owning real estate is not only a solid financial investment but also a pathway toward securing a permanent place in this beautiful country. Portugal's residential property market is generally regarded as stable and reliable, offering a sense of security to investors.

The responsibilities that come with property ownership, such as maintenance costs and property upkeep, can be more demanding. Yet, these can be seen as part of the investment, enhancing the property's value over time.

If you're considering buying a property but find the language barrier or the process daunting, it's wise to seek expert assistance. Hiring real- estate agents and professionals who are familiar with the Portuguese property market and its nuances can be invaluable. Our partners at Goldcrest have a wealth of experience working with the expat and foreign buyers' community, offering support, advice, and services to make your property-buying journey smooth and successful. Independent legal advice in your home country and Portugal can also provide an extra layer of protection and confidence.

 

Portugal Property Taxes and Fees

The primary property tax you will have to pay is the IMT property transfer tax, which can vary significantly depending on your situation. It can be as high as 10 percent for non-residents in a tax haven, or as low as zero for those buying cheap property as a second home. It's a good idea to discuss this with a professional to understand what the costs will be according to your situation.

Estate agent fees are usually covered by the seller. We would definitely recommend having a conversation with the seller about estate agent fees in advance.

There are some fees and property tax that you may need to pay:

• Imposto Municipal Sobre Transmissões (IMT) or Property transfer tax: This tax is based on the cost of your home, and will be higher if the property you’re buying is a second or third home.
• Land registry and notary fees: These are paid together and usually range from 0.2 percent to 1.2 percent of the property's value.
• Stamp Duty: Stamp duty is set at 0.8 percent of your home's value.

See: Property Tax Portugal: A Guide to Navigating Portuguese Property Taxes.

 

Who We Are and How We Can Help You

At GetNifPortugal, we specialize in offering indispensable NIF, tax representation, and banking services – three essential components to make your property purchase and relocation in Portugal as seamless as possible.

We understand that buying a property in Portugal involves navigating through a series of prerequisites, which is why our services are specifically designed to guide you through each of them, and, consequently, expedite your journey towards owning your dream home in Portugal.

Get a NIF with ease

When it comes to any financial activity in Portugal, from buying or selling a house to working a job, the Número de Identificação Fiscal (NIF) is absolutely crucial. This tax identification number is key to all property-related transactions, including property purchases, rental agreements, tax payments, and even tax return submissions.

At GetNifPortugal, we simplify the process for you. Our service enables you to obtain your NIF online, right from the comfort of your home. Say goodbye to long queues and unnecessary hassles, as we ensure that your NIF is procured and delivered straight to your inbox. For non-EU/EEA/Swiss nationals, we can also appoint a fiscal representative to assist you in applying for a NIF and managing your taxes, eliminating the need for you to search for one. With our service, you can expect to receive your NIF within two to three weeks of your application.

Open a Portuguese bank account

Another important step in the property purchasing journey is the establishment of a Portuguese bank account. This isn't just a requirement for specific visa applications but also a practical need. Having a local bank account can vastly simplify your financial management and transactions while living in Portugal. This includes bill payments, receipt of payments, and accessing various financial services.

With our assistance, you can set up a Portuguese bank account online from anywhere in the world. We collaborate with some of Portugal’s leading banks to ensure that you are well-equipped to handle all your banking needs while in Portugal, making your transition and property management easier.

We aim to make your journey to owning a property in Portugal as hassle-free as possible. We provide essential support and services that are tailored to streamline your property purchasing process and help you settle into your new life in Portugal. Allow us to shoulder the bureaucratic burden while you focus on envisioning your new home in the beautiful landscapes of Portugal.

Connect with us and make your dream of owning a property in Portugal a reality.

 

Useful Resources

You might find our following blog posts useful in your journey to buying property in Portugal:

• A Guide to Non-Habitual Tax Residency (NHR Portugal 2023)
• Moving to Portugal from the USA: A Comprehensive Guide
• Is Portugal Expensive for Americans? (Updated 2023)

 

Frequently Asked Questions About Buying Property in Portugal

Can a foreigner buy property in Portugal?

Yes, a foreigner can indeed buy property in Portugal. There are no restrictions for foreigners, whether residents or non-residents, to purchase private property anywhere in Portugal. However, to facilitate the process, certain prerequisites such as obtaining a Portuguese fiscal number (Número de Identificação Fiscal or NIF) and having an ID card are necessary.

Is it a good investment to buy property in Portugal?

Investing in Portuguese property can be a sound and profitable investment decision, given the stability of the real estate market and the country's strong tourism sector. Moreover, the Portugal Golden Visa scheme, which provides residency rights and potential access to Portuguese citizenship to investors, enhances its attractiveness.

However, as with any investment, it is essential to conduct thorough research, consider various factors such as location and property type, and possibly seek professional advice.

How hard is it to buy property in Portugal as an American?

Buying property in Portugal as an American is not overly difficult, but it does involve several steps. These include obtaining a NIF (tax number), opening a Portuguese bank account, and finding a local lawyer to handle the legal aspects.

With the right help and guidance (like services from GetNifPortugal), the process can be made significantly easier and streamlined.

Is Portugal expensive to buy property?

The cost of property in Portugal varies greatly depending on the location. Properties in larger cities like Lisbon or Porto, and popular tourist areas like Algarve, can be more expensive. However, in comparison to many other Western European countries, property prices in Portugal can be considered relatively affordable.

It's crucial to research property purchase price and explore different areas to find a property within your budget.

Why buy property in Portugal?

There are several reasons why buying property in Portugal is an attractive option. The country offers a high standard of living, excellent weather, rich history and culture, and beautiful landscapes from stunning beaches to scenic countryside.

Additionally, Portugal's tax benefits for foreign residents, including the Non-Habitual Resident (NHR) regime and the Golden Visa program, make it an enticing proposition for international investors and retirees.