Guide to Buying Property for Sale in Portugal


Andrea Barnes
Andrea is Communications Manager at FXcompared. Prior to joining FXcompared, she worked as a communications consultant for companies seeking guidance with their social media, marketing and digital… Read more

How to Buy Property in Portugal

Whether you are seeking a holiday getaway or looking to invest in overseas real estate, property for sale in Portugal is appealing for a number of reasons. For foreign investors, Portugal’s housing market presents robust opportunities, as the housing price boom that affected most of Europe from the 1990s to 2006 largely missed Portugal. Because of this, customers sifting through property for sale in Portugal will be surprised by a lower priced housing market than other parts of Europe.

Though the cost of housing in Portugal is considered to be quite low compared to the rest of Europe, prices of real estate in Portugal have steadily increased since 2014, indicating a growing popularity in Portuguese real estate. Combined with the euro’s falling valuation against the US dollar (USD) and continued slide against the British pound (GBP), Portugal’s real estate market is an excellent opportunity for foreign investors looking to buy an overseas property.

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Portugal Welcomes Foreign Buyers

Portugal recognizes the appeal of its real estate market and is aiming to attract more foreign investors to property for sale in Portugal. To entice foreign buyers, Portugal is offering non-EU citizens a 5-year residency permit when they buy a Portuguese property worth a minimum of €500,000. This permit allows the holder to work, study, and travel throughout participating Schengen countries. After five years the permit holder can then apply for permanent residency, if they choose.

While there are no restrictions on foreign property ownership in Portugal and transaction costs are generally low, the level of bureaucracy involved in the process of purchasing or selling Portuguese real estate can make it more difficult for those who are not familiar with the Portuguese language, its legal and administrative systems, and home-buying process.

A Practical Guide to Buying Property in Portugal

FXcompared's Guide to Buying Property in Portugal will help you navigate the world of Portugese real estate. It is important to understand and follow the proper procedures to ensure your transaction is successful.  There are a number of things to consider that can help make for a smoother property purchasing experience:

  • Define your goals
  • Run the numbers
  • Research financing options
  • Learn the rules
  • Know the neighborhood
  • Use a money transfer provider
  • Manage Expenses

Read on to learn more about buying property in Portugal.

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Define your goals

Identifying what you want to accomplish with your purchase upfront will save you time and effort in the long run, as well as help you to find the best home for your needs. Your investment objective obviously plans a large role in your decision-making process. Are you looking for a primary home, a rental property that can supply steady cash flow, a vacation home to share with family and friends, a pied-a-terre for work or occasional visits, or a future home for retirement? Your investment objective should be clearly established before you make any decisions. If you plan to rent out a property which you have bought with a view to retiring in Portugal at a later date, then expenses you need to consider can include your monthly mortgage payments (if the unit is not rented out, you need to be prepared to cover payments until it is occupied again), taxes, and any repairs, renovations, or ongoing maintenance that the property may need. Knowing all your expenses upfront will help you determine how much you can afford to spend.

Run the numbers

Use this checklist to create a simple budget that will help you identify potential costs: Talking to a money transfer provider early in the process can help you identify the best options to assist you in managing risky international currency markets. It is common for foreign exchange brokers to offer their customers a number of products and strategies that can lock-in a future exchange rate to protect against currency market risk. Forward contracts and hedging strategies can also help you manage foreign exchange currency risk. A broker specializing in international transfers can also help you determine if you are better off paying in your home currency or in euros. Refer to the overseas property buying checklist for questions to consider, and visit our historic exchange rates page for a big picture view of current currency market trends.

Research financing Options

Many people choose to make an all-cash payment when purchasing a home abroad, but financing is also an option. Be aware, however, if you choose to finance your purchase it may be difficult to obtain financing from abroad. No matter how you choose to pay for your new home, it is highly recommended by most experts that you retain the advice of a real estate attorney who speaks the language and is familiar with the Portuguese real estate market to advise you. You should also factor in the additional costs that come with buying a home in Portugal which the buyer must cover: the deposit, which is typically between 10% – 20% of the purchase price; a property transfer tax, typically 5% for a property in the countryside, and 6.5% for urban property; notary and property registration fees; real estate agency fees, typically 5%; and a stamp duty, which is usually less than 1% of the purchase price. It is important to have a plan in place to send money overseas when you need to make payments to cover these fees.

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Learn the rules

There are a number of steps to navigate to successfully purchase real estate in Portugal. getting a Portuguese-speaking lawyer and a licensed real estate agent, who can help negotiate the property price and the associated fees you need to pay will help enormously. You can find listings for licensed agents through the Portuguese Chamber of Commerce, as well as English-language newspapers such as the Algarve Resident and the Portugal News. Portuguese newspapers such as Publico, Correio da Manha, Expresso, Sol, and Metro also can contain listings from agents. If you do not speak Portuguese, get documents professionally translated and only sign when you understand what you are signing.

Know the neighborhood

It is easy to learn about a country’s foreign property ownership laws by checking the International Consortium of Real Estate Associations website or by visiting the US State Department’s website for more information on Portugal's safety and stability.  You can also create your own list of the most important factors to consider when looking for a new home in Portugal. Factors like neighborhood safety and crime statistics, location, community resources, access to public transportation, or future developmental plans for the area, are all important things to consider.

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Manage Expenses

Managing expenses for your overseas purchase means identifying those expenses upfront so you know exactly what you need to ensure a successful transaction. You want to factor in all relevant costs and expenses as early as possible to give yourself the time to research all your options for payment. Expenses such as mortgage payments, construction or renovation work, maintenance fees, additional taxes, costs for surveyor fees, and any other costs that might be relevant to your situation should be factored into your overall budget. If you have monthly payments to make, such as a monthly mortgage payment, it is easy to set up a recurring payment plan with a money transfer provider, which can make the process much easier to manage, offer you better currency exchange rates, and save you costly monthly bank wire transfer fees. It is worth the time to compare different providers to find the best broker for your needs, and FXcompared's comparison tool can help you find the best money transfer provider for your specific needs. 

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