Buying Property in Portugal: Making the Right Decision

Portugal’s real estate market is booming, and expats have certainly been catching on in recent years. From year-round sunshine to fantastic living standards, from excellent cuisine to a high-quality healthcare system and schooling, international families and expats from all walks of life have been purchasing property in droves.

In this ultimate guide on buying property in Portugal, you’ll learn everything you need to know to purchase real estate with confidence and clarity.

 

Why buy property in Portugal?

There are many reasons why Portugal is the ‘it’ destination for real estate investors. Here’s why you should consider Portugal’s real estate market a profitable investment.

Ten reasons to purchase real estate in Portugal

1. Purchasing and maintaining ownership of a property for at least five years can make you eligible for Portuguese residency and citizenship.
2. The opportunity to find your home where there is sunshine all year round
3. The cost of living in Portugal is one of the lowest in Europe
4. It is an investment with high rental yields
5. Portugal is a safe place to live, with a high level of political stability
6. It is a beautiful country with unspoiled nature and beautiful beaches
7. Portugal offers a very high quality of life
8. Great tax incentives through the NHR scheme
9. It is easily accessible from Europe, Africa, and the US
10. Public infrastructure such as healthcare and transportation are widely available and accessible.

 

Where to buy property in Portugal?

There are many places to buy property in Portugal, and the best place for you depends on your budget and the type of property you’re interested in. You’ll first have to identify what you are looking for and which part of Portugal you would like to live in. Compared to other European countries, you should find property prices to be quite reasonable. Each region is unique and offers different advantages. Some places you might like to consider to find the perfect property are:

Lisbon

Lisbon is the capital city and the central economic hub of Portugal. It is a beautiful city filled with history that has seen its stock rise in terms of tourism and commercialization. This makes it a perfect place to buy a property in Portugal, whether for commercial purposes or for living.

It is important to note that property prices in Lisbon have sharply increased, so buying here is now quite expensive, compared with other parts of the country. The most expensive properties in Lisbon can be found in Avenida da Liberdade, Baixa, Chiado, and Lapa.

If you would like to know more, take a look at our guide on where to buy property in Lisbon.

The Algarve

Properties in the Algarve attract everyone from retirees to second homeowners and investors.

It is one of Portugal’s most popular holiday destinations, known for its sunshine, stunning coastline, fresh seafood, top-class golfing, and innate natural beauty.

Easily reachable by plane to and from the UK, it’s no surprise why there are so many English-speaking homeowners in this part of Portugal who own properties such as holiday homes, villas, and beach houses. As a property owner in the Algarve, you can enjoy living in one of the most stunning parts of Europe.

If you would like to know more about real estate in the Algarve, Portugal, take a look at our guide on where to buy property in the Algarve.

Porto

Popularly known as Portugal’s second city, Porto is one of the oldest European centers. It’s a bustling commercial city with a rich historical and cultural heritage.

Home to the famous Port wine, it is a popular tourist destination in Portugal. In terms of property, Porto offers good bargains in many of its districts, such as Ribeira, Foz do Douro, Vila Nova de Gaia, and Vila do Conde.

If you would like to know more, take a look at our guide on where to buy property in Porto.

Cascais

In recent years Cascais has seen a great influx of Europeans as well as non-EU nationals buying property. It is considered a popular alternative to buying a property in Lisbon.

This is in part due to its more relaxed environment. The town is rich in beautiful architecture, free museums, and carefully maintained parks.

It is also by the coast, with access to beautiful beaches and other living amenities.

If you would like to know more, take a look at our guide on where to buy property in Cascais.

Other Locations

Some other locations worth considering include the following: Braga, Coimbra, Setúbal, and Guimarães.

For those buying for residential purposes, it might be useful to experience living in different areas before deciding on where to purchase a property.

 

Types of Property in Portugal

Portugal’s real estate market is thriving, with no shortage of property types. If you buy in Portugal, you’ll find that there is something to suit whatever you are looking for – you’ll be sure to find your dream home in the country. From eclectic farmhouses to trendy warehouse-style apartments, beachfront condos, and luxurious villas, the real estate market is quite developed.

