The prospect of owning a home in another country used to be something that most people could only dream about. With Europeans becoming more prosperous and interest rates settling at affordable levels this has changed.
Today, owning a second home abroad is viable and also a good long-term investment. With an volatile stock market, badly managed pensions and competitive UK buy-to-let market, many people are now considering overseas property investments that offer promising returns and will also enrich their lifestyles. As Portugal is a member of the E.U. it is as secure to buy there as in the UK. It offers a pleasant year-round climate, security and a very reasonable cost of living so many people are finding that enjoying the good life is simpler here.
N.B. the following information is an introduction to the property buying process in Portugal. If you decide to buy here, we recommend you use an English speaking Portuguese lawyer, as the system is different to that of your country of residence.
The Property Buying Process In Portugal
STEP 1 - Investigate thoroughly
When you have identified a suitable property, you need to instruct a solicitor to conduct a number of important checks to ensure everything for the sale is in place. Most solicitor s will research:
- Property title
- That the person or company selling owns the property
- Any outstanding charges or costs associated with the property
- Building licenses or permissions are in order should you buy a plot of land
- That the terms and conditions stipulated by the vendor are fair and legal
STEP 2 - 'Promisory Contract' or 'Contrato de Promesa de Compra e Venda' (CPCV)
The Promisory Contract details the owner, buyer and property together with all terms, conditions, payments, timings, etc, agreed between all the parties. This contract is legally binding and most vendors will ask for a deposit at this stage.
STEP 3 - Fiscal Representation
After the Contrato de Promesa de Compra e Venda above, you have to recruit a Fiscal Representative. Portuguese law requires this and they will organise your tax number (needed for the purchase) and oversee all taxation liabilities that you may have in Portugal on an ongoing basis. Your solicitor should be able to organize this for you.
STEP 4 - The Final 'Deed' or 'Escritura de Compra e Venda'
When signing the Promissory Contract, the owner and buyer will agree a completion date when the final deed or Escritura de Compra e Venda will be signed. You can attend this in person or give your solicitor power of attorney to sign for you. The Escritura is signed in the presence of a notary public (Notario) who is responsible for the document and bears witness to the transaction.
The name on the contract can affect your tax liability, inheritance tax and change of ownership taxes should the property be sold and your solicitor / Fiscal Representative should give you advice on this.
STEP 5 - Registering the property
After signing the Escritura, your lawyer will take a notarised copy of it to the Land Registry for registration and payment of fees. This process can take several weeks, but you should expect your lawyer to handle this on your behalf.
Finance for your Purchase
Many people consider raising finance via a remortgage on an existing property and alternatively we can recommend Portuguese banks and brokers of the banks that specialise in finance for non-resident purchasers.
There are no restrictions on transferring money in or out of Portugal and it is worth using a foreign exchange service if your funds are sourced from a non-Euro base. The exchange rates will be more beneficial and this is a quick, efficient and safe way to transfer funds whilst minimizing commission charges. Elite Portugal Properties can recommend a suitable company for this.
Your Fiscal Representative will help you open a bank account in Portugal, which can hold any income from rentals.
