Explore the ins and outs of Buying Property in Portugal as a Non-Resident!
In 2023, a record-breaking 329,000 expats were granted residency in Portugal, after a surge in interest from non-residents looking to buy a vacation home, move abroad, or take a step towards European residency.
But what does it take for a non-resident to buy property in Portugal? In this blog, we will outline the legal, financial and practical aspects of owning a property in Portugal as a non-resident, so you can understand the process better!
Table of Contents:
- Can Non-Residents Buy Property in Portugal?
- Financial Considerations of Buying Property in Portugal
- The Process of Buying Property in Portugal
- Portugal's Property Market at a Glance
- Living in Portugal: What to Expect?
- A Guide to Buying Property in Portugal as a Non-Resident: A Summary
Can Non-Residents Buy Property in Portugal?
One of the first questions prospective buyers often ask is whether they can legally purchase property in Portugal as a non-resident.
The simple answer is; yes, non-residents can purchase property in Portugal without any restrictions.
Portugal's legal framework is notably welcoming to foreign investors, with no specific barriers to property ownership based on nationality or residency status. The country's relaxed approach to property ownership is part of Portugal's broader strategy to attract international investment, which has so far been successful in transforming the real estate sector into one of the key pillars of Portugal's economy.
Some legalities that you'll have to consider for buying property in Portugal as a non-resident include:
- A Portuguese taxpayer number (NIF) is needed to buy property in Portugal.
- A long-term Visa will be required to buy property in Portugal.
We will go through the above in more detail below!
Financial Considerations of Buying Property in Portugal as a Non-Resident
Let's now take a look at the various financial costs and considerations it's worth thinking about when looking to buy property in Portugal as a non-resident.
Portugal Property Taxes and Costs
Property costs will vary depending on where you choose to live in Portugal, we've summarised them below:
- Lisbon - Average Property Cost: €536,100
- Porto - Average Property Cost: €344,590
- The Algarve - Average Property Cost: €450,000
- The Silver Coast - Average Property Cost: €300,000
- The Alentejo Region - Average Property Cost: €312,000
- Madeira - Average Property Cost: €425,000
- The Azores - Average Property Cost: €150,000
When you've found your ideal property, you'll need to factor in several costs, when buying property in Portugal as a non-resident, including:
- IMT (Property Transfer Tax): This is a sliding scale tax based on the property's value, ranging from 1% to 8%. For properties over €1,000,000, the rate is 7.5%.
- Stamp Duty: This is a fixed rate of 0.8% of the property's purchase price.
- Notary and Registration Fees: These typically amount to around 1-2% of the property price.
- Legal Fees: Legal fees vary but are usually around 1-2% of the purchase price.
- Annual Property Tax (IMI): This is an ongoing tax based on the property's rateable value, ranging from 0.3% to 0.8%.
Financing Your Property Purchase in Portugal
If you're not paying cash, you'll need to secure a mortgage. Portuguese banks offer mortgages to non-residents, usually, they allow expats to borrow up to 70% of the property's value, which is lower than Portuguese residents. Interest rates are generally low, but terms and conditions will vary depending on the provider, so we recommend doing some shopping around!
Keep in mind that obtaining a mortgage as a non-resident will require additional documentation such as proof of income, tax returns, and a Portuguese tax identification number (NIF).
Currency Exchange for Your Property in Portugal
If you're purchasing using your home currency, which needs to be exchanged into Euros and transferred to Portugal then considering exchange rate fluctuations is a must. This may seem daunting at first, but, using a currency exchange specialist, like ourselves at EasyFX, can support you through this process, help secure a more favourable rate for your money and protect you against potential exchange rate volatility, which can increase costs.
Talk to our expert team of brokers today for more information and foreign exchange support and advice!
The Process of Buying Property in Portugal: Step-by-Step
If you're at the start of this exciting journey, we're now going to have a brief look at the step-by-step process of buying a property in Portugal, to get you prepared.
Understanding Residency and Visas
You don't need to be a resident to buy property in Portugal. However, if you plan to spend more than 90 days in the country, you'll need a visa.
The Portugal Golden Visa Program is particularly popular among non-EU citizens, offering residency in exchange for a property investment of at least €500,000, or, €350,000 in certain areas, with other investment options starting at €250,000. This visa allows you to live and work in Portugal, with the possibility of obtaining permanent residency or citizenship after five years.
Portugal also offers other residency options, including the D7 Visa for retirees and those with a stable income, and the D2 Visa for entrepreneurs and independent workers.
Finding the Right Property
Once you've decided on a location in Portugal (we go through some possibilities below!), the next step is to find the right property.
Working with a reputable real estate agent is crucial, especially if you're not familiar with the local market. Real estate agents in Portugal are licensed and regulated, and many speak English, making the process easier for foreign buyers.
Online property portals like Imovirtual, and Casa Sapo are useful tools for exploring available properties.
