Buying property in Portugal

The number of Brits moving to Portugal jumped up almost 35% between 2019 and 2020. These days there are almost 50,000 UK citizens who live in Portugal, making Brits the second biggest group of foreigners residing in the country after Brazilians.

If you’re thinking of buying property in Portugal, read on for all the information you need, including:

  • Can foreigners buy property in Portugal?

  • Is buying a property in Portugal a good investment?

  • Post-Brexit: can I live in Portugal if I buy property?

  • How long does it take to buy a property in Portugal?

Can UK citizens buy property in Portugal after Brexit?

UK citizens can still buy property in Portugal after Brexit. Property in Portugal can be bought and owned by British citizens with no specific restrictions.

The biggest post-Brexit change is probably that as the UK is no longer in the EU, UK citizens can’t stay indefinitely in the EU without applying for a visa. As things stand, Brits can stay in the EU for 90 days in a 180 day period without needing to apply for a specific visa or permit. However, one reason for the ongoing attractiveness of Portugal as a place to live as a foreigner is that there are a couple of great long term visa and residence options if you want to live there on a longer term basis. 

If you’re planning on moving to Portugal full time, check out the Golden Visa which can offer a 5 year residence permit, followed by Permanent Residence status if you buy a property worth over 500,000 EUR. Or, take a look at the D7 Residence Visa which is favoured by retirees looking for sunnier climes.

When transferring money between the UK and Portugal, specialist transfer providers like Wise (read review) can help you save money through lower transfer fees and better exchange rates compared to banks. For high value purchases - like buying a property - you could cut your costs overall by thousands of pounds. At Exiap we compare providers to help you find the best one for your needs.

What are the requirements to buy a house in Portugal?

If you’re considering buying a property in Portugal you’ll be pleased to hear that there are no barriers to purchasing a place as a foreigner. 

As with anywhere else, there will be a process to follow to make sure the sale of your new home in Portugal is legally sound - and you’ll need to show your ID documents and paperwork to register as the new owner. After that, one of the few specific things you’ll need is a fiscal number - Numero de Contribuinte - which you can get at a local tax office in Portugal. Your lawyer can help with this step if you’re not already registered.

How to buy a home in Portugal step by step

In most cases the process to buy a home in Portugal is similar to buying a place in the UK. The end to end process is likely to take one to six months. Here are the basic steps you’ll need to take:

  1. Set a budget for buying your new Portuguese home, and get a mortgage offer in principal if required

  2. Decide on the Portuguese city or region where you want to buy a property

  3. Find a local Portuguese estate agent and start to view properties

  4. Choose your perfect Portuguese property and make an offer

  5. At this stage you’ll want to find your own solicitor - who works for you - and a notary - who works for both you and the seller

  6. Once you have agreed a sale price the notary will check the transaction details and make sure it’s legally sound

  7. Once you’re ready to proceed you’ll  sign a preliminary contract - Contrato de Promessa de Compra e Venda

  8. Pay a deposit - usually 10% of the agreed price - and property transfer tax - Imposto Municipal sobre Transmissões (IMT)

  9. Your solicitor will complete due diligence checks including searches and surveys as required 

  10. Sign the property deeds - Escritura Publica de Compra e Venda 

  11. Pay the remaining purchase costs, taxes and legal fees

Portuguese property prices

On the face of it, Portuguese property prices seem fairly high, and they’re growing. In 2021, the property price average for major cities in portugal looked like this:

  • Lisbon - average house price of 591,072 EUR

  • Faro - average house price of 368,441 EUR

  • Madeira - average house price of 369,579 EUR

However, before you lose hope of buying a property in Portugal yourself, it’s important to note that these are the most expensive regions in the country. Unsurprisingly, buying a home in a major city is going to push the price up significantly, compared to a rural or coastal home somewhere off the beaten track.

