Portugal THE BUYING GUIDE

The complete guide to buying a new home in Portugal, from beach apartment to luxury villa...

. Area guide . Property facts . Country overview . The buying process

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THE BUYING GUIDE Portugal

Over 200 days of sunshine a year, yet only four hours from London, Portugal represents an accessible escape from the British weather. Portugal’s Atlantic coastline spans the whole of its west side; it allures and captivates its visitors with isolated coves, sand dunes and dramatic cliffs. The rural pace of life and picture perfect villages relax and calm the inhabitants, whereas the vibrant, bustling resorts of the south, certainly keep you on your toes. However if it is stone cobbled streets, medieval castles, and a shopping centre to rival Blue water you are after, then the exciting capital of Lisbon is a must. Even though Portugal is now a well-known overseas option, it still offers an attractive option, in a market that is far from saturated. With only a short drive from the major cities or beach resorts, you can be in relative seclusion, amongst beautiful rural villages. Old-fashioned charm is perfectly married with sun-kissed beaches in the Algarve, while the country’s second city, Porto, is a magical place for the wandering traveller. Wherever you venture in Portugal, you will never be far from true isolation, even in the busiest of resorts, hop on a bus and within an hour you will be away from the crowds and experiencing Portugal in all her glory.

Country Overview - Fast Facts • Population: 10,676,910 (July 2008 est.) • Currency: Euro • Capital city: Lisbon • Major cities: Porto, Faro • Languages: Portuguese (official), Mirandese (official - but locally used) • Climate/weather: Cool and rainy in north, warmer and drier in south • Location: South-western Europe, bordering the North Atlantic Ocean, west of Spain

• Healthcare: Private Healthcare is recommended here • Visa/residency: All non-residents must apply for residency if you plan on living in Portugal past six months • Economy: Inflation rate (consumer prices GDP) (official exchange rate): $255.5 billion (2008 est.) GDP (purchasing power parity): $245 billion (2008 est.) GDP (real) growth rate: 0.9% (2008 est.)

Portugal has become an increasingly service based economy since joining the European community in 1986. The government has privatised many state controlled firms and liberated key areas of the community including financial and telecommunications industries. However a poor educational system has left the country somewhat lacking with regards to productivity and growth. Portugal is continually over-shadowed by lower cost producers in Europe and Asia leaving less room for foreign direct investment.

THE BUYING GUIDE Portugal

. Main property markets . Forms of ownership . Restrictions . How safe is it? . Mortgages Main property markets Although the percentage of Portuguese who own their own homes is fairly high in comparison to other EU countries, they do not buy for investment purposes. Statistics show that rates only increase by about five percent a year, which means you should be prepared to own your home for about three years before trying to sell for a profit. The very stable Portuguese market actually puts investors off making a quick profit and high capital gains tax can also take a huge chunk out of a sale on a 2nd home. There are many foreign home owners in Portugal generally favouring the sunny Algarve coast. However, recently more rural inland areas have become increasingly popular too.

Forms of ownership It is possible both Leasehold and Freehold in Portugal.

Restrictions There are no restrictions on foreigners buying in Portugal. Foreign nationals do need to acquire a Tax code and Fiscal number from the local authorities. You will also need a Portuguese address for all documentation.

How safe is it? In recent years horror stories have put foreign investors off buying in Portugal. However, if you follow the correct procedures, you shouldn’t have a problem. Always employ the services of solicitors to oversee the whole procedure from the very start. Not after you have already handed over a deposit. The Portuguese law on Subrogation (any debts that the property holds will automatically be inherited by the new owner), should be one of the first checks your legal representative carries out.

Mortgages The most popular way to raise capital for your new home in Portugal is gain a mortgage in the UK rather then in Portugal. Portuguese banks tend not to lend to foreign buyers.

THE BUYING GUIDE Portugal

. The buying process . Choosing an area . Viewings . Legal representation . The sale . Taxes The buying process The buying process in Portugal is relatively easy and you should encounter very few problems. There is no need to have a foreign national as a partner and as long as you comply with any legal conditions and pre-requisites set in the applicable legal code, buying your new home should run smoothly. The key differences in investing in Portugal to other EU countries are firstly you must obtain a tax card and fiscal number from the local authorities, you then must nominate a Portuguese postal address for all documentation. Secondly, only a very small number of banks will lend money to foreign investors, so a British mortgage may need to be sought after. Thirdly, many apartments in Portugal are community run, meaning any potential buyers will have to buy a share in the organisation and be responsible for communal areas.

Choosing an area The majority of foreign nationals who buy in Portugal are purchasing a 2nd holiday home and tend to favour the sunny Algarve coast. However if you travel as little as ten minutes inland, prices come down and picture postcard villages emerge out of the beautiful rural land. This is the key to deciding on an area: why you are buying? Do your research thoroughly and visit different areas. This will not only give you a feel for an area but you can also assess where you can get most for your money. Never rush into a sale, especially in Portugal. If needs be, the option to rent for a period of time may be a good idea.