Making an Offer and Signing a Preliminary Contract
Once you've found a property, the next step is to make an offer. Negotiation is common in Portugal, so don't be afraid to propose a price below the asking amount, but, of course, consult with local experts for more advice.
If your offer is accepted, a preliminary contract known as the "Contrato de Promessa de Compra e Venda" (CPCV) is signed. This contract outlines the terms of the sale, including the price, payment schedule, and completion date.
At this stage, you'll typically need to pay a deposit, usually 10-30% of the purchase price.
Due Diligence and Legal Advice
It's essential to hire a lawyer to carry out due diligence on the property. This includes verifying the property's title, ensuring there are no outstanding debts or legal issues, and confirming that all necessary permits are in place. The lawyer will also review the CPCV to ensure your interests are protected.
Completion and Transfer of Ownership
The final step is the completion of the sale, which takes place in front of a notary. The remaining balance is paid, and the deed of purchase, known as the "Escritura" is signed. The notary will then register the property in your name with the Land Registry.
Portugal's Property Market at a Glance
Portugal offers a range of different residential regions, each with its own unique appeal, let's go through some of them...
Lisbon
Lisbon, Portugal's capital, is a city of contrasts, where historic neighbourhoods like Alfama and Bairro Alto sit alongside modern developments in Parque das Nacoes.
As the country's largest city, Lisbon offers a dynamic mix of culture, entertainment, and business opportunities, making it an attractive location for both investors and those seeking a cosmopolitan lifestyle.
Buying a property, and living in Lisbon, means enjoying a vibrant cultural scene, world-class dining, and easy access to beaches and nature. The city is well-connected, with an international airport, efficient public transport, and proximity to the Atlantic coast. Lisbon is also home to several international schools, making it ideal for families.
For non-residents, Lisbon offers a range of property types, from traditional azulejo-covered townhouses to contemporary apartments with river views. While Lisbon offers many advantages, it's important to consider the higher cost of living and the competitive property market. Lisbon's property market is one of the most expensive in Portugal, with prices reflecting the city's popularity and demand. Additionally, parking and traffic can be challenging in the centre of the city.
Porto
Porto, Portugal's second-largest city, is renowned for its historic architecture, wine production, and stunning location along the Douro River.
The city has seen significant growth in recent years, attracting both tourists and property investors. Porto's blend of tradition and modernity makes it a compelling choice for those seeking a more authentic Portuguese experience.
Porto is known for its laid-back atmosphere, excellent food, and wine culture. The city is smaller and less hectic than Lisbon, offering a more relaxed lifestyle. The Douro Valley, a UNESCO World Heritage site, is just a short drive away, providing opportunities for wine tourism and countryside retreats.
Porto's property market is more affordable than Lisbon's, though prices have been steadily rising. The city offers a variety of properties, from renovated townhouses in the Ribeira district to modern apartments in Boavista. Emerging areas like Campanha and Bonfim are also gaining attention from investors looking for properties with good growth potential.
While Porto is growing in popularity, it's still a more traditional, conservative city than Lisbon. The weather is also cooler and the city experiences more rainfall than other locations in Portugal, which may be something to consider.
The Algarve Region
The Algarve in southern Portugal is famous for its stunning coastline, sunny weather, and world-class golf courses. The Algarve's combination of natural beauty and developed infrastructure makes it one of Portugal's most popular regions.
Living in the Algarve means enjoying over 300 days of sunshine a year, beautiful beaches, and a relaxed pace of life. The region is well-served by Faro International Airport, making it easily accessible for international visitors. The Algarve is also known for its outdoor lifestyle, with activities ranging from golfing and sailing to hiking and bird watching.
Property in the Algarve varies widely, from luxurious villas in Quinta do Lago and Vale do Lobo to affordable apartments in towns like Albufeira and Lagos. The region has a strong rental market, particularly during the summer months, making it an attractive option for investors.
The Golden Triangle Area is known for its high-end properties and international clientele.
While the Algarve is ideal for sun-seekers, it can be very touristy, particularly in the summer. Additionally, the region's popularity means that property prices in certain areas can be high, especially in the Golden Triangle.
The Silver Coast
The Silver Coast, or Costa de Prata, is a stretch of coastline north of Lisbon that remains relatively undiscovered compared to the Algarve.
Known for its long sandy beaches, charming fishing villages, and historic towns, the Silver Coast offers a more authentic Portuguese experience, with a slower pace of life and fewer tourists.
This region of Portugal is perfect for those who enjoy nature, history and a quieter lifestyle. The region offers plenty of outdoor activities, including surfing, hiking, and exploring historic sites. The cost of living is also lower here, adding to the region's appeal.
The Silver Coast is more affordable than Lisbon and the Algarve, making it an excellent choice for those looking for value for money. The region offers a mix of property types, from traditional village houses to modern villas with sea views. Popular areas include Nazare, known for its giant waves, and Obidos, a picturesque medieval town.