There are many different types of homes for sale in Portugal. However, when it comes to buying property in Portugal, there are certain terms you’ll need to get accustomed to. In the following section, we’ll provide you with some definitions of the most common terms you’ll come across.

• A casa or a 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 simply means a semi-detached house.
• Condomínios or condos are individual apartment units with common spaces. These can be expensive because they come with a monthly condo fee but offer a premium standard of care and safety in return. Many have swimming pools and gyms, etc.
• Quintas are timeless rustic houses or farms. They’re 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. If you go down this route, it’s best to check with the respective city hall (Câmara Municipal) to ensure that the land is registered for residence and not agricultural purposes.

Other terminology to be familiar with:

When scouting for a new home, you might come across some advertisements with a ‘T0, T1, T2’ and so forth. These numbers mean the number of rooms in a given property. So a T1 would be a one-bedroom apartment, and so on. T0, in this case, means a studio apartment. You’ll find that some of the more luxury properties in Portugal have swimming pools, additional security, or a private gym, which will increase the price.

 

Buy a Property and Obtain Portuguese Residency

The Portugal Golden Visa Program is an attractive five-year residency-by-investment program open to all non-EU, non-Swiss, and non-EEA nationals. Qualifying applicants must make an investment in the nation in order to obtain a Portuguese residence permit. Portuguese citizenship by naturalization is possible after five years of holding your investment.

You will also be required to adhere to all the rules under Portuguese nationality law, such as holding a clean criminal record and passing a basic Portuguese language test.

Eligible real estate investment options for the Portugal Golden Visa

While there is a range of investment options on the table, one of the most popular routes to Portuguese residency is to make a real estate investment.

Real estate investment options:

• Buy residential real estate in designated interior areas of Portugal worth at least €500,000 or €350,000 if investing in a rehabilitation project. If the residential real estate is located in a designated ‘low-density’ area, then a 20 percent discount applies.
• Buy commercial real estate anywhere in the country worth at least €500,000 or €350,000 if investing in a rehabilitation project. If the commercial property is located in a designated ‘low-density’ area, then a 20 percent discount applies.
• Buy residential real estate and commercial real estate anywhere in Portugal’s autonomous islands of Madeira and Azores, worth at least €500,000 or €350,000 if investing in a rehabilitation project.
• Invest in tourism real estate (serviced apartments, condominium resorts, hotel projects). To qualify for this option, you will need to invest €500,000 in tourism real estate or €350,000 if investing in a rehabilitation project. As with commercial real estate, you can invest in tourism real estate anywhere in Portugal. Additionally, if the property is located in a designated ‘low-density’ area, then a 20 percent discount applies.

For more information on what constitutes a ‘low-density’ area, consult our guide: Portugal Golden Visa Low-Density Investment.

 

Talk to a Specialist

If you are looking for expert advice on buying property in Portugal, it can help to talk to a specialist. Our real estate division, Goldcrest, can provide you with a personalized plan for purchasing a home in Portugal. Contact Goldcrest today to get started on landing the perfect property.

 

Market History and Overview

The Portuguese real estate market has become very popular amongst investors in recent years, especially among investors from abroad. This rise in foreign investment in the property sector of Portugal is largely due to the Golden Visa Portugal Program as well as properties being relatively cheaper than in other parts of Europe.

What are property prices like in Portugal?

Portuguese property prices are generally increasing, especially in the most popular areas (Lisbon, Porto, and the Algarve), due to demand from foreign buyers and investors. The prices in Lisbon have increased exponentially and are much higher than prices in other parts of the country. Analysts are predicting that property prices are set to continue rising in the immediate future.

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

Lisbon and the Algarve are by far the most expensive areas to buy property in Portugal. Setúbal, near Lisbon, can be an expensive place to buy property while, in the Algarve, areas such as Lagos, Albufeira, Tavira, and Lagoa, can be quite pricey. For luxury houses and apartments, Vale do Lobo, Quinta do Lago, and Vilamoura are the best places in the Algarve to consider.

