Whatever your reasons for buying a property, this is probably the first time that you have bought a property in Portugal, or even abroad. We have put this guide together to help you understand a little more about the process of buying in Portugal.
This guide is aimed at providing some basic information about buying in Portugal and tries to answer the majority of the common questions that we are asked about. Although we hope that you will find it useful it is important to remember that it doesn’t cover all legal issues involved and certainly isn’t a step by step DIY guide to buying in Portugal.
We’ve also put together a guide to useful terms to know when buying property in Portugal, including both the Portuguese terms and their English translations. You may also want to take a look at our Buying Property in Portugal Checklist.
While we hope this guide helps to somewhat demystify the process of purchasing Portuguese property, it is still recommended that you seek advice from a professional before proceeding – after all we do this every day and have been doing so for many years and therefore know all the tricks and pitfalls that you may come across
We also know the practical solutions to the problems that exist and understand how Portuguese law interacts with UK law, so can help to ensure you meet all of the strict requirements of both countries’ laws.
For specific advice on buying Portuguese property tailored to your needs, please get in touch with our friendly, expert Portuguese property lawyers based in the UK.
Buying property in Portugal FAQs
Is the legal system in Portugal the same as the UK?
No, they are very different, but there is an interaction between them when you buy a property in Portugal. That is why the best person to advise you on your purchase in Portugal is somebody who understands both Portuguese and UK law.
Do I need a lawyer to help me buy in Portugal?
Surprisingly, this is the most common question that we get asked. No, you don’t – just like you don’t necessarily need a lawyer when buying in the UK. However, in reality you would always use a lawyer when buying in the UK, so what is so different about buying in another country where you probably don’t have experience of buying before?
For more information, please take a look at our guide to how to choose a lawyer when buying property abroad.
I have been told that I don’t need a lawyer but need a Notary. Is this true?
The Notary is important in Portugal, but tends only to get involved at the end of the transaction. Their role is to carry out some basic checks at the end and attend to the signature of the title deed and in some cases to register the property. They don’t normally advise on whether the contract is okay to sign, whether you should pay the deposit, who should own the property, and so on.
I have heard that there are problems with buying property in Portugal. Is that true?
There are potential problems when buying in Portugal, just like there can be in any country, including the UK. Most of the potential problems that you read about can be avoided by using common sense and by instructing an independent lawyer to advise you on the purchase. We often see people with problems with their property and they invariably tell us that they didn’t use a lawyer or used the lawyer given to them by the seller or estate agent.
Are the costs of buying property more in Portugal than in the UK?
Yes, the total costs in addition to the purchase price are higher than you will be used to in the UK. It is therefore important to factor these into your budget from the beginning.
Luckily property prices are currently rock bottom, which not only makes the average purchase price of a Portuguese property much lower than in the UK, it also reduces many of the additional costs as these are often calculated based on the value of the property.
What are the additional costs involved in buying Portuguese property?
The total cost of buying in Portugal includes a number of extra costs that you may not expect if you are not familiar with the Portuguese property market. These include IMT (Imposto Municipal sobre as Transmissões onerosas de Imóveis), the “Imposto do Selo”, and usually the Notary Public Fees.
To find our more, please take a look at our guide to the costs of buying property in Portugal.
Do you need to pay a deposit when buying property in Portugal?
You may be asked to sign a reservation contract or a Promissory Purchase and Sale Contract and pay a small deposit, which is called a “Sinal”. Signing this contract is the most important sign that you wish to proceed with the property purchase, because a payment is made and the vendor is also obliged not to proceed with the sale to other person in the meantime.
After that you would work towards a full purchase contract and pay typically around 10% deposit. That contract commits you to buy the property. The balance is paid upon signature of the title deeds and registration.
On a new property you may have to make stage payments throughout the course of construction.
Can you get a mortgage to buy property in Portugal?
There are two ways of financing your purchase in Portugal through a mortgage.
The first is to release equity from your UK assets to buy the property in Portugal. The second is to mortgage the property in Portugal. Each has advantages and disadvantages but getting it wrong can cost you dearly, so please do take professional advice on this.
If you wish, we can put you in contact with mortgage brokers either in the UK or in Portugal. We do not receive a commission for doing so and are not tied into a particular broker – we simply recommend them because they have given our clients good service in the past.