Despite all of the positives, this region is more rural and less developed than other parts of Portugal, which may not appeal to non-residents who are looking for a bustling social scene. Additionally, the Atlantic Ocean can be cooler and rougher, which might not be ideal for beachgoers used to warmer waters.
The Alentejo Region
The Alentejo region, located between Lisbon and the Algarve, is known for its rolling plains, vineyards, and olive groves. This is one of the most rural and least populated areas of Portugal, offering vast landscapes and a slower pace of life.
The Alentejo is ideal for those seeking peace, space, and a connection to nature. In fact, it's a must as to live here means embracing a rural lifestyle, with a focus on agriculture, local produce, and a strong sense of community. The region is most famous for its wine and olive oil, and laid-back vibe, perfect for those looking to escape the fast-paced city life.
Alentejo offers some of the most affordable properties in Portugal. The region is known for traditional farmhouses, or months, which often come with large plots of land. The historic town of Evora and the coastal area of Comporta are particularly popular with non-residents.
While Alentejo's tranquillity is a major draw for some, it may not suit everyone. The remoteness of the region means that amenities are often limited, and the hot, dry summers can be intense. Alentejo is also less developed than other parts of Portugal which may impact job opportunities.
The Islands
The Madeira and Azores islands are perfect for nature lovers, complete with temperate forests and turquoise waters.
Madeira
Madeira's natural beauty is its biggest draw, with lush landscapes, rugged coastlines, and a wealth of outdoor activities, from hiking and diving to whale watching. The island's mild climate makes it an ideal year-round destination. Madeira also has a rich cultural scene, with festivals, music, and a strong culinary tradition.
Property in Madeira is more affordable than in mainland Portugal, although prices in popular areas like Funchal can be higher. The island offers a range of properties, from traditional Madeiran houses to modern apartments with ocean views.
Living on an island comes with certain limitations, such as dependency on imports and higher costs for some goods. While Madeira is well-connected to mainland Portugal and Europe, the island's remote location may not appeal to everyone.
The Azores
Living in the Azores is all about connecting with nature. The islands offer a range of outdoor activities, from hiking to whale watching to exploring volcanic craters and hot springs. The Azores also have a slower pace of life, with a focus on sustainability and preserving the natural environment.
The Azores is one of the most affordable regions in Portugal, with property prices significantly lower than on the mainland. The market is less developed, offering opportunities to purchase traditional homes and renovate them. Sao Miguel, the largest island, is the most popular among buyers, but each island offers its own unique charm.
Like Madeira, the Azores' remote location means that amenities and services can be limited. The Islands are also more exposed to Atlantic weather, which can be unpredictable. Additionally, the property market is less popular, so eventually selling a property may take longer, than mainland regions.
Living in Portugal: What to Expect as an Expat
Healthcare and Education
Portugal has a well-regarded healthcare system, with both public and private options available. Non-residents can access public healthcare by contributing to the social security system or through private healthcare insurance. The country also boasts a range of international schools, particularly in Lisbon and the Algarve, making it a great destination for families.
Cost of Living
The cost of living in Portugal is generally lower than in many other Western European countries. While cities like Lisbon and Porto are more expensive, rural areas and smaller towns offer a more affordable lifestyle. Utilities, groceries, and dining out are all reasonably priced, contributing to a comfortable standard of living.
Integration and Community as a Non-Resident in Portugal
Portugal is known for its warm and welcoming people. While learning Portuguese is beneficial, especially in rural areas, many locals speak English, especially in tourist-heavy spots. There's also a large and growing expat community, offering plenty of opportunities to connect with fellow foreigners.
A Guide to Buying Property in Portugal for Non-Residents: A Summary
Portugal has emerged as a highly attractive destination for expatriates, thanks to its stunning coastlines, vibrant cities, and pleasant Mediterranean climate.
The country's relaxed legal framework allows non-residents to purchase property without restrictions, further encouraging foreign investment and transforming real estate into a vital sector of the Portuguese economy.
Portugal offers diverse living environments, from the bustling, cosmopolitan atmosphere of Lisbon and the historic charm of Porto to the sunny Algarve region. The Silver Coast and Alentejo regions appeal to those seeking a quieter, more authentic Portuguese lifestyle, while the islands of Madeira and the Azores attract nature lovers.
The process of purchasing property in Portugal is fairly straightforward, supported by Portugal's favourable tax policies and financing options for non-residents.
Finally, the popular Golden Visa program provides a pathway to residency in Portugal for non-EU citizens, further enhancing Portugal's appeal as a prime destination for international living.
Let Us Make Buying Property in Portugal, Easy.
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Our aim is to provide you with a competitive exchange rate for your significant international money transfers with no added-on transfer fees, potentially saving you thousands on your Portuguese property purchase.
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We have helped over 40,000+ happy customers make their foreign exchange for purchasing property overseas, Easy.
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