Property in the Algarve

The sunny Algarve is one of the top places in Portugal to purchase property or own real estate, either as an investment or for residence purposes. In the Algarve, there is plenty of choice in terms of property types ranging from apartments and villas with a sea view to luxury houses and condos.

The price of a property in the Algarve also varies depending on the region. For example, Vilamoura is known for its luxury homes, making it one of the most expensive places to buy property in the Algarve. Lagos and Albufeira are also expensive areas to buy property. For cheaper properties in the Algarve, you will need to go to areas like Monchique and Alcoutim or more rural areas to find bargain deals. For more information, take a look at this article about how to live in the Algarve.

Lisbon, Portugal real estate

Lisbon property is a prime investment right now, although prices have become massively inflated. Apartments and properties in the downtown area and neighborhoods around the city center have skyrocketed. However, the city is still attracting many foreign buyers and investors looking for second homes or just buying as a financial investment. The most expensive properties in Lisbon are Avenida da Liberdade, Baixa, Chiado, and Lapa. For more information, check out our property guide to the Avenidas Novas district here.

For cheaper properties at more reasonable prices, you may want to consider areas such as Benfica and Amadora.

Cascais and Estoril are alternatives to buying property in the Lisbon metropolitan area. They are both located a 30 to 40 minute drive from Lisbon. Although the real estate prices here are gradually increasing too, and are considered expensive in some areas, properties here still offer great value for money. Oeiras, located between Lisbon and Cascais, is also a good alternative. Check out this article about the best neighborhoods in Lisbon for further information.

Porto, Portugal real estate

The real estate market in Porto is also showing some great signs of growth, and it is generally considered a good place to buy property in Portugal. More and more people are looking for alternatives to the Algarve and Lisbon, where real estate prices are rising rapidly. In this regard, buying a property in Porto also makes for a good investment as it is both a commercial and tourist hub and has a large student population.

There are different types of property to choose from throughout the Porto district. For example, properties in the Foz do Douro neighborhood offer lovely views of the Atlantic, while Vila do Conde is an upcoming area where you can still find great bargains. The Ribeira neighborhood is also a good place to buy, especially for commercial purposes.

Where to look for a property

There are many online portals and real estate agencies that advertise properties for sale in Portugal.

Some of them are:

IMO – https://www.imovirtual.com/en/

Casa Sapo – https://casa.sapo.pt/en_GB/

Facebook can also be used to find properties for sale.

Real estate agents can also help you with your search. Another way to find a property in Portugal is through a Buyer’s Agent. Buyer’s Agents usually have access to properties for sale that are not advertised on the market and sometimes can get lower prices too.

Property specialists

Finding a property in Portugal can be a complicated process, and it is important to be aware of all the conditions that may apply to your specific circumstances.

Our team of specialists at Goldcrest has almost a decade of experience when it comes to property investments in Portugal. Click here to get in touch and start building your personalized investment plan. We’ll provide you with tailored advice so that you can find your dream property and begin your adventure in Portugal.

Financing a Property in Portugal

If you’re not making a one-time payment for the property you want to buy in Portugal, then you will probably need to understand financing options to pay for the property. The most common is by securing a mortgage loan.

Mortgage loans

You can decide to get a mortgage from a bank in your home country or from Portuguese banks. Some Portuguese banks you can approach for mortgage loans are Santander, Novo Banco, and BBVA.

In most cases, non-residents can get a 25-year mortgage, while residents can get up to 30 years. Also, non-residents will have to put up a 30 percent deposit, while residents are only asked for a 20 percent down payment.

For more information about mortgage loans and financing property in Portugal, you can see our article on financing property.

Step by Step: How to Buy Property in Portugal

Buying a house can be difficult, whether in your home country or abroad. It can be even trickier when buying abroad with little knowledge about the process. The good news is that the process involved in buying a house in Portugal does not entail too much paperwork, and there are no restrictions on foreign ownership in Portugal.

