Buying A Property In Portugal - 5 Easy Steps
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Step 1 - The Offer
• Step 2 - Reservation Contract
• Step 3 - Preliminary Contract & Deposit
• Step 4 - Legal Checks & Portuguese Paperwork
• Step 5 - Completion
Portugal's property buying process is a little different to the UK, which can make it confusing for British buyers. It's actually quite straightforward however, and has the added benefit over the UK system of being regulated by law.
One of the advantages of this is that from quite an early stage you are protected from being outbid by other buyers, as the process doesn't allow this.
Step 1 - The Offer
As with any property hunt, the first stage is to find a property you like and make an offer on it. A little negotiation may be necessary and your estate agent should be able to handle this for you. Make sure you are dealing with a licensed estate agent (a Mediador Autorizado). They should have an IMOPPI license number.
Once you've agreed a price, you will need to find a Portuguese solicitor and a surveyor to represent you and carry out the legal and structural checks on the property. Your surveyor should also be able to advise on any pending planning decisions that could affect the area you are buying in.
Remember - unless your Portuguese is very good, try and find an English-speaking solicitor - there are plenty around in popular holiday areas.
Step 2 - Reservation Contract
It's now a good idea to try and agree a Reservation Contract with the seller. In return for a small deposit (€3000-€5000), the seller will take the property off the market while you arrange your mortgage and the other checks that are necessary. You should be able to get this deposit back if any problems are found with the property.
Now is also the time to finalise your mortgage arrangements - whether in the UK or in Portugal.
Step 3 - Preliminary Contract & Deposit
The next stage is to arrange and sign the preliminary contract (Contrato Promessa de Compra e Verda). This is a private but binding agreement between you and the seller to complete the sale.
By now you should have engaged a Notario, or Notary Public. These are solicitors employed by the government to ensure that sales are carried out correctly, and they oversee all legal aspects of property sales. Your estate agent will probably be able to put you in touch with a local Notario.
The preliminary contract should include all the terms and conditions of the sale and needs to be signed in the presence of the Notario to be valid. You will need to place a substantial deposit at this point - normally 10% - 30% of the purchase price.
If you back out of the sale from this point onwards, you will lose your deposit. On the other hand, if the seller pulls out you will be entitled to claim damages of twice your deposit.
Step 4 - Legal Checks & Portuguese Paperwork
Sales normally move from preliminary contract to completion in around four weeks. Although this isn't too long, there are a few things you need to arrange in that time:
- You need a Portuguese tax code (Numero Fiscal de Contribuinte)
- Your solicitor needs to complete all the legal checks on the property (including verifying it is free of debt) and obtain copies of some official documents:
- License of Use (Licenca de Utilizacao)
- Property Registration Document (Certidao de Teor)
- Property Tax Document (Caderneta Perdial)
Once all this paperwork is in order, you should be ready to arrange completion.
Step 5 - Completion
At completion you (or an appointed representative) will be required to meet with the seller and the Notario to sign the deeds of sale (Escritura de Compra e Venda). You will need to have arranged for the transfer of the outstanding balance of the purchase price and will also be required to pay various taxes at this point.
These include:
- Property Transfer Tax (Imposto Municipal Sobre Transmissao Onerosa de Imoveis - IMT)
- Notary fees, which include Stamp Duty and registration costs
- Legal & surveyor's fees
You should budget around 15% of the purchase price for fees and taxes and should check exactly what fees will apply to your purchase.
If you do want to have your solicitor (or someone else) act on your behalf, you will need to give them your power of attorney. This can be arranged by your Notary and is known as Procurcao Publica).
Once the deeds have been signed and all taxes paid, the Notario will file details of the registration (Registo) with the Land Registry (Conservatoria do Registo Predial Notario)
Read
On
•
Introduction
• Buying A Property In Portugal - 5 Easy Steps
• Should I Get A UK or Portuguese Mortgage?
• Getting A Mortgage In Portugal
• Other Things To Consider Before Buying In Portugal
• Glossary of Key X Terms
Buying
Overseas Property and Mortgages
