Buying Property in Portugal - Why & How?

Buying a property in Portugal may seem like a daunting process, but with the right guidance and expertise, it can soon become a totally hassle-free experience.

At the Brookes Property Group, we have 17 years' experience helping our clients overcome their challenges and secure their dream property in Portugal. We take pride in our expertise of the international property market which allows us to guide you effectively through every step of the purchase process.

Whether you want to discover the best areas to buy or how to benefit from reduced tax rates with the Non-Habitual Residency scheme, the combined knowledge of our team and our esteemed network of contacts puts us in a favoured position to advise on why buying property in Portugal is right for you.

To help you with your initial research, we've put together this useful guide that will provide you with a better understanding on all there is to know about the purchase process and the benefits of buying in Portugal.

Lifestyle Incentives

If there's one thing the Portuguese lifestyle is characterised by, it's relaxation. Deciding to move to Portugal means you'll be treated to the fabulous carefree lifestyle that has drawn visitors from across the world for years.

Friendly locals, an exquisite coastline, bustling cities, and even better food, there's nothing quite like Portugal.

Accessible routes to and from Europe

Offering direct routes to and from the UK and Europe, including Spain, Germany, France and much of the Scandinavian Peninsula, Portugal is one of Europe's most easily accessible countries. Not only does this ensure ease of access, but for those interested in making an investment purchase, there will be the added benefit of long-term and holiday rental visitors travelling to and from Europe.

There are a variety of well-connected airports that allow ease of access to most of Portugal. Faro Airport, also known as Algarve Airport, is ideally located to serve the region. Whilst Lisbon and Porto each have their own airports offering superb links around the country.

Our latest development, Quinta Heights , is located no more than a 45-minute drive away from Faro airport in the south.

Warm climate

One of the main draws of Portugal for many overseas buyers is of course, its favourable climate. In Summer, you'll benefit from glorious sunshine and even in Winter, temperatures remain mild, making it the perfect year-round European location to escape to.

For some of the best weather in Portugal, the Algarve reigns supreme, with an average of 300 days of sun per year.

Friendly and laid-back culture

Owning a property in Portugal gives you unlimited access to the local area and Portuguese culture. This is where friendliness prevails - where you'll become harmonious with the local community, see familiar faces and get to know the local restaurants and their hospitable teams. It will be the perfect incentive to return time and time again.

Varied landscapes

In Portugal, the landscapes range from sunny beachfront towns and bustling cities to rustic country homes and endless vineyards situated further inland.

For sun-seekers, the Algarve offers plenty of coastline ideal for a range of leisure activities, as well as quaint fishing towns and coastal walks to explore.

City life reaches its peak in Lisbon and is an attractive option for those looking to make an investment. For a more rustic experience, towns and castles situated in the central region have historical significance as strongholds for the Knights Templar.

Financial Incentives

As a property destination, Portugal is highly favourable from a financial perspective. At The Brookes Property Group, we've chosen it for a number of our developments due to its proven return on investment for our clientele, as well as a number of incentivised tax and residency programs for investors.

Fortunately, there are no restrictions on those from overseas who wish to purchase or invest, you simply need to provide all of the official documentation and successfully complete all of the legal processes required.

Here are some of the main financial incentives we can help our clients benefit from when buying property in Portugal.

Non-Habitual Residency (NHR)

Primarily, Portugal offers two initiatives for overseas buyers, including the Non-Habitual Residency (NHR) and the Golden Visa Program. Introduced in 2009 by the Portuguese government, the NHR scheme was created to attract high net worth residents and pensioners to invest and receive reduced tax rates and exemptions for the 10 years of residency. It is attractive if you:

• Have not been a tax resident in Portugal in the last five years
• Are planning to retire
• Are expecting to receive interest or dividends.

In order to qualify for the NHR scheme, you must become a tax resident. For non-EU citizens, including the UK, you will need to obtain a residence permit to apply for tax residency, which are issued for a number of reasons including investment in property. For EU, EEA, or Swiss citizens, you do not require a residence permit to apply for tax residency. Once you become a tax resident, you will then be eligible to make an application for NHR tax status.

A great investment opportunity

If you are considering buying a property in Portugal, you may already be aware of investing for real estate purposes, or the idea may be new to you. Fortunately, our team at The Brookes Property Group have experience investing in international property, on both a personal and professional level, helping hundreds of clients to make profitable investments, and can answer any questions you may have.

Buying an investment property for both long-term and short-term rental purposes provides great returns. The wonderful quality of life in both rural and high-density areas draws a high volume of tourists and holidaymakers, as well as those wishing to stay for longer periods of time. Due to the country's seasonal demand in the Winter months, Portugal carries a remarkable, year-round return on investment, with high rental yields and returns.

Expected gross rental income is amongst the highest in Europe

Regardless of whether purchasing property in Portugal for rental reasons currently interests you or you are buying for personal use, it will remain a viable route that could be revisited in the future.

Golden Visa Program*

The Golden Visa Program is a form of residency by investment. Once your investment has been made, you'll have access to a number of benefits, including freedom to travel in the Schengen area, as well as to live, work and receive healthcare in Portugal. This is all possible as long as you retain your investment.