Here’s a quick breakdown of the steps you’ll need to take to buy a property successfully:

Step 1: Work out whether you want to take a mortgage and what plan works for you

Step 2: Try and negotiate the price with the seller

Step 3: When the price is agreed upon, you’ll need to make a down payment

Step 4: Sign a Contrato-Promessa De Compra e Venda

Step 5: Sign and notarize the property deed or Escritura Publica De Compra e Venda

Requirements for a successful property purchase:

A Portuguese tax number

To purchase a property in Portugal, whether as a resident or non-resident, you will need to have a Portuguese tax (fiscal) number (número de contribuinte), also known as the tax identification number (NIF) in Portugal. This can be obtained at any local tax office (Finanças), and you will need to show proof of your address and your passport to obtain a tax number. You will also need a tax number to open a bank account.

Means of identification

As a buyer, you will need to provide proper identification. It can either be a passport or a Portuguese ID card (Cartão de Cidadão).

A Portuguese bank account

Opening a Portuguese bank account is advisable when buying a property to avoid dealing with frequent changes in the exchange rate.

The property purchase process, documents, and costs in Portugal

Purchasing process

After agreeing on a price with the seller, the next thing is to conclude the purchase process. To conclude the purchase of a property in Portugal, you should do the following:

• Step one – Involve a local lawyer or solicitor if you don’t already have one.
• Step two – Review the terms and Promissory Contract with your solicitor.
• Step three – Both the seller and buyer sign the Promissory Contract. At this point, the buyer is also required to pay a deposit. This is usually 10 percent and will be forfeited if the buyer pulls out of the deal.
• Step four – After the terms of the Promissory Contract have been met, the buyer and the seller or their representatives meet in front of a notary for the final act of sale. The buyer pays the remaining amount, and the seller hands over the key.

Purchase costs

In Portugal, the buyer incurs the following cost upon purchase of a property in Portugal.

1. IMT (Property Transfer Tax) – Usually based on the value of the purchase price
2. Stamp Duty – Fixed at 0.8 percent of the purchase price
3. Notary fees and Land Registration fee – Usually not more than €600

What documents do I need to buy property in Portugal?

1. A passport
2. Portuguese tax number

Financing your Property

Step one – Compare the different banks to find the most suitable one for your circumstances

Step two – Get your documents ready

Some of these documents are:

1. ID Card or Citizen Card
2. Duplicates of the last three payroll documents
3. Floor plan of the apartment or house in Portugal that you intend to buy
4. Documents about other incoming sources (if relevant)
5. Credit Report
6. Last Income Tax Return and its Notice of Settlement
7. Plan of the building
8. Bank Statements (in Portugal and overseas)
9. Employment confirmation letter

Step three – The bank evaluates the property and determines the Loan-to-Value.

Step four – Get life insurance. By law in Portugal, you need to get life insurance when contracting a mortgage loan.

For more about mortgage loans and financing property in Portugal, see our article on financing property.

Is it worth buying property in Portugal?

What to consider before buying property in Portugal

In conclusion, you may have questions like: Is it the right time to buy? Should I wait? What type of property should I buy? In truth, the answers to these questions are always complex, but one thing is for sure – owning a property in Portugal is a good financial investment.

Bonus tip: If you’re considering buying property to relocate, you may be wondering what to expect in terms of living in Portugal. We’ve got you covered – you can consult our Expats in Portugal guide for more information.

Is it worth buying property in Portugal for rent?

Buying Portugal real estate to rent is an excellent financial investment. It is worth it as there is more demand for accommodation than what is currently available — especially in Lisbon and Porto. Also, rental yields during peak tourism season make property rental in Portugal a viable investment.

Renting versus buying property

This largely depends on what you want to do in Portugal, whether you are looking to live for a long term in the country or have a second home. Either way renting before buying is a popular option amongst expats who move to Portugal as this gives you the opportunity to sample different areas before making a huge commitment to purchasing a place. Some things to consider when deciding between renting or buying are:

Flexibility

In this regard, renting gives you more room and freedom to try out different areas of the country. You can see what suits you better as you are not committed to any place yet. It is also not a huge financial liability in case you decide to move out of Portugal as opposed to trying to sell your property if you decide to leave Portugal.

