Real estate purchase Lisbon, real estate investment in Portugal

Search house or apartment Lisbon Whether you are looking to rent, buy or invest in rental property in Lisbon or elsewhere in Portugal, it is important to know that things have changed a lot in recent years. There are now a large number of European expatriates in Portugal, many of them investors, but also many English, German or Chinese who also come to invest in Portugal. We are therefore seeing a very sharp rise in prices and a real estate market that has developed enormously around short-term rental investment or the purchase of second homes in recent times.

The consequences are higher purchase prices, a demand much higher than the supply, but also an improvement in the standing of the properties to be purchased. The latter do not remain on the market for long in Lisbon as elsewhere and a large part of the renovation work in Portugal will have to be planned, which not all foreign investors necessarily think about, especially to meet European standards concerning insulation.

You will therefore need to take the time to carry out your search with the different estate agencies in Lisbon or elsewhere in Portugal or have a property hunter accompany you to make sure you review all the opportunities in the Portuguese market that are available to you and make the right choice.

Buying real estate Lisbon and Portugal: professional support

I suggest you save time and avoid the pitfalls of real estate by contacting professional agencies based in Lisbon. By clicking on the button below and filling in the dedicated form, I will forward your request to 5 Portuguese estate agencies of reference, which will allow you to obtain property proposals on a very large catalogue of apartments or houses for sale in Portugal.

These real estate agencies have real estate agents who speak perfect English and who will be able to accompany and guide you in many steps such as the search of the property according to your criteria, the organization of visits, the finalization of your real estate purchase at the notary but also to accompany you for the obtaining of essential documents such as the TIN or the status of Non Habitual Resident.


Looking for a property to buy in Lisbon, Portugal

The search for a property to buy in Lisbon or Portugal can be complicated if you don’t speak the language and don’t know the specificities of the Portuguese real estate market or the pitfalls to avoid:

  • Some properties are only available in certain agencies on an exclusive basis.
  • Some real estate ads on major websites have been out of stock for a long time and are used as an appealing product.
  • There are websites where you can find apartments or houses to buy in Portugal for sale to individuals but you will need to be fluent in the language.
  • Some plots of land may be for sale but in reality are not constructible.
  • You will need to be accompanied by a notary for the conclusion of the sale but the documents will be in Portuguese.
  • When buying a property in Lisbon or Portugal, there are different rules on the right of withdrawal than in other European countries.

For all these reasons, it is preferable to be accompanied by a professional who knows the market, its pitfalls and will know how to find the right Portuguese real estate investment according to what you are looking for.

Real estate agency portugal

Buying real estate Lisbon and Portugal

The contents presented from here do not exclude in any case the consultation of a professional in the field of real estate, accounting or property law, which I consider indispensable for any real estate transaction in Portugal by a foreigner. These 3 areas of expertise are not mine and some information may be inaccurate or not updated. My main objective here is simply to give you indications, leads or ideas that could be useful to you by being as accurate as possible.

Portuguese law does not provide for any restrictions on the purchase of real estate by foreigners. Authorised to purchase residential and commercial real estate, as well as land – both as a physical and legal entity. Once you are familiar with properties for sale in Lisbon or Portugal via the Internet, printed publications and visits to thematic exhibitions, you will need to choose the right Ombudsman.

You can make your property purchase independently, but if you do not speak the language I do not advise you to do so. For a quicker and safer purchase, it is recommended that you go through a Portuguese estate agent.

Before buying property in Portugal

After a more detailed discussion of your property search with the real estate agent, the potential buyer is invited to take a guided tour. These visits include an inspection of selected properties and expert advice. Here the buyer will have to pay for transportation and accommodation costs.

If the first visits are not conclusive, there will have to be other visits. If the buyer cannot stay in Portugal throughout the transaction, it is more risky but entirely possible to make a distance property purchase. To do so, it is necessary to make a letter of proxy (Procuração) and send it to the Embassy of the Portuguese Republic in your country and to a legal representative. The document is published in Portuguese.

After selection of your property

Before the parties proceed directly to the transaction, several procedures are necessary.

real estate contract purchase portugal First, the buyer must have a local tax identification number (TIN). It can be issued by the local tax authority (Servico de Financas), through a lawyer or tax representative. Obtaining a TIN is necessary because when acquiring real estate in Portugal, the buyer becomes a Portuguese taxpayer. In addition, a tax identification number is required to open a bank account.

Opening a bank account in Portugal or not – depends on the option of transferring funds :

  • Transfer from your European bank account to a Portuguese bank account and then to the seller’s bank account. The transfer of funds to the seller can be done by the person to whom you have given power of attorney.
  • Transfer from your bank account to a special bank account of the lawyer and then transfer the funds to the seller.