After five years of investment, Portugal's Golden Visa program offers the option to apply for permanent residency and citizenship. The property investment needs to be equal to or above €500,000, or equal to or above €350,000 when purchasing property requiring renovation. On average, you only need to stay in the country for up to 14 days over each residency period to be eligible to receive these benefits.

*From January 1st 2022, the Golden Visa is no longer available for investments in high-density areas of Portugal, including much of the Algarve, Lisbon and Porto. This is due to recent amendments which focus on residency-by-investment in low-density areas.

Where to buy in Portugal

From the golden shoreline in the south to Portugal's bustling cities and mountainous northern areas, this celebrated country bursts with a wealth of diverse regions all offering distinctive but equally spectacular perspectives of the world. Thriving with an array of things to do and see for couples, individuals and families alike, these are our selection of the best places to buy in Portugal.

The Algarve is one of Portugal's hotspots for overseas buyers. Featuring endless stretches of golden beaches and rugged coastline, charming local towns and delicious seafood, The Algarve has upheld its crown over the years as one of the best places to buy property in Portugal.

Popular with expats and retirees, as well as investors looking for a great rental location, The Algarve offers plenty of things to see and do, in a luxurious, laidback setting. With easy access routes to and from much of Europe, and with a location less than three hours from the UK, The Algarve's sunny climate is certainly one of its main attractions. For an unbeatable lifestyle investment, this region's offering is second to none.

Central Algarve

The Central Algarve offers an undeniable mixture of modern luxury and quintessential Portuguese charm. This is where golfing adventures, Michelin-starred restaurants, multi-million Euro villas and charming fishing villages find a home.

Widely recognised as the most prestigious area to buy property, The Golden Triangle boasts lively restaurants, bars, nightclubs and beaches. Comprised of the luxury gated communities of Quinta do Lago and Vale do Lobo, as well as the towns of Almancil and Vilamoura, this is where you'll find some of the most expensive properties in The Algarve. Featuring a beautiful yacht marina, numerous resorts and exclusive beach resorts, properties in this area tend to be much higher in price than other areas of the Central Algarve.

Some lesser-known locations in the Central Algarve include Carvoeiro, a charming fishing village with a small beach decorated with colourful fishing boats. Further west along the coast, Ferragudo is truly a hidden gem in the Central Algarve. Sitting on the edge of the River Arade, it boasts a collective of whitewashed cottages, hillside streets and old-world charm. Properties in these areas benefit from fantastic value, whilst providing easy access to the best of the region.

Eastern Algarve

Whilst less populous than the renowned Central Algarve, the Eastern Algarve still holds its fair share of highlights. Featuring unspoiled beaches, remote islands, charming villages, and of course, the spectacular Ria Formosa Natural Park, you're sure to find a spot you love along the Eastern Algarve's 30 miles of coastline.

Arguably one of the prettiest towns in The Algarve, Tavira offers a Moorish wonderland along the Gilao River. With its thirteenth-century castle, old town and whitewashed churches, it brims with an abundance of Portuguese culture and history.

From Tavira, a day trip to the small fishing village of Santa Luzia is a must. Famed for its octopus fishing and harbourside restaurants that have perfected the delicacy, this pretty and characterful village is a hidden gem.

The wider area of Ria Formosa Natural Park comprises an ecosystem of canals, islands, and marshes, as well as an array of bird and animal species, ideal for a bike ride, boat trip or a kayaking adventure.

Western Algarve

For a diverse variety of scenic landscapes and breathtaking natural beauty, the Western Algarve fulfils all expectations. Complemented by the glorious Atlantic Ocean, the region is replete with secluded coves and remote wild shores interspersed with new seaside resorts and a much slower pace of life than its neighbouring areas.

For the iconic beaches and rugged cliffs of The Algarve, Lagos is symbolic of this exquisite ideal with sweeping headland views and a charming walled old town.

The verdant Monchique offers an array of ways to appreciate its mountainous environment, from charming walks to soaring views over The Algarve.

In the foothills of the mountains, Silves presents a quiet market town and a storied history as one of region's defensive strongholds. Its rich history can still be felt throughout the town.

Situated on the River Arade, Portim?o is the Algarve's second largest city, renowned for its sardine fishing, as well as delightful regional market.

West Coast

Porto - Porto offers a bustling metropolis that holds its own to compete with the thrilling heights of Lisbon. Home to historic towns and characterful cities, Porto strikes a balance between tradition and contemporary flavour. Careful selections of port wines enjoyed in old-school taverns, alfresco cafes, and old-world charm blend seamlessly with alleyway street art. The main draws of buying property in Porto include access to the city's transport infrastructure, museums, arts and culture.

Silver Coast - Vast white sand and cool sapphire waters stretching from Porto to Lisbon - the Silver Coast contends with the likes of The Algarve, offering sun and sea, as well as close proximity to Portugal's urban centres. Boasting a relaxed pace of life within authentic Portuguese communities, this varied region combines remote mountains with stunning beach towns, including Peniche, a popular seaside location, and the iconic surfing beach, Nazaré, as well as historic sites. Since the area is not as well known as its Algarvian counterpart, its rental returns and/or capital gains are not so generous, but its slow pace of life and wild natural surroundings form part of its appeal.