Security

Owning a home gives you a certain sense of security which renting doesn’t necessarily offer. Although the housing laws in Portugal are generally in favor of the tenant, you are still somewhat at the mercy of the property owner as they can decide to sell the property or even choose not to accept the renewal of your lease.

Golden Visa scheme

If you have the financial means, buying a property worth at least €500,000 in an interior part of Portugal can make you eligible for the Portuguese Golden Visa, which allows you to work and live in Portugal as well as have free visa travel in the Schengen area.

Type of property

In Portugal, renting limits the type of property you will have access to, especially if you’re looking for long-term rents in places like the Algarve. Many homeowners prefer short-term sublets during the high season because of the rental income they make during these periods.

Cost

Generally, the cost of buying a property in Portugal is relatively cheaper than in other European countries. So, it may be a good idea to purchase a property now because the prices are still low and can be sold in the future at a great profit as opposed to paying rent which in real terms is dead money.

 

Is there a real estate bubble in Portugal?

The Portuguese economy has gradually recovered from its financial crisis and recession. Tourism is booming again, and the housing market is breaking new ground. Generally, the demand for property in Portugal in the major cities right now outweighs the supply of property. This has pushed the prices of property upwards. Also, there are constant renovations of derelict buildings and constructions of apartment buildings, as well as new hotels springing up. This has also led to the gentrification of some neighborhoods recently.

Tourism and increased demand have contributed to the increase in rent and point to a real estate bubble in Portugal, as many properties are being overvalued. The property bubble is set to be around for a while if the interest from foreign investors does not slow down, as they represent the highest number of buyers in the past few years.

 

Get in Touch

Global Citizen Solutions provides specialist advice for immigration and investment in Portugal. If you are looking to invest or acquire residency in Portugal, our team of in-country specialists can help you in your Portugal search for property.

Every Portugal search query is answered within a day, and the initial 15-minute consultation is free. Get in touch to begin working on your personal plan. Whether you are looking for a fabulous luxury property with swimming pools, or a country home in the Portuguese countryside, we can assist you in your search.

You can get in touch via the form below, by phone, by text message, or through our website.

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DISCLAIMER: This guide on How to Buy a Property in Portugal is not intended as a substitute for legal advice. Whilst we take care to ensure that all our information for your Portugal search for property is correct and up-to-date, it is important to always rely on professional advice or the relevant legislation when considering your particular circumstances.

Frequently Asked Questions about Buying Property in Portugal

Can US citizens buy property in Portugal?

There are no restrictions on foreign property ownership in Portugal. The Portuguese government encourages foreign ownership of property in Portugal. You will, however, need to have a Portuguese NIF number. If you would like to stay in the country for more than three months, you will need to have the appropriate residency to stay in the country.

Can the British buy property in Portugal?

Yes, there are no restrictions on British citizens purchasing property in Portugal. If you would like to stay in the country for more than three months, you will need to have the appropriate residency to stay in the country.

Do I need a lawyer when buying a property?

Yes, it is advisable. An independent lawyer will act on your behalf and in your interest.

What are the additional fees when buying a property in Portugal?

This varies depending on the property you purchase. However, for private property, the total purchase cost should be between 7 percent and 10 percent.

How much do I need for a deposit payment?

The deposit is usually 10 percent of the agreed total purchase price.

Why buy property in Portugal?

Portugal is becoming an increasingly popular place to buy property, whether for the purpose of relocation or investment. This small country in western Europe has a high quality of life, low costs of living, a good climate, and a steady economy.

Is Portugal a good place to invest in property?

The Portuguese real estate market is inexpensive in comparison to other western European capitals. Recently, the country has seen a period of steady growth, which makes it a good place to invest in.

Is property cheap in Portugal?