Obtaining a mortgage in Portugal is more difficult than it has been in the past. If you are buying a property in Portugal that already has a mortgage on it then it may be possible to take over that mortgage from the current owner.
This is often seen as an easy way of obtaining a mortgage, but you should be aware that this mortgage might have been the right one for the seller, but may not be the best one for you.
For more information, please take a look at our guide to mortgages on foreign properties.
Do you need a survey when buying a Portuguese property?
If you are buying a property anywhere, we would always recommend that you obtain a survey.
While your mortgage company will carry out a valuation report, this will only cover defects that affect the value of the property as the goal is simply to see whether the property is worth the amount you have negotiated. Any defects in the property which do not affect the value will not normally be shown on your lender’s valuation report.
A survey will rate the condition of all permanent structures and will highlight any important problems that could affect the property value. Depending on the survey this may also give advice as to future maintenance.
Having a survey carried out should reduce the chance of discovering any nasty surprises with the condition of the property once a purchaser has bought the property. If there are any defects the survey will help the buyer negotiate the price or require certain works to be carried out before the property is purchased.
The survey may also reveal that certain works have been carried out or highlight rights that are necessary for the property which we can investigate before the property is purchased.
How does the exchange rate affect the cost of buying a property in Portugal?
When you are converting from one currency to another, the difference between one exchange rate and another can literally make a difference of thousands of pounds on your purchase.
Do not underestimate the difference a good exchange rate can make, especially when converting between euros and pounds. We know people who have sold properties and made more money on the exchange rate difference than on the sale.
We are not a bank or currency dealer, but would recommend that you investigate the cheapest way of sending your money abroad. If you would like, we can put you in contact with currency dealers that we know will give you a good exchange rate and a good service.
Currency dealers have increasingly sophisticated products. You can agree rates for the future. They can advise you when to buy or agree to buy for you when the rate hits a certain level. You can even agree a fixed rate for longer periods of time if you make regular payments abroad (for example for a mortgage or moving your pension money).
We work with Currency Dealers who can give you a good exchange rate for your purchase and whom we have known for years. We will normally receive a commission for introducing them to you, which does not cost you anything as they pay us out of what they make. This commission is costed into our overall charges for providing our services.
Should you use a Power of Attorney to buy property in Portugal?
A Power of Attorney is a document which allows somebody to do something on your behalf.
If the title deeds are not being signed in the UK, then often clients prefer to grant a Power of Attorney to somebody to sign the title deeds on their behalf.
This has several advantages:
- You are normally busy and haven’t time to go out to Portugal to sign the title deeds.
- Signing title deeds is not particularly exciting and most people prefer to use their time off enjoying the property rather than signing pieces of paper.
- It normally works out cheaper than you going out to Portugal to sign.
- You should only give a Power of Attorney to somebody that you trust as they allow that person to do things legally on your behalf.
- In Portugal Powers of Attorney have much wider faculties than we are used to in the UK and often have very general clauses in them “just in case”. We try and limit the Powers of Attorney as much as possible whilst still allowing the person appointed the freedom to do what you need them to do.
- The cost of a Power of Attorney is not included in our standard fees as not every client needs one.
For more information, please take a look at our guide to using Powers of Attorney.
What is fractional ownership?
Fractional Ownership is not a new concept and has been around for many years – although back then we called it Co-ownership.
Put simply, Fractional Ownership is where several people buy a property together. This can be members of a family, friends, work colleagues or even complete strangers.
You buy a share in the property and also share the running cost.
The best Fractional Ownership schemes are those where the cost of buying is closest to the value of the actual share in the property – i.e. the ones where there are not huge margins built into the sale.
Timeshare is a type of Fractional Ownership, but Fractional Ownership is not necessarily Timeshare as there are strict definitions as to what Timeshare is.
What is a NIF and when do you need it?
The NIF (Número de Identificação Fiscal, which translated literally is your Foreigner’s Identity Number) is your Tax Identity Number in Portugal.
There are several times when you are likely to be required to produce your NIF number;
- When you buy a property
- Opening a bank account
- Dealing with the utility companies
- Taking out insurance
- Dealing with the tax authorities
- Buying or selling shares, bonds and stocks
- Buying a car
At the moment, you can apply for your NIF personally, by your representative or business manager. We will therefore advise you how this is working at the time that you contact us.
