There is no denying that the Portuguese property market has suffered in recent years, with house prices dropping and many new developments standing unfinished.
However, we clearly have a strong affinity with Portugal with approximately 80,000 British people living there and OPP reporting that 53% of homes currently being bought are by UK residents.
If you are looking for a long term investment, then now is a good time to buy, with a wide choice of properties available and many at a bargain price. The downturn in the economy has left estate agents with a large number of repossessed properties which they are now selling at a much lower value. Lending is stricter than it has previously been, but there is still finance available in Portugal, with some banks lending up to 70 percent to 75 percent loan to value. However, interest rates are notably higher than other areas of the EU currently sitting at around 4.5 to 5.5 percent (in Euros). The introduction of the “Golden Visa” scheme, which offers residency to non EU buyers purchasing a property over £500,000, has also attracted a lot of Russian and Chinese buyers which will hopefully boost the market.
The Algarve has remained a firm favourite with buyers over the years and is now one of the most popular locations for buying a second home. However, an increasing demand for property has led to higher houses prices and buyers have started to take interest in other cheaper and attractive areas such as the Silver Coast and Costa Verde. Both areas are much less developed than the Algarve, but improved transport links has resulted in a large number of new developments now being focused in these areas..
When looking to purchase a property in Portugal, there is some important advice that I would give to potential buyers:
- Make sure you work with certified professionals, most importantly a Portuguese Lawyer who should represent you in the acquisition of the property, carry out all the necessary searches and check the documents are in order.
- There must always be a written promissory contract to protect the purchaser’s position and interests and with the signing of the contract, the Lawyer should check the following relevant documentation of the property: Land Registry Certificate, Predial Certificate and Habitation License.
- It is advisable to carry out a survey on the property, especially if it is not new. Any defects found can be listed and the vendor will be responsible for the repair.
- Confirm with the lawyer that the maintenance costs are in order, such as infrastructure charges, property tax and condominium fees to avoid future surprises.
- The lawyer must inform the purchaser of all the necessary and relevant information on the Portuguese fiscal system, mainly regarding the taxes due when acquiring a property in Portugal (Transfer Property Tax, Stamp Duty and Annual Property Tax). A fiscal representative must then be appointed to represent you before the Tax Administration in all the matters related to the property.
Simon Conn
Overseas Property & Finance Specialist
T: +44 (0)7739 033266
E: simon@simonconn.com