Buying a property abroad can be a daunting prospect, but here at Chavetejo, our aim is to help you through the whole process with the minimum amount of fuss.
When you are looking to purchase a property abroad, whether for the first time or the fifth, our advice is the same – ensure you are completely satisfied and happy to start the purchase procedure before you part with any money.
The purchasing process here in Portugal is relatively straight forward and follows a set procedure. In Portugal all estate agents or imobilária are licensed and regulated by the government. By law all licensed agents must display their AMI number on all documents and property advertisements. The governing body which oversees all agencies in Portugal is Instituto da Construção e do Imobiliário INCI.
However to purchase any property in Portugal you will need to have a ‘Numéro Fiscal de Contribuinte’ or tax card, which we here at Chavetejo will help you obtain.
Once you have found the property you wish to purchase, simply make an offer to the owner. If this offer is accepted then the next step is to sign a ‘Contrato de Promessa de Compra e Venda, then the property is secured.
A promessa contract is drawn up by an ‘advogada’ (or lawyer) and signed by both the sellers and the buyers and a deposit is handed over. Once all parties have signed, the lawyer registers this document online. A deposit is required to be given, usually around 10%, by the buyers at this stage. It is worthwhile to note the contract ensures you will not be gazumped and it will usually state the date for the ‘Escritura’ or completion.
Prior to the escritura you will have to pay ‘Imposto Municipal Sobre as Transmissões’ or IMT tax, if relevant, at the local finanças office at least three days prior to the final signing. If you are taking out a mortgage to purchase your property, then this will have to be registered with the Conservatória do Registo Predial (land registry office) at least 15 days prior to the signing, however your appointed advogada will usually take care of this for you.
Once you’ve completed the Escritura you will need to register your property at the Conservatória and at the local Finanças, to ensure the annual rates bills are received in your name. However if the property is to be your sole residence then you can apply for an exemption from rates
What you need to buy a house
Before you purchase any property in Portugal is it essential to ensure you all the relevant documentation is up to date and present for the Escritura.
Cardeneta Predial – supplied by owner
This is a document (obtained from the Fiscal department of the Finanças) detailing the property’s size, location, boundaries and a brief description. In some cases there maybe a drawing outlining the plot size and buildings.
Certidao de Teor – supplied by owner
Is a document showing if there are any outstanding debts on the property and if the property is registered in the seller’s name. some times it can take a while for debts to be logged and it is advisable to instruct your solicitor to check with the Conservatória do Registo Predial (land registry office) on the day of completion to ensure the property is free from debt.
Proof of Payment of IMT – supplied by purchaser
This applies to resale properties valued over 85,500€.
Identification documents – supplied by all parties
Both the buyer and seller must be able to produce identification documents (identity card and/or passport) as well as their tax numbers for the Escritura in Portugal.
Ficha Technica de Habitação – supplied by owner
Houses built or altered after 1 January 2003 in Portugal are required by law to have a Ficha Technica de Habitação. This document contains information about the property including builder details, materials used and so on.
Top 10 tips on buying a house
1 Take your time. Don’t rush into signing a promessa contract until you are sure the property and location are completely suitable for your needs.
2 Take off the ‘rose coloured glasses’. Remember not to do anything you won’t back in the United Kingdom. If something seems a little out of the ordinary seek independent advice.
3 Make a checklist of requirements you want from your property in Central Portugal. If you are looking to retire and live abroad take into consideration proximity of local amenities. If it a holiday house you are looking for – is an airport important?
4 Ensure the legal owner is selling the property you wish to buy and that what is advertised is what is being sold.
5 Ensure on the day you sign for the property the property is clear from any debt. Mortgages and debts are registered to a property in Portugal. Until you register the property in your name debt can be added and it is up to you to pay it off.
6 If you like a property, talk to the locals. They are a great source of information and will be glad to assist.
7 Visit the property more than once and at different times of the day. What looks great in the evening sun, may not first thing in a morning.
8 Location of your property is important. If you are looking at a property close to water (river, lake, stream etc) please note it does rain in Portugal and water levels can rise dramatically within hours. Remember if you are viewing a property in the spring or summer, it does rain in Portugal during the autumn and winter. What looks like a cute rock garden, could turn out to be a dry river bed.
9 Under declaring. When you are purchasing a property in Central Portugal beware of under declaring the property’s’ true value when signing at the Escritura. The practice is illegal and it could cost you dearly when, and if, you come to sell. You will be liable to pay tax on a property if you make a profit from its sale.
10 Register your property and land as quickly as possible following the final signing. Until you register the property in your name previous owners can still lodge debt against the property.
Fees and charges
As well as the purchase price of your property there are additional costs which you are entailed when you buy a place in Portugal.
Here at Chavetejo we can help give you an idea of the costs involved on top of the purchase price of your dream home before you spend any money. If you are interested in purchasing a property we will clearly identify the additional costs involved to enable you to make an informed decision
Notario Fees are set by the government and are based on a sliding scale according to the value of the property. These are between 1.25% and 1.5%.
Land Registry Fees 0.75% to 1%
In the past lawyers charged a percentage of the purchase price, however today most good lawyers will charge between 450-650€ to convey a property though this figure may increase depending upon the level of work involved.
Paying for your property in Portugal
Like any property deal it is best to have your finances in order before you decide to purchase in Portugal. All payments must be made in Euros. If you have the funds in the United Kingdom to pay for your property purchase you can either:
Obtain a Banker’s draft in Euros from your UK bank and give this to the Notário. However you will have to be sure of the exact amount needed to cover all charges as well as the purchase price.
Transferring cash from the UK bank account, converted into Euros using interbank transfer. You will need to know your bank details, including the IBAN number (Inter Bank Account Number) to do this. you will most likely have to open a bank account in Portugal to complete this process.
If you are intending to take out a mortgage for pay for your property it may be easier to apply for to a Portuguese lender.
Opening a Bank Account
Opening a bank account in Portugal is simple and may, in the long run, be advantageous. With a Portuguese account you can set up direct debits for tax and utility bills.
In order to open account in Portugal you will need to provide:
– Proof of identification
– A Numéro de Fiscal de Contribuinte
Once you have opened a bank account you will be able to SWIFT funds from your UK bank directly into your new account, then write out a cheque or draft for the purchase amount.
Mortgage Portuguese mortgage lenders usually require a deposit of around 25% of the purchase price. In addition a mortgage from a Portuguese bank only covers the property itself not the legal fees incurred buying it.