The price of real estate in Portugal varies widely, but it is, on average, cheaper than other countries in western Europe. The minimum and maximum price for property will also depend greatly on where you are looking to buy in Portugal. For example, the minimum and maximum prices for property in Lisbon will be higher than in other parts of the country, as it has its own price range.

Can foreigners buy property in Portugal?

There are no restrictions placed on foreigners who want to purchase property in Portugal. The Portuguese government actively encourages foreign buyers and has incentives for foreigners to invest in real estate in Portugal, such as through the Portuguese Golden Visa scheme. Without too much trouble, you should be able to find your ideal home in Portugal.

To buy property in Portugal, you should obtain a Portuguese tax identification number (NIF) at your local tax office, and we recommend opening a bank account in Portugal to avoid transaction fees. You should also make sure that you are aware of the taxes involved, such as Property Transfer Tax (IMT).

What documents do I need to acquire Property in Portugal?

To buy a property in Portugal, you’ll need the following documents:

• A copy of your Passport
• A copy of the Portuguese tax number (NIF)
• Proof of address (recent utility bill)
• Your credit report
• Any recent payslips
• Any recent bank statements
• Your most recent tax return
• A copy of the tenancy agreement

Is buying property in Portugal a good investment?

Buying a property in Portugal can be a rewarding investment. Now is a good time to invest because there is a higher demand for accommodation than what is currently available, particularly in Lisbon and Porto. Rental yields in the peak tourist season make short-term rentals a profitable investment.

What is the average house price in Portugal?

When it comes to buying property, the following are averages for Portugal:

• Price per square meter to buy an apartment in the city center –  €3,031
• Price per square meter to buy an apartment outside the city center –  €2,028

Where do most expats live in Portugal?

The most popular places for expats to live in Portugal are Lisbon, the Algarve, and Porto. You’ll come across many stunning locations in Portugal to live in, and where is best for you will depend on what you are looking for.

Where can I find Portugal real estate beachfront properties?

Portugal real estate beachfront properties can be found across the county. The top locations to consider are the Algarve, Cascais, Setúbal, Sesimbra, Troia, and Comporta. You will also find lovely waterfront properties in Lisbon and Porto. With a coastline

How does tourism real estate qualify for the Portugal Golden Visa?

Tourism real estate refers to properties related to hospitality, such as serviced apartments, condominium resorts, and hotel projects. To qualify for this option, you will need to invest €500,000 in tourism real estate or €350,000 if investing in a rehabilitation project. As with commercial real estate, you can invest in tourism real estate anywhere in Portugal. Additionally, if the property is located in a designated ‘low-density’ area, then a 20 percent discount applies.

How does tourism real estate differ from commercial real estate?

Commercial real estate includes a wide range of properties, such as offices, retail, and industry, while tourism real estate focuses specifically on properties related to hospitality, such as serviced apartments, condominium resorts, and hotel projects.

What are the pitfalls of buying property in Portugal?

The most important factors to take into consideration are to ensure that you understand the taxes and fees that you will need to pay during and after the process and do your due diligence checks. Also, make sure that you have good insulation, as it can get cold in the winter. 

Working with experts and having a good lawyer is essential to a hassle-free buying process. We also recommend hiring the services of a surveyor to ensure that everything is in order with the property that you are purchasing. 

What is IMT tax?

IMT, or Imposto Municipal sobre Transações Onerosas de Imóveis, is a property transaction tax paid by the buyer when there is a real estate property ownership transfer in Portugal. 

IMT is the same for both locals and foreigners and ranges from 1 to 8 percent, depending on factors such as the property purchase price, location, if you’ve bought a property in Portugal before, and whether your property has been valued since 2004. 

• Pre-2004 valued properties are taxed at a rate of 0.4-0.8 percent, while  post-2004 properties are charged at 0.2-0.5 percent. 
• Properties in rural areas are taxed at 0.8 percent, while properties in urban areas are taxed from 0.3 to 0.545 percent. 

For a full overview of the taxes you will need to pay, including Municipality Tax and Stamp Duty, you can consult our article:  Property Tax in Portugal: How to Pay Property Transfer Tax.