While prices do fluctuate and trends change over time, typically, Lisbon and the Algarve will have some of the highest costs per square metre, while cheaper homes can be found in the north and centre of the country, and regions like Alentejo. We’ll take a look at some of the best - and cheapest - places to buy property in Portugal next.

Best places to buy property in Portugal

The best place to buy property in Portugal will depend on what you're looking for. Some regions have high densities of Brits and other expats, especially retirees. If that’s your thing then life in one of the resort locations in the Algarve might be perfect. 

Of course other people will specifically be looking for a place with some more local flavour. While you can still absolutely get a real taste of Portugal in the Algarve, you’ll probably get more for your money and a more off the beaten track experience if you head to the centre or north of the country.

Finally, if you’re looking for a rental place or investment, maybe you’ll be considering buying a city apartment. Prices are high, but these properties may still appeal depending on your risk appetite and how long you intend to keep hold of your place - check out Lisbon, Porto, Coimbra, Braga and Madeira.

Cheapest places to buy property in Portugal

As we’ve already noted, property on the whole isn’t necessarily cheap in Portugal. However, there are certainly places to find a cheap home - and some great bargains to be had - if you’re willing to look around more rural areas. As with most places, smaller towns and villages are likely to have lower house prices - but in Portugal you’ll also want to stay away from key tourist and resort areas to find the best bargains. 

Here are a few examples to start your search:

  • Portalegre - on the Spanish border about 2 and a half hours from Lisbon - has some great bargain properties and interesting cultural attractions

  • If you want to be close to a major city but not in the middle of it all, check out Santarém just outside of Lisbon, or Vila Real which is about an hour from Porto

  • The interior is a good place to hunt for cheaper places too - take a look at Guarda as a strong example

  • If you want to be in the Algarve but don’t want the hefty price tags, take a look in the east of the region where there are often lower property costs to be found 

Getting a multi-currency account can help you manage your money across different currencies more easily, and save on fees. You can use the account to receive, hold, and transfer different currencies, as well as to spend on a debit card. Wise (read review) and Revolut (read review) are some of the most popular providers.

Is buying a house as an investment in Portugal a good idea?

Before buying a property as an investment it’s important to take professional advice and do your research thoroughly. Investing in Portuguese property can be a good bet for some - but whether it suits you will depend on your budget, your preferences and how long you’re prepared to leave your money tied up in the property.

One advantage to buying a property in Portugal as an investment is that you may qualify for the Golden Visa scheme if you buy a place worth 500,000 EUR or more. This would allow you to get a 5 year initial residence permit which can lead to permanent residence, with relatively simple requirements to fulfil.

If you’re buying a property purely to see your investment grow financially you’ll want to consider the taxes and costs involved, as well as the risks. Costs can include rental income tax - usually 15%; property tax and property wealth tax, which can vary based on the property type; and capital gains tax when you sell the property on later, which can be 25%. 

It’s also worth noting that property prices do rise and fall substantially - and Portugal, like many countries, has seen its fair share of fluctuations. That may mean you make less than you expect - or in the worst case, your property ends up worth less than you paid for it, if you have to sell in a hurry.

What’s the property market like in Portugal?

As with many countries, Portuguese property prices fell significantly during the global financial crisis of 2007-2008, but had stabilised relatively early compared to other markets, by around 2014. Since then there was a period of growth right through to the start of the global pandemic in 2020. Although there was a fall in the level of growth at this stage, by 2021 house prices were on the rise significantly again, hitting averages of about 4% or 5% growth depending on the location. 

In some areas growth in house prices is even steeper. In 2021, Lisbon saw house price growth of around 10% and in popular expat areas like the Algarve, prices rose about 7% in 2021 alone.

How much does it cost to buy property in Portugal?

Here’s a look at average prices per square metre for some major Portuguese cities to help build a picture of the costs of buying property in Portugal.

