Portugal

Portugal, with its sleepy inland villages, vibrant towns and cities and beautiful fishing ports remains one of the more popular holiday and property locations in Europe.

Costs

While properties still represent good value in Portugal the costs attached to buying one can be quite high, normally between 10% & 15% on top of the purchase price. The majority of the fees are based on actual value of the property.

Value Added Tax (VAT): Known as IVA, this tax applies to new properties only and is set at 19%, however this is normally included in the asking price. It is a good idea to double check this though as you don't want any nasty surprises later.

Notary Fees: The notary oversees the sale for you and their fees were traditionally dependent on the sale price of a property. Now with new legislation their fee will be in the region of €150 per transaction, with a further €1.25 for an added clause of amendment.

Legal Fees: This is an optional cost but one that is highly recommended as you don't need a lawyer to complete the transaction. The fee is somewhere between 1%-2% but there is usually a minimum charge.

Deed Registration Fee: To register a deed of sale with the land registry costs between 0.75% and 1% of the property value.

Utility Fee: Don't forget to check with your developer about the costs involved in connecting you to electricity, water and heating if they are not included in the asking price.

Process of buying

Contract: The first thing you have to sign is a promissory contract - contrato de promessa de compra e venda - and pay a deposit which can be anything from 10% to 20% of the asking price.

Conditional clause: To protect your interests it is worth having your contract checked by a lawyer to ensure that any conditional clauses that you want added are present and correct. The most usual clause is one which allows you to withdraw from a sale if you can't raise the finance within the specified period.

Deposit: You will lose your deposit if you withdraw from the sale after all conditions have been met and may have to compensate for loss of fees. If the vendor withdraws under the same conditions, they will return your deposit, but will also have to pay you the same amount again in compensation.

Completion: This usually happens within one or two months of signing the promissory contract, known as escritura de compra e venda, it is the final deed. This involves signing the deed, transferring the ownership and paying the outstanding balance.

Registering the deeds: After you have signed the escritura at the Notary's office you should send a copy of the document to land registry office.

Tip

You should do this as quickly as possible because under Portugese law you are not the legal owner until it has been registered.

Final Tips

Tip 1: Decide if you are buying an investment property or holiday home for personal use and list out your criteria accordingly.

Tip 2: While it may be tempting to fall in love with a computer image, it's always better to actually go to see the site of the proposed new build.

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