HOW TO AVOID MAKING A MISTAKE WHEN BUYING REAL ESTATE IN PORTUGAL
Starting a new life in Portugal and purchasing a property should be a thrilling experience. However, numerous expat buyers often find the process to be daunting and intricate. This is primarily due to the fact that everything is in Portuguese and the process of buying property in Portugal differs from your country of origin, as well as a different legal system.
DECIDE THE PURPOSE OF THE PURCHASE
Professional brokers emphasize that there is no one-size-fits-all real estate solution that can cater to every need and purpose. Would you require a property for relocation or investment purposes? Do you plan to sell your home for a profit in a year or rent it out in the future? In each case, the search criteria and outcome will vary. A project under construction might be a suitable investment opportunity, but not for immediate occupancy. A villa in a community half an hour away from the downtown area might be perfect for you, but not for daily rentals. Some developments do not allow pets on the premises, and serviced apartments with a renowned hotel brand may prohibit short-term rentals.
MAKE A LIST OF THE RELEVANT FACTOR
Each case is different but there are a few general guidelines that can be emphasised.
- How much money are you ready to spend?
- Is a resident visa important to you?If yes, real estate purchase of at least 500,000 Euros or the purchase of a property with a total value of at least 350,000 Euros when it is located in an urban regeneration area or it was constructed more than 30 years before;
Capital transfer of at least 350,000 Euros in research activities or capital transfer of at least 250,000 Euros in artistic outputs;
Capital transfer of at least 350,000 Euros for the incorporation of a company with its head office in Portugal, combined with creating at least 5 permanent jobs;
Creating at least 10 new jobs;
Capital transfer of at least 1 million Euros.
- What amenities and benefits are significant to you?Proximity to the centre or a particular neighbourhood? Availability of a school, park or beach nearby? Views of the water? Pet-friendly policy? Free parking space? Opportunity for daily rentals?
Explain all your requirements to your agent in detail. Let’s move on to the next point
CHOOSE AN AGENT CAREFULLY
Yes, you can search for real estate on your own. However, when it comes to mistakes, this will certainly be one of them. Experienced brokers know the market from within. They’ll give you all the specifics that are impossible to find out even with a detailed search on the Internet. Information on the net is contradictory and not always correct, even from specialised resources. It’s easy to come across outdated or incomplete information.
DO RESEARCH ON THE DEVELOPER, THE PROJECT AND THE NEIGHBOURHOOD
It's not necessary to have extensive knowledge of Portugal or reside there in order to purchase local real estate.
If the complex is still under construction, it is important to research the amenities that the developer has implemented in previous projects, compare the brochures to reality, and examine the price dynamics, demand level, and return on investment for those projects.
Similarly, if the housing is ready, it is important to ask similar questions about the property of interest. When researching the area, it is essential to pay attention to the accessibility and status of transportation, whether it is still under development or already developed with fully-prepared infrastructure.
The latter option is ideal for those who want to move in immediately, whereas the former is more suitable for investment purposes.
CONSIDER THE ADDITIONAL COSTS
Expenses without a mortage, in new and used properties:
- Registering the property:to legally register the buying of the property. For this you can use the state centralised service, Casa Pronta, which costs €375. Alternatively, you could go through a private manager, though their prices may be different.
- Stamp Duty (Imposto de Selo):set at 0.8% of the sale price.
- Property Transfer Tax (Imposto Municipal sobre Transacções Onerosas de Imóveis or IMT):the exact amount will vary depending on the type of property, where it is and what you use it for. It is only paid on properties worth more than €92,407.
- Municipal Property Tax (Imposto municipal sobre imóveis or IMI):calculated using a government form available in the Portal das Finanças, between 0.3% and 0.8% of the taxable property value.
- Insurance premiums
Expenses with a mortgage:
As well as the aforementioned costs, there are these:
- Bank commissions:surveyance commissions and other such costs will vary by bank but will normally be around the €1000 mark.
- Mortgage registry:registering the house doesn’t mean you don’t also have to register it with the mortgage loan, too. This is twice the registry fee, €700.
- Life insurance:banks require anyone who contracts a mortgage to have life insurance so they are covered in case of premature death. Naturally, the cost of this will depend on the insurance company and your own health circumstances.
- Multi-risk insurance:The amount will depend on the property value.
LEARN MORE ABOUT MOVING TO PORTUGAL
GET TO KNOW MORE ABOUT OUR SERVICES!
We have the right project for you.