Lisbon - For many, the first city location that comes to mind when thinking about Portugal is the lively metropolis of Lisbon, the country's largest urban centre, which also makes it the most expensive to live in. This is where ancient history mingles with cultural entertainment and modern infrastructure, and where many of Portugal's immaculate beaches lie, including the coastal town of Cascais on the outskirts of the city. Each area of Lisbon adds its own characterful perspectives and unique charm, making property in this area extremely varied. From apartments that line traditional cobbled streets, to villas overlooking the shoreline, Lisbon is a good investment location due to the high demand for city breaks generating guaranteed footfall in the area.

Financing property in Portugal

When buying property in Portugal, the means to finance your purchase is often top of mind. Once you've reviewed your available funds, you may decide that the best option is a cash purchase, or you may consider mortgage options, equity release, or withdrawing funds from other investment sources. There are plenty of options available when buying in Portugal and our expert team can guide you through choosing the option that is best for you.

Remortgage your existing property

You may be able to remortgage your existing property in order to generate enough equity to purchase a new property in Portugal.

Drawdown on your pension in Portugal

By drawing down on your pension, you'll receive monthly withdrawals for whichever amount you wish, whilst keeping the remainder of your income invested in your pension pot.

An option is to transfer your UK pension funds to a Qualified Recognised Overseas Pension Scheme (QROPS) tax-free. This will allow you to receive your pension in euros and offer more freedom to pass on your benefits to your chosen beneficiaries. Transferred funds will also be protected from the UK lifetime allowance charges.

Additionally, if you obtain Non-Habitual Residency (NHR) status whilst in Portugal, you may be eligible to benefit from a reduced tax rate of 10% on your foreign-source pension income for the 10 years of residency. Our contacts in Portugal can help check your eligibility for the NHR scheme and guide you through the application process.

Withdraw funds from low-performing investments

If you're looking to source surplus cash for your property purchase, an option is to review your current investments. Some funds allow periodic withdrawals, whilst others may allow you to sell your stocks or other investments. Be aware that if you do not choose to sell your investments, you may not be able to withdraw the proceeds straight away, as you will need to wait until after the settlement day. You should ensure that this is prepared in advance of your property purchase.

Getting a mortgage in Portugal

When you buy a property in Portugal, there are no restrictions for non-EU residents on obtaining a mortgage. Many Portuguese banks are happy to offer up to a 70-80% loan for the value of your property taken out for an average of 30 years for non-residents of Portugal. This takes into account that no more than 35% of your income is spent on repaying any outstanding debts or existing mortgages. Most Portuguese banks offer a fixed-rate or a variable-rate repayment option.

Our helpful team at the Brookes Property Group have helped our clients apply for over 1000 mortgages, so are extremely well versed with the process. We will put you in touch with our network of trusted mortgage advisors and specialists to help you find a mortgage provider and repayment option that is best for you.

Purchase costs

On top of the purchase price of the property, you'll need to consider the additional costs of the buying process which will be needed to cover a number of legal and agency fees. It's usually recommended to budget at least 10% of your purchase price to cover these.

Transfer Tax (IMT) and Stamp Duty

The IMT is an annual transfer tax payable at the time of transfer of Portuguese property. The amount you will pay is dependent on a number of factors including the property's primary use and whether it is your first or second home purchase. An additional stamp duty of 0.8% is also payable, although this may differ per development.

Legal fees

A lawyer will take care of all legal matters involved throughout the buying process in Portugal. It is possible to grant your lawyer limited Power of Attorney to sign documents on your behalf to save you travelling back and forth. They will also carry out any checks on the property, and manage any licences and contracts that need to be in place, including the promissory contract.

Notary & Land Registry fees

These fees will be required at the point at which you are given the official documents certifying that you own the property. This has to be signed with a Notary present and sent to the Land Registry.

Purchasing steps

Once you are aware of the required documentation and processes needed to purchase property in Portugal, you'll be in a good position to embark on the process for yourself and be well on your way to securing your dream property.

At The Brookes Property Group, we work with a trusted network of contacts in Portugal who carry out due diligence, making the buying process for our clients as hassle-free as possible. Together with our dedicated team, we'll support you every step of the way. Whether it's overcoming your existing hurdles to buying property or helping you to discover the most profitable locations to purchase in Portugal, our UK-based team make your international buying journey a breeze.

How we can help

Do you have questions about buying property in Portugal or want to find out about our Quinta Heights development? We can help. With over 30 years' experience in property investment and accountancy services, as well as extensive history working with our clients and managing the property purchase process in Portugal, we are ideally placed to make the experience much more streamlined.

To get in touch to find out more about buying property in Portugal or if you're interested in discovering more about our latest development in The Algarve, please contact Carrie Adam:

?? [email protected]

?? +44 (0) 1621 875 925