Investing in Portuguese real estate as a foreigner offers lucrative opportunities and the chance to enjoy the country's vibrant lifestyle. At Ortega Realty & Management (ORM), we specialize in assisting foreign buyers in navigating the property market. In this blog post, we provide a comprehensive guide outlining the process of buying property in Portugal, tailored specifically to the needs of international investors.
1. Research and Planning:
Explore Portugal's diverse regions and property markets.
Determine your investment goals, budget, and property preferences.
Think about the type of property that suits your investment goals and personal preferences. Are you looking for a property for personal use, rental income, or capital appreciation? Your goal will influence the location and type of property you choose.
2. Engage a Real Estate Consultant:
Partner with a reputable real estate consulting company like ORM.
Benefit from our expertise, market insights, and access to exclusive property listings.
ORM offers a bespoke real estate property search service where we go the extra mile to give you access to Portugal’s best real estate portfolio and find you the right home to match your investment goals, your dream house, and the new life you want to experience in Portugal.
3. Property Viewing and Selection:
Arrange property viewings, either in person or virtually.
Evaluate properties based on location, amenities, investment potential, and legal considerations.
We take the property search to heart by providing our clients with insights on how the property can match up with their investment goals. We factor in its appeal to expats or tourists, the change of weather at different times of day and year, the local community, the amenities in the area, and many other factors that ease your Portugal property search and selection experience. Once we have a selection of properties for you, viewings of the properties are scheduled or video presentations, if bought remotely.
4. Legal Assistance:
Retain the services of a skilled Portuguese lawyer specializing in real estate.
Ensure due diligence, including property title verification and legal compliance.
Procure a Número de Identificação Fiscal (NIF).
ORM works with our partner law firm to facilitate the purchase of your new Portugal property. Our legal pool comprises local Portuguese practitioners who are experts in the local laws, regulations, and procedures related to property investment.
Once you have selected a property, the lawyer will be granted a Power of Attorney (POA) to represent you and cover the necessary due diligence to inspect the property you are eying. This will include reviewing the legal status of the property, checking that debts, community, and utility fees are paid and building permissions and licenses for future improvements are all in good order.
When investing in real estate in Portugal, obtaining a NIF is a vital step to ensure compliance with tax regulations and fulfill your tax obligations related to the property investment. NIF stands for "Número de Identificação Fiscal," which translates to "Tax Identification Number". The lawyer can assist you in procuring a NIF by guiding you through the application process and providing the necessary documentation to the Portuguese tax authorities.
5. Negotiation and Offer:
Work closely with your real estate consultant to negotiate the best terms and prices.
Submit a formal offer, outlining any conditions or contingencies.
With a NIF, legal representative, and the due diligence checks completed, you are now ready to make an offer on the property of your choice. Depending on the location, market trends, and future improvement plans for the area, ORM proactively negotiates the best rates for our clients. After an alignment on the final offer, the lawyer will draw up a Provisional Offer for your property of choice.
6. Sales Agreement and Deposit:
Upon offer acceptance, a sales agreement is drafted.
Secure the property by paying a deposit, typically around 10% of the purchase price.
Once a Provisional Offer has been accepted and agreed upon, a Reservation Fee with a minimum of €10,000 is required to guarantee the investment. The property seller will then take the property off the market.
After the Promissory Contract is signed, the deposit, which is typically 10% of the total purchase price agreed, less the reservation deposit is transferred. The remaining balance of the property is done through a series of transfers until the payment is completed.
7. Financing (if applicable):
Explore financing options with Portuguese banks or mortgage brokers.
Obtain pre-approval and finalize your financing arrangements.
There are several Portuguese banks or mortgage brokers with different financing options available to you. Provide the necessary financial information and documentation to the chosen bank or mortgage broker to assess your eligibility for financing. This typically includes proof of income, bank statements, tax returns, and details about the property you intend to purchase.
Obtaining pre-approval gives you an idea of your budget and enhances your negotiating position when making an offer on a property. After finalizing your financing arrangements with the chosen lender, the lender will review the property's appraisal, conduct a title search, and assess any other required due diligence.
Review the offer carefully, seek clarification if needed, and proceed with accepting the mortgage offer. After acceptance, work closely with your lender and lawyer to fulfill any remaining requirements. On the closing date, the necessary funds will be transferred to the seller, and the property ownership will be transferred to you. The mortgage agreement will come into effect and you will begin making regular mortgage payments as per the agreed-upon terms.
8. Completion and Finalizing the Purchase:
Pay the remaining balance, taxes, and associated fees.
Engage your lawyer to ensure a smooth transfer of ownership and registration.
While the transfer of payments is being completed as per the agreed schedule in the Promissory Contract, the lawyer, on your behalf, will appoint a notary who will be assigned as a witness for the signing of the Deed of Transfer.
Once the Notary recognises that all the purchase details are in order and full payment of the property is completed, the Deed of Transfer (Escritura), will be signed between the property seller, the buyer, and the notary.
The lawyer may represent you during this legal exercise and sign the contract on your behalf. The certified copies of the sale will then be issued. The lawyer will then proceed to register the new owner of the property into the Land Registry (Registo Predial) and will give a copy of the registration, recognising you as the new property owner.
9. Post-Purchase Considerations:
Set up essential utilities and services.
Consider engaging our property management services for hassle-free ownership or rental management.
ORM will then arrange for the activation of essential utilities such as electricity, water, gas, and internet services to initiate the connection process and ensure a seamless transition.
ORM also offers Property Rental and Management by MAREA. Our services encompass a wide range of after-sale concerns, including but not limited to interior design, property maintenance, repairs, budget management, short- and long-term rental management, and even tax-related matters. Let us take care of the details so you can focus on other priorities.
Buying property in Portugal as a foreigner can be a rewarding experience with the right guidance. At ORM, we are committed to providing comprehensive support throughout your property purchase journey. Whether you seek a dream home or a lucrative investment opportunity, our expertise and personalized services will help you navigate the process with confidence.
Start your Portuguese property journey with ORM today and unlock the endless possibilities that await you in this beautiful country.
(Note: This blog post is for informational purposes only and should not be construed as legal or financial advice. Seek professional assistance for your specific situation.)
