Bespoke Property Search Service for People Buying Homes Abroad

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Property Search Agents in Portugal

Cavendish Brooke specialises in sourcing luxury properties on the Algarve. We have many years of experience in this region and have chosen to specialise here as it is the area of Portugal that we know best and those that our clients most frequently ask us for.

As property finders we are not tax or legal specialists, but below is a brief outline of the buying process in Portugal and things to budget for when thinking about purchasing your property here:

Some interesting facts about Portugal

  • Member of the European Union since 1984
  • Capital = Lisbon
  • 94% Roman Catholic
  • Currency = Euro (EUR)
  • Portugal includes the Azores and Madeira islands in the Atlantic Ocean
  • Portugal is one of the oldest nations in Europe and was the first to discover the ocean routes to India, China, Japan and Brazil
  • Time = GMT + 1

Climate and Healthcare

The coastal areas enjoy mild winters and hot, dry summers. Inland the temperatures are lower in the winter but still mild when compared to the rest of Europe. The north of the country is generally cooler and rainier and the south warmer and drier. Some snow does occur, especially in the Serra da Estrela mountains where occasional ski-ing is possible.

There is a reciprocal agreement between the UK and Portugal which means that the European Health Insurance Card (EHIC) is not necessary. (The EHIC replaced the E111 in January 2006) This agreement provides free or reduced cost emergency treatment but this does not extend to cover medically required repatriation.

The state health system is extensive but suffers from overcrowding and inconsistency. Private treatment is likely to be preferred but is expensive and you are therefore advised to ensure that you have adequate travel insurance.

Visas and Documentation

No visa is required by EU citizens for stays of up to 180 days. Anyone intending to settle or remain for longer than this will need to apply for a resident's permit. There are strict rules for minors (under 18) entering Portugal alone so please check before travelling.

To hire a car you will need to carry a UK or International Driving License and must be aged over 18.

The Buying Process

The buying process in Portugal can vary from region to region, but the sequence below will help you gain an insight as to how the process usually works:

1 - Appoint a solicitor to conduct the necessary searches and ensure that all the legal requirements are met. Unless you speak fluent Portuguese, you are best advised to use a solicitor who speaks English and can translate and explain the legal documents. We can recommend several UK based law firms who can assist you.

2 - Calculate all the costs involved including estate agents fees, taxes, valuation, notary, administration and legal fees. It is safe to assume purchase costs of 10-15% of the purchase price of the property.

3 - Arrange your mortgage, or alternative finance, if you haven't already. We can help you with this. If you require a mortgage, there is a range of UK and Portuguese lenders who would offer terms and as in the UK, a lender will require a survey and will insist on instructing the valuation from their own approved panel of surveyors/valuers. We would always recommend that you obtain an independent survey, even if you are not using a mortgage to purchase the property.

4 - Obtain your Personal Fiscal Number (Numero fiscal de contribuinte) - This is a legal requirement and it is essential that you have your personal fiscal number before entering into any transaction that could incur tax implications, i.e. buying a property. It's easily obtained by visiting a Local Tax Office (Finanças).

5 - Preliminary sales contract - Once a price has been agreed with the vendor both parties will sign a preliminary "promissory buying and selling" contract, called a Contrato de Promessa de Compra e Venda. This Contract is then legalised by registering it in the Notary Office. This Contract is legally binding on both sides and the law requires the seller to repay twice the deposit should he withdraw from the sale. Likewise, if the buyer fails to complete he forfeits the total of his deposit. There are specific laws relating to this act that a Lawyer will be able to explain.

6 - Pay your deposit to secure the property - The buyer will normally pay a deposit of approximately 10% of the purchase price. This deposit is forfeited if the property buyer backs out; if the seller withdraws he/she must pay the buyer double the value of the deposit - 20%.

7 - Sign the Deeds and Pay the Balance of the Purchase Price - When all of the legal requirements have been completed the act of sale can proceed in any Notary Office. This act is known as the “Escritura de Compra e Venda” which takes place in front of the selected Notary and is recorded in his official books. The Notary will check prior to the act of sale that all the necessary documents are correct to ensure that the sale can proceed according to the facts provided. It is at this moment that payment is normally completed to the seller. After the act is recorded the Notary Office will issue a photocopy of the entry, which is the proof to the buyer that the act has officially taken place. The photocopy will carry the seal of the Notary but as further official copies can be requested at any time this document should not be mistaken for a "Title Deed" – as known in the UK.

8 - Register the Transfer of Title - On completion of the above act the property in question has then to be registered in the new owner's name in the Land Registry (Conservatória do Registo Predial) and the local tax office.

Tax and Legal

We at Cavendish Brooke International are not tax experts, however, we will be happy to introduce you to professionals who can assist you and answer any questions you may have on this subject. The information below is offered merely as helpful notes and we strongly recommend you employ the services of professional tax advisers.

  • Portuguese residents are liable to worldwide income, capital gains and inheritance taxes. A non resident is liable to income tax on their Portuguese source income and capital gains and inheritance tax on their Portuguese assets.
  • Any Capital Gain is added to income and taxed at income tax rates.
  • Portugal enjoys a double taxation treaty with the UK, the treaty covers Income tax, Capital Gains tax and Corporation tax and means that any tax due will only be payable in one country.

The Portuguese legal system is very different to the English system. However, provided that you make the necessary enquiries and checks, you should have no concerns about buying in Portugal. To avoid complications and pitfalls, we strongly recommend that you employ Independent legal advice. We will be very happy to put you in contact with a panel of lawyers who are totally independent of any agents or developers.

Costs

Expect to pay around 2% of the purchase price in legal fees.