Top tips for planning to buy property in Portugal
The Overseas Property Team at Halo Financial asked our clients and trusted partner advisors for their top tips at the start of your planning for buying in Portugal. Here are their Top Five Tips.
1. Are you eligible to buy a property in Portugal?
While Portugal has long been a popular country for overseas property hunters, particularly British buyers, the UK’s decision to leave the EU has created uncertainty over whether the process will be as straightforward in the near future. Currently, there are no restrictions on foreign property ownership in Portugal and non-EU citizens can get a five-year residency permit (known as a ‘Golden Visa’) if they buy a property worth a minimum of €500,000. These have been a popular method of buying property in Portugal from abroad and have significantly boosted the Portuguese property market.
If you are a British buyer in Portugal and you are able to move and become resident there before the UK leaves the EU, you will be able to remain in Portugal with all the benefits that British expats currently experience in the country. While assurances have been made to protect the rights of UK residents in the EU and vice versa, we will not know the full details until the UK’s exit from the EU. This is, of course, an area that is very important to our clients and we are keeping a close watch on Brexit developments and what they mean.
Beware Brexit: Potential implications for British buyers
One potential impact that Britain leaving the EU could have on buying a home in Portugal is that mortgages could become higher to obtain. Some non-EU purchasers are viewed as higher risk by lenders in the country than those from inside the EU. Whether British buyers will fall into this ‘higher risk’ category once the UK finally completes its divorce from the Union remains to be seen. The likelihood, though, is that the Portuguese authorities are not going to want to lose British property purchasers at a time when confidence is finally returning to the country property market. We’re keeping a close eye on what happens next and the implications for property buyers, homeowners and expats in Portugal and throughout the EU.
2. Why do you want to buy property in Portugal?
Are you looking for a holiday home? A property with investment potential? Somewhere to live in at a later date?
Your own individual reason for your purchase should play a huge part in your investment decision. If you’re looking for a property with investment potential, research which areas have property markets that have performed consistently well in previous years.
Check out whether there are any events happening that could lead to increased demand for property, such as golf tournaments, as golfing is eternally popular in Portugal.
Likewise, if you are seeking a holiday home, take a look at the climate for the area in which you wish to buy, get to know the area and its surroundings, try to find out exactly how busy your desired location is during peak – and off-peak – season, so you can paint a picture of how appealing it will be for holidaymakers.
If you are looking guidance, speak to your Halo Financial Consultant for some recommendations.
3. Have you set a budget?
It’s important to have an idea in your mind of how much your property will cost – in total – and how you will be paying for it. A clear idea of the budget will mean you can make the most of any funds you have available to you to find the right property. Buying property in Portugal could mean you will have to exchange your currency to Euros, which, given the weakness of the Pound since 2016’s Brexit announcement, is something you will need to keep an eye on, as there could be a considerable price difference between Pounds and Euros. Currency markets move all the time, and are very sensitive to political and economic events – stay on top of movements and what they mean for you with a currency specialist like Halo Financial.
4. Have you considered the extra charges and hidden fees?
Beware additional charges when purchasing a home in Portugal. You should allow at least eight to ten per cent of the purchase price to cover all taxes and fees. It’s essential to note, however, that if you purchase a home for more than 250,000 Euros, and the home has sea views and/or faces the sun, then you will be taxed an additional 20 per cent as a foreign buyer. It’s important to make sure you never buy a property in Portugal without seeking legal advice first, to make sure the nuances and legal implications of buying a property in Portugal like this don’t slip under the radar.
5. Have you thought about where you want to live in Portugal?
While the Internet is an invaluable tool for research and a great place to start, there is nothing quite like checking out an area for yourself. A fact-finding trip is almost essential prior to purchasing a home in Portugal. You can see for yourself what the neighbourhood is actually like; get a feel for the place; check out how close it is to the local amenities and public transport. Make sure everything is as it seems. You can either make this trip separately or tie it in with visiting a range of potential properties with a few selected agents, once you have identified these through your initial online searches.