Portuguese city

Price per square metre - city centre (GBP)

Price per square metre - outside of city centre (GBP)

Lisbon

3,921.45

2,343.62

Porto

2,808.75

1,564.88

Coimbra

1,740.17

1,102.15

Braga

1,242.30

861.66

  • Data taken from Numbeo.com; correct at time of writing, 17 March 2021

On top of the property cost don’t forget you’ll also need to pay additional fees and taxes at the point of purchase. These can include: 

  • Real estate transfer tax of 10% of the property value

  • Legal fees of 1% - 2% of the property value

  • Registration fees of 0.2% - 1.2% of the property value

  • Stamp duty of 0.8% of the property value 

  • Estate agent fee of 3% - 5% of the property value (+23% VAT) 

Financing a property purchase in Portugal

There are a few common ways to finance a property purchase in Portugal:

  • Buy in cash using savings

  • Get a mortgage in Portugal through a bank or broker

  • Get a mortgage or loan in the UK 

  • Refinance your UK property and use the cash to buy in Portugal

Get professional advice to help you decide which option might suit you. We’ll look at Portuguese mortgage options in a little more detail next.

Getting a Portuguese mortgage

Depending on your situation you may well be able to get a mortgage in Portugal, either directly through a Portuguese bank or with the help of a local broker. Sometimes using a broker can actually mean you see offers and discounts which you can’t access as an individual, offsetting any fee you may have to pay.

Portuguese banks all decide their own eligibility requirements for mortgages, so you’ll need to shop around to find one which suits you. It is normal to be asked for a higher level of deposit as a foreigner, with loan to value ratios usually hitting 60% - 70% for foreigner and non-resident mortgages.

Paying property tax in Portugal

It’s important to remember that your Portuguese property means paying some taxes at the point of purchase, and also some ongoing costs in the form of various property taxes. Ongoing taxes can include:

  • Like the UK’s council tax - Imposto Municipal sobre Imóveis (IMI)  which can vary based on the location and value of your property

  • Property wealth tax - Adicional Imposto Municipal Sobre Imóveis (AIMI) - which is levied on high value properties

On the other hand, if you’re letting your property out you may need to pay Portuguese income tax on the rental income.

How easy is buying property in Portugal for foreigners?

You might be wondering: how complicated is it to buy a house in Portugal as a foreigner? There’s no need to worry here - buying a property in Portugal is no more or less complex than buying a place in the UK - but you’ll need to make sure you understand the process thoroughly before you start to commit your money.

Probably the most important thing is to avoid some common pitfalls when buying a property in Portugal as a foreigner. Here are some common problems:

  • Forgetting the impact of the off-season - if you’re buying in a resort or tourist area, be sure to visit off season to make sure you’re still as keen on the location when it’s quieter

  • Running out of money - draw up a budget covering purchase taxes, legal fees and any costs of maintaining the property

  • Trying to do it all yourself - get local professional support and advice to help you navigate the process and make sure everything goes through smoothly

  • Cutting corners - make sure your solicitor has done all necessary due diligence checks, and get a building survey to make sure the condition of the property is sound

How to find a Portuguese property

Start your property search without even leaving home, by browsing key property websites. Pick ones which aggregate listings from many agents to get a wide variety and which have a good search function to help you pick places which suit your needs and budget. Some English language options are highlighted below. 

For most people the next step is to engage a local agent  - an imobiliaria - to help you search. Make sure your agent is fully licensed and registered with the professional body for real estate agents - the Associacao de Mediadores Imobiliarios.

Portuguese property websites

Here are a few popular Portuguese property websites to get your search started:

Conclusion

Portugal is a popular destination for Brits looking to buy property abroad for a number of good reasons. Of course there’s the weather and great food and wine. But there are also great properties available at a reasonable price, with relatively simple ways to establish long term residency, even after Brexit. All in all it’s easy to see why Brits are the second largest group of expats calling Portugal home.

Use this guide to help you on your journey to finding the perfect property in Portugal - and good luck with finding your dream home!

By Ileana Ionescu
Updated 12 April 2022