Portuguese Property Market Overview
The Portuguese property market has long been popular amongst British buyers who have traditionally favoured the southern shores of the Algarve as a destination, where some 50,000 properties are now British owned. As a member of the European Union since 1986, Portugal is regarded as a safe bet amongst purchasers seeking a well established and stable economic climate in which to invest.
One of the beauties of Portuguese property lies in the diversity of opportunities available to suit all tastes and budgets: Property located in the popular golf resorts of the Algarve is now priced high, some at multi-million levels, while you'll find very little to buy for less than 100,000 GBP. As a general guide, a good standard two bedroom apartment will cost approximately 200,000 GBP.
Lower prices can be found further north towards Lisbon and the Silver coast where an emerging property market is in progress due to a new motorway linking the area easily to Lisbon and the rest of the country.
As a new trend emerges for well located rustic, rural properties, many of which are in need of some restoration, property further north along the Green Coast, beyond the beautiful city of Porto can be purchased for as little as around 30,000 GBP, but do remember that the weather is not as warm as further south.
Meanwhile if it is top class golf facilities you are after, then the most popular spot remains the Algarve, between Lagos and Tavira, where the country's most prestigious golf courses can be found, all within easy access of Faro airport. Heading east from the airport, property on the eastern Algarve is still around 30% cheaper than further west, with three bedroom villas priced at around 150,000 GBP. |
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Reasons why property in Portugal is a good investment
- One of the lowest costs of living in the EU, though prices are slowly creeping up as Portugal regularizes its tax policies with the rest of the EU
- A highly appealing tourist location and quality of life conducive to a peaceful retirement destination
- Stunning and diverse natural beauty, from rivers, cliffs and clean sandy beaches to mountains and championship golf courses, making it popular with all kinds of visitor
- Interesting history and cultural heritage with a wealth of tourism potential throughout the country
- Well trodden property market place, with stability and transparency in buying procedures for foreign purchasers
- English is widely spoken
- Over 300 days of sunshine per year
- Lowest crime rate in Europe and stable political climate
- Construction density limits in the Algarve set at 8%, guaranteeing preservation of the natural environment
- The largest area covered by golf courses in southern Europe
- Growth rates of around 10% per annum and rental yields of maximum 10% in key locations
- Easy access via budget airlines (2 ½ hours flight from the UK) and an advanced road infrastructure
- Interesting new markets emerging on the Silver Coast, north of Lisbon, at lower prices than in more traditional locations
- Founding member of NATO
Steps to Buying Property in Portugal
With the tightening of regulations surrounding the use of offshore companies for property purchase most people investing in property will now be going the more traditional route: - Preliminary Contract followed by Final Deed and Completion. If you are still interested in finding out whether you can benefit from the use of an offshore company it will be important to get the proper legal and financial advice relevant to your personal circumstances. If you follow the traditional buying process the first stage will be the signing of a Reservation Agreement, followed by a Promissory Contract (Contrato de Promessa de Compra e Venda) finalised with the signing of the deeds (Escritura). |
You will normally pay a non-refundable deposit of a fixed amount of say €5,000-10,000 stipulated the Reservation Agreement. Thereafter, a 10-30% deposit (minus the reservation fee) with the Promissory Contract and the balance on completion.
It has become customary that the property developer offers bank-finance for the final 70-90%, which makes this investment form even more interesting with the still very low interest rates offered by the banking world!
Those interested in buying property in the Algarve are not only buying a sound medium and long term investment, they are potentially buying themselves a regular income, as well. Villas and apartments in the area are much sought after - especially during the long summer months - for holiday lets.
So a ‘buy to let’ investment property, especially in the Algarve is of real value and an added bonus opportunity for many.
Step 1:
It is advisable to retain the services of a reputable lawyer to act on your behalf and if needed to have a "Power of Attorney" to continue the process during your absence from the country. Your Agent will recommend a number of lawyers for you to meet and choose from and ensure that they are fluent in your own language.
It is also advisable that you call on the professional assistance of a surveyor to make a thorough check on the property before you commit yourself.
Step 2:
To secure the property, it is essential to agree and pay an acceptable deposit to the vendor, which usually is between 10 to 20 % of the purchase price - and to complete a PROMISSORY CONTRACT (Contrato Promessa de Compra e Venda). This is a legally binding and notarised contract between buyer and seller and includes the terms of the sale which are:
Step 3:
The balance of the purchase price will be made available for transfer to the vendor. The property purchase tax (IMT) will have been calculated and paid to the local Tax Office.
The lawyer’s office will then proceed to register the transfer of ownership at the Land Registry, which only leaves:
Step 4:
Time to fully enjoy your property!
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