In the past few years, Portugal’s economy has been doing very well. Even though the real estate market is still young, it is easy to see why so many investors worldwide are interested in it. People who live in other countries often dream of moving to Portugal because of its beautiful islands, beautiful scenery, and relaxed way of life. Portugal is known as a cheap place to go on holiday, and ex-pats in Europe ranked it as the 12th most desirable place to live.
This is the best place to start for anyone buying property in Portugal. This essay will try to answer some of your questions beyond just explaining the country’s current economic situation and plans for building up its infrastructure.
Portugal’s Popularity in the Real Estate World
Portugal is now one of the best places for European investors to buy property. It’s a peaceful way of life, friendly people make it a great place to live, and its Mediterranean climate and beautiful coastline make it a popular place to visit.
Portugal is a great place to invest because it has a strong economy and is part of the European Union. Portugal offers a variety of tax breaks to attract investors in a wide range of industries. The country’s startup scene and real estate market are also both good. Portugal is a great place to put money away for the long term because its economy is growing, and the risks are low.
A big reason Portugal is becoming more popular as a place to invest in real estate is the large number of tourists who visit every year. Renting out your home as a holiday rental during the summer, winter, and spring is a great way to make steady money. The best place in Europe for Portuguese ex-pats to live in their home country.
Benefits of Buying Property in Portugal
A person not from the EU shouldn’t have to worry about any problems if they want to buy a home in Portugal. There are many reasons to buy a home in Portugal, such as,
1. Outstanding tax benefits
The Non-Habitual Resident Tax Regime provides significant tax advantages. Residents of Portugal will pay the same flat rate of 20% on their income for the next ten years. Income from outside the country that comes from self-employment, employment, or pension plans is not taxed twice.
2. Golden Visa
Under the Golden Visa program, if you buy a home in Portugal for at least €500,000, you may be able to live there. After that, you and your family can fill out an application to stay in Portugal for good. A person can apply for Portuguese citizenship after investing in the country for five years. More people are buying homes in Portugal because of the Golden Visa program.
3. Retirement at Little Expense
In general, the cost of living for Portuguese people is low. Also, new laws say that non-EU citizens who retire to Portugal can do so without having to pay taxes on their pensions.
4. Portugal has many different ways of life
Portugal has everything to offer, whether you’re looking for a busy city or a quiet place in the country. Moreover, the number of people per square kilometer is much lower than in other western European countries. The World Population Review said in 2022 that Portugal was the third safest country in the world and the fourth most peaceful country.
5. Property and living costs are low
Compared to other Western European countries like the UK, France, and Spain, the real estate market in Portugal is very cheap. So, you will get a lot more for your money if you invest in Portuguese real estate.
But cheaper prices don’t just apply to real estate. Even in the biggest cities, the cost of living in Portugal is lower than in many other countries, even for foreigners.
Recent Portuguese Government Involvement in Real Estate
Portugal’s Prime Minister António Costa has devised a new plan called “mais habitação,” meaning “more housing.” This is because he hasn’t been able to solve Portugal’s housing crisis, which has been worsening for several reasons in recent years. The Portuguese government hopes this new project will do two things: increase the number of homes on the market, make it easier for people to get affordable housing in the long run, and help low-income families with their rental and mortgage problems immediately. To do this, the government, which has an absolute majority, has directly intervened in the market by passing controversial laws. These include getting rid of golden visas, limiting how much rent can go up, punishing Local Accommodation (AL), and taking over ownership of empty houses, making the State both the landlord and the tenant.
After being agreed on by a Council of Ministers meeting in February that was focused on housing, the legislative package is now in the consultation phase. To meet the urgent need to increase the number of homes for sale and rent in Portugal, the government has passed a set of laws called “Mais Habitado.” These laws include tax breaks for property owners who put their properties on the rental market, easier ways to get licenses, and building modular homes on empty land.
Portugal made it easier for families whose incomes and buying power were going down to rent and get loans for homes. This help came in both direct and indirect forms, like getting rid of capital gains taxes on the sale of houses used to pay off mortgages.
Buying Property in Portugal: Process and Prices
If you want to buy a house in Portugal in 2023, you should know what you have to pay in addition to the price of the house. To buy a home in Portugal, you must carefully plan your budget to pay the high initial cost. There’s more to it than just figuring out how much a mortgage payment will be each month. You can’t get around many types of fees, commissions, and taxes.
First, Get Personal Fiscal Number (Numero Fiscal de Contribuinte)
You need a taxpayer number before you can do business with the Portuguese government. A taxpayer number will be given to a Portuguese citizen or permanent resident who goes to the tax office and asks for a NIF. On the application, they need to write down their official Portuguese address. Tourists from the European Union who visit Portugal and want to get a NIF can do so independently or get an expert’s help.
