Guide to Buying Property in Portugal
The Portuguese Property Market
In recent years, there has been a true construction and real estate boom in some
parts of Portugal. Along the coastal locations of Portugal,
a great deal of real estate development has taken place. This development has included
everything from luxurious housing developments to vacation communities that have
attracted visitors and investors from across Europe and indeed much of the world.
Beyond the very fast paced development that has taken place along the coastal regions
of Portugal, there has also been a great deal of new construction in some of the
more rural areas of the country. Rural Portugal has proven to be a fertile area
in which many people from other European nations (and from a good share of other
nations from around the world) are taking to constructing second homes, lovely and
relaxing retreats tucked away from the hustle and bustle of everyday life.
Investment Property in Portugal
When it comes to investment property for sale in Portugal,
many foreign nationals have focused their attention on real estate opportunities
along the coastal regions in Portugal. By way of example, these foreign nationals
are involving themselves in some of the massive residential developments that have
been initiated in these coastal regions over the course of the past ten years.
In addition to investing in the residential developments themselves, some of these
foreign nationals are also putting their money into those commercial real estate
ventures that accompany a burgeoning residential market. For example, these foreign
nationals are investing in shopping centers or districts as well as other types
of necessary commercial properties.
Residential Real Estate in Portugal - Single Family Properties
As has been mentioned above, there has been a great deal of activity in the residential
real estate market in the coastal regions of Portugal. The trend towards buying
homes along the coastal regions of the country has been fast paced for nearly a
decade. Most real estate analysts in Portugal believe that this high rate of activity
in the coastal Portugal residential real estate market will continue unabated well
into the next decade.
In addition to a fast paced market along the coast, residential real estate has
also been selling briskly in some of the rural areas in the Portuguese interior.
While high end housing has been the most rapidly selling area of the residential
real estate market, in Portugal, when it comes to
residential real estate, there really is something for every budget. This is particularly
the case in the more major cities in the country. For example, the real estate market
in Lisbon is very active and varied -- the old adage that there is something for
everyone really holds true.
Residential Real Estate in Portugal - Apartments
As is the case through much of the European Union, the demand for residential apartments
is strong in Portugal.
Algarve apartment living provides a more carefree and, oftentimes, a less
expensive way of living.
Apartments in Lisbon have been selling at a particularly brisk rate. Many foreign
nationals have taken to purchasing apartments in Lisbon and in a few of the more
major cities in the country. There are three primary reasons who apartments have
been selling so briskly in Lisbon and in a few of the other more urban centers in
Portugal.
First, with the advent and creation of the European Union, and with the trans-European
economic culture that was created by the EU, and ever growing number of foreign
nationals have taken to spending at least part of the year in Portugal on business.
Apartments provide a practical and affordable housing solution for these business
men and women in the 21st century.
Second, many people have taken to purchasing apartments in the urban centers of
Portugal for vacation or holiday purposes. As with the business owner of an apartment
in an urban center in Portugal, these holiday visitors find apartments an economical
and practical means of vacationing in the country. This has proven particularly
to be the case with families.
Finally, some foreign nationals have taken to purchasing apartments which they then
turn around and rent or lease to other people. Many of these foreign investors have
found buying and then renting apartments in Portugal to be a very solid method of
generating a reliable source of income.
Holiday Property in Portugal
The coastal areas of Portugal have become the locations of some of the most sought
after real estate in all of Europe. The demand for vacation properties in these
areas rivals even the demand for real estate in such prime European travel areas
such as the French Riviera.
Many foreign nationals have taken to buying real estate along the coastal regions
for vacation or holiday purposes. As mentioned previously, oftentimes these investors
are buying holiday properties in Portugal for dual
purposes. Of course, they are buying these properties to provide a vacation destination
for themselves and their families. In addition, they are making these purchases
to allow them an investment income which they obtain by leasing or renting these
properties to other holiday travelers.
In addition to the coastal regions of Portugal, many foreign nationals have taken
to buying residences in rural communities. Finally, in large, urban areas such as
Lisbon, foreign nationals regularly are purchasing apartments which they are utilizing
for vacation or holiday purposes.
Specific steps to buying real estate property in Portugal
As in many countries the world over, the first step in the real estate purchase process
is the execution of a preliminary contract for sale. In Portugal, this initial contract
is called the contrato de promessa de compra e venda. This particular agreement
is a legally binding contract that sets forth the conditions of the sale.
The contrato de promessa de compra e venda is drawn up by a notary. At the time
that this contract is executed and signed, the purchaser of the real estate is called
upon to place a deposit for the real property that is subject to the transaction.
In Portugal, the deposit that normally is paid by a buyer of real estate is between
ten and twelve percent. If a seller elects not to follow through with the sale,
he or she will forfeit the deposit that has been paid. Of course, there are instances
when a buyer is justified in not closing on a contract for the sale of real estate.
For example, if a seller cannot provide to the buyer a title free and clear, the
buyer then does have the right to walk away from the contract and will not forfeit
his or her deposit.
An interesting feature of the preliminary contract in Portugal is the fact that
if the buyer walks away they will simply loose the deposit. If the "contracto
de compra e venda" (CPCV) has already been signed, the buyer will loose the
value they have paid (usually 10 - 15%).
If the SELLER walks away before the "CPCV" they will need to pay twice
the deposit. If the "CPCV" has already been signed then the SELLER is
obliged to pay twice the amount paid in the CPCV.
Thus, in Portugal, the buyer of real estate is provided with a level of protection
that is found in very few other countries around the world. Indeed, this level of
protection really is almost unheard of anywhere else in the world.
Another requirement that is unique to Portugal when it comes to the purchase of
real estate is one in which the buyer of real estate is obliged to obtain a "Fiscal
Number" from the local Tax Office. This requirement applies to foreign nationals
who are interested in buying real estate in Portugal as well as to citizens of that
country. The process of applying for and obtaining a Fiscal Number is very simple
and does not require a great deal of time. Indeed, the process really involves completing
what is in reality a very simple form and submitting it to the local Tax Office
where it can be processed in no time whatsoever.
The real estate sales process in Portugal moves at a pretty fast clip. Generally
speaking, the signing of the final contract and deed -- which is known as the escitura
de compra e venda -- will occur within three to four weeks of the execution of the
initial contract for sale. Once this agreement and related documentation is executed,
the ownership of the real estate will transfer by operation of the law from the
seller to the buyer. Although the buyer will become the legal owner of the real
estate at that juncture, there still is a bit more work to do to completely conclude
the real estate purchase process.
The final step that a person needs to take when purchasing real estate in Portugal
is the payment of the Imposto Municipal Sobre, a tax imposed on real estate transactions
in that country. In addition, the buyer will be obliged to register -- either personally
or through a lawyer -- the deed with the Land Registry Office.
Overall, there are no added obligations on a foreign national who purchases real
estate in Portugal. The rules, regulations and legal schemes that apply to citizens
of Portugal apply similarly to foreign nationals who are interested in buying real
estate in that country.
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