Viewings The process is fairly straightforward to buy in Portugal, however viewings are essential. Never rely on information in leaflets or on the Internet. Once you have visited an estate agent and selected a few properties on their list, you will be taken to go see them. The vendor will not always be present however your estate agents will have all the required knowledge on the property.

Legal representation Only ever deal with a government registered estate agent (mediator autorizado). A lawyer’s task is to handle all legal matters of the sale, from drawing up contracts to making the necessary checks on the properties titles. A search will also be made to check the land registry at the local municipal authority and also that there are no outstanding Inland Revenue charges. You will need to obtain a Fiscal number (numero de contribuinte). As with all legal matters when the language isn’t your own, it is advisable to employ a bilingual lawyer who has knowledge of both Portuguese and English law.

The sale Portugal as a country is very eager to grow internationally. Therefore the process for foreign buyers to purchase their new homes is very straightforward and tens of thousands of buyers buy without any problems every year. After you have negotiated a price, your legal representative will do all the necessary checks and only once everyone is satisfied (both the vendor and buyer), will the contracts be drawn up (contrato de promissa de compra e venda). This will include details of the conditions of sale and other agreements regarding the transfer. Once this has been signed both parties become legally bound and generally a deposit of 10 to 15 percent will be required. All parties will set a date with the notary for completion. The buyer’s next task is to get municle pay property tax (Imposto Municipal Sobre Transamissões-IMT.) The transaction ends with the signing of the contracts at the notary office with all persons present. The deeds will be read out in Portuguese, this is when a bilingual lawyer is very useful and all monies need to be transferred. After this period, the property will be handed over to the new owners.

Taxes Municpal Transfer Tax 0-6 percent Legal Fees 1-2 percent Notary and registration fees 1-2%

THE BUYING GUIDE Portugal

AREA GUIDE . Lisbon . The North . Central . The Algarve Lisbon

The North

Central

The countries capital is watched over by the mighty Rio Tejo, and although drenched in history, has a vibrant youthful tone. Wander the cobble stoned, tiny streets of the old town, enjoy a coffee and a chat with the locals in the perfect street squares whilst others haul the chic boutiques and shops for a designer bargain. Lisbon has so much to offer within the city itself, a fairly good public transport system sees bright yellow trams whirling their way through the town, numerous art galleries, museums and collections are all available.

Portugal’s north is a beautiful mix of rural countryside, dramatic mountains and a scattering of dense green forestry. The area has been made famous for its wine production and of course Porto, the largest city in the area also acquired its name after its famous tipple. It’s a country bumpkin paradise up here, and endless balmy days can be spent rambling aimlessly, wine tasting or exploring the mountains.

This region in Portugal is known as the poorest. However it has a very charming appeal with bargain property set amongst olive groves, fields of roaming cattle and historic remains.

Porto however has enough to offer anyone who craves a little bit of a city feel. Draped across a series of waterways, in an eclectic mix of eras. The contradictions Porto has to offer can really astound. The night scene is not only for the young, clubs attract a multigenerational crowd and often play host to a European mix of DJs.

Other Towns and cities Estromoz, Evora, Nazare, Obidos,Tomar

The hilltop district of Bairro Alto has something for the night owls, Jazz cafes and nightclubs keep party goers entertained until the wee small hours. Step out of the city and after about a 15 minute ride you will be at the doors of once the largest shopping centre in Europe. The beach side resorts of Sintra offers fishing villages and coastal towns for that quieter pace of life. House prices in Lisbon are relatively fair, and when the rest of Europe enjoyed a boom in property sales, Lisbon was sadly forgotten. As more and more foreign investors fall hypnotised by her beauty and charms, prices have understandably risen slightly. The low cost airlines fly daily into this city, with only a four hour flight to endure.

The architecturally rich town of Evora along with many other spectacularly walled villages lie here awaiting to be explored. If you are looking for a taste of traditional Portugal- This is the place to be.

Braga, is another hidden gem set in the north of the country, it has become to be known as the Rome of Portugal. It boasts the oldest cathedral in the country and the biggest attraction of the north is only minutes to the east of the town-Bom Jesus do Monte. Despite the holy feel, the town’s streets are lined with lively cafes and bars filled with student s from the Neighbouring University of Universidade do Minho. Other towns and cities Porto, Braga, Viana do Castelo

The Algarve The Algarve is like marmite: you either love it or hate it! Either way though it is Portugal’s premier tourist attraction. With its white sandy beaches, turquoise waters, brash resorts, white washed towns that become swarmed with tourists when summer arrives. The beauty of this area is undeniably breathtaking though. Faro, the largest town, has a more Portuguese feel, with its medieval quarters. Again, flights pour in daily with an influx of excited tourists searching for that party atmosphere. Other towns and villages lay scattered around the province to explore and relax. With well over 200 days of sunshine a year, it’s hard not to become addicted to the shores of Southern Portugal. Other Cities and Towns Faro, Lagos, Monchique, Sagres, Silves, Tavira

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