In Portugal, there are four ways to get a tax identification number,
- You can do it in person at Finangas or Loja do Cidadão, the Portuguese tax office. The website for the Portuguese government will help you find the closest branch and tell you when it’s open.
- Because of the epidemic, many government agencies will also accept tax forms online. You can send the branch of your choice a filled-out application form and copies of any supporting documents.
- If you are not a Portuguese citizen and don’t plan to go to Portugal, you might want to hire a tax agent. The tax agent will get permission from the client to do the paperwork and send it to the tax authority.
- A tax representative could also live in the area. Someone like a friend or a real estate agent who helps you make a big purchase. On the NIF registration form, there must be a Portuguese address, and the representative must send in the required paperwork on behalf of the international applicant.
Second, Work With an Experienced Local Estate Agent
A real estate agent who knows the area well may be able to help you avoid problems and costs that aren’t necessary. There are a lot of specialized languages used in real estate transactions, so it’s essential to work with someone who knows it well.
Some real estate agencies in Portugal serve the whole country, but many others focus on a smaller area. By researching, find a real estate agent who specializes in the area and type of home you want.
Some of the Biggest Real Estate Agencies in Portugal
- Portugal Property
- Engel & Völkers
- Century 21
- RE/MAX
- ERA
- ZOME
- IAD
- Predimed
Third, It’s Time to Make an Offer
People in Portugal are used to haggling, and even though the market is competitive, advertisers are putting in more significant profit margins in their prices. Don’t be afraid to make offers that are less than what the seller wants. In Portugal, homes sell for 5–10% less than what they are listed for.
If you want to make a fair offer on a property, you might look up all the vital information on the Property Registry. So, before making such an offer, you should make sure your mortgage is in order. You might want to look at the house more before making an offer.
Fourth, Signing the Contract
Before signing the public deed of purchase and sale, the parties should sign a promissory contract of buy and sale. This will bind the parties to future transactions. The parties to this agreement want to sell the property to the buyer. To make that happen, they have made this agreement to set the terms and conditions of the sale.
A buy and sell agreement based on promissory notes should spell out the terms of a business deal. The following are some of them:
- Identification of the seller and the buyer
- Getting the property's name
- The price of the buy and sell
- Outline of the payment terms and conditions
- Date by which the public deed must be completed
It’s not required, but it’s usually done when the buyer needs to use a bank credit card or, for some other reason, can’t sign the final contract right away.
Finally, You Will Need to Sign the Deed of Purchase and Sale
The parties prepare and sign the final contract of sale and purchase in front of a notary, lawyer, or solicitor, who, depending on the situation, will be the entity that certifies that the sale and purchase happen according to the agreed-upon terms, including verifying the payment of the price, licensing the identity of the parties, and approving the documents related to ownership and the amount of taxes. This person is responsible for sending the proper paperwork to the Land Registry so that the buyer can become the official owner.
Property Prices in Portugal
In January 2023, the average price of a property in Portugal was $496,000, or $248 per square foot. In Portugal, the price of a home in January 2023 will be 7.1% higher than in January 2022 but 0.3% lower than in December. In the past year, home prices in Portugal went up by 7%, which was more than the 5% increase in nearby Spain.
With an average price of $694,000 (or $347 per square foot), Lisbon is the most expensive place to buy a home in Portugal. In the beautiful Algarve area of southern Portugal, the average price of a 2,000-square-foot home is thought to be $614,000. The cost of homes in the Algarve went up by 16.7% in one year, one of the country’s most significant increases.
A typical house in Portugal costs $272,000, but you might be able to get one in the Azores Islands for only $136 per square foot. In the Azores, the price of a home went up by 30% in just one year. At $136 per square foot, the average cost of a home is lowest in the Central area of continental Portugal. A 2,000-square-foot house here would cost you about $272,000. In the last year, the average price of a home in the Alentejo area went up by 33.8% to $296,000.
Get Golden Visa with Property Acquisition
Anyone with at least €500,000 to invest can buy property in Portugal and also get the Golden Visa. Investors could choose to do this on their own or as a business. If the house is in a “low-density area,” the limit goes down to €400,000.
In Portugal, investors can put their money into buildings requiring much work. In this case, the base need drops to €350,000. Either the building had to be built more than 30 years ago, or it had to be in an urban restoration zone. The base price drops to €280,000 because the house is in a “low-density region.”
The minimum necessary investment is the purchase price plus an estimate of how much repairs will cost.
Conclusion
That’s it. This page has everything you need to know to buy a home in Portugal. With a little bit of help and direction, you can purchase property in Portugal.
We hope the advice above was helpful and that it will be easy for you to find and buy the perfect property in Portugal. If you plan and work with a good agent, you can have a great time in this exciting country for a reasonable price.