Who should own the property?
This is probably the most important decision that you can make. Getting this right can save you thousands in costs and taxes. Getting it wrong can be an expensive mistake.
The way that you would buy a property in your home country is not necessarily the best way to buy in Portugal, so don’t assume that you can adopt what you have done here to your purchase in Portugal. Acquiring a property in a different country is always different and the rules for that acquisition may also be different.
There are many options – ranging from personal ownership to company ownership but there is no “one size fits all” solution that works for everybody.
Your circumstances and priorities are different from the next person. We are able to look at your circumstances and your priorities and advise you who should own the property based on that information. The solution may not necessarily be immediately obvious.
When deciding on the best form of ownership we would need to take into consideration both Portuguese and UK tax and also a range of other circumstances such as your plans for the property in the future.
For more information, please read our guide to company ownership of foreign properties.
Who do you need to inform when you buy a property in Portugal?
There are various organisations, companies and official bodies you will need contact when you buy a Portuguese home, including:
- Residents Association (Associação de Proprietários)
- Water and Electricity
- Land Registry (Registo Predial)
- Title Certificate (Caderneta Predial)
- Town Hall (Câmara Municipal)
To find our more, take a look at who to tell when you move into a property in Portugal.
I’ve inherited a Portuguese property, what do I do?
Many people who inherit a property abroad do not understand what the legal requirements are, whether they wish to keep the property or sell it. We can advise you on your options and make sure all of the necessary issues are taken care of, allowing you to make the most out of your inheritance.
To find our more, please see our guide to inheriting Portuguese property.
Do I need to make a Portuguese Will when I own property in Portugal?
Portugal has different inheritance laws to the UK, so it is generally a good idea to make a Portuguese Will in addition to your UK Will. While you can simply leave your Portuguese property to your chosen beneficiaries in your UK Will, this will normally significantly increase the inheritance costs to your beneficiaries and does not generally make financial sense.
To find our more, take a look at our guide to making a Portuguese Will.
Our legal fees for buying property in Portugal
We charge 1.5% of the purchase price subject to a minimum of £2,250 plus VAT. If the property title is defective or unexpected additional work is required, then there may be additional charges. We would inform you before incurring this cost.
In addition to our fees, there are also Notary fees, Land Registry fees and the like. We will be able to give you an idea as to the cost of these when we know more about the transaction. Those costs will be the same no matter which legal firm you use to assist you.
Our charges include:
- Legal advice on the terms of your offer to purchase
- Searches at the Town Hall
- Searches at the Land Registry
- Obtaining certificate from the Community of Owners (if appropriate)
- Checking the legal status of the property and the seller’s right to sell
- If appropriate checking the guarantee provided by the vendor
- Preparing a report on our searches and advising you on the purchase
- Arranging the signature of the title deed
- Arranging payment of the relevant taxes
- Arranging registration of the property at the Land Registry
- General hand holding and advice throughout the transaction
Why use Judicare for buying property in Portugal?
A highly experienced Portuguese legal team.
We are Solicitors
We are a UK based firm of Solicitors regulated by the Solicitors Regulation Authority and who specialise in international legal issues.
We understand both sets of laws
Because we understand both sets of laws we understand the difficulties that come when two sets of laws meet. This is particularly important when it comes to issues involving ownership, taxation and inheritance.
We are members of AIPP
The Association of International Property Professionals was set up to improve standards of professionalism in a largely unregulated overseas property market.
Our Portuguese team has many years of experience dealing with a whole range of legal issues with Portugal.
We speak your language
You need a lawyer who can speak your own language. More importantly you need somebody who can explain and discuss often complicated issues in terms that you understand.
We are independent. We are not allowed to act for the buyer and the seller at the same time. We are not linked with any Development Companies, Builders or Estate Agents.
Need help buying property in Portugal?
Our UK-based team of property lawyers are highly experienced in helping clients to buy and sell property in Portugal, as well as handling a whole range of related issues, such as advice on Wills and inheritance.
With a thorough understanding of both UK and Portuguese law, we can provide clear, reliable legal guidance in plain English, giving you the confidence to deal effectively with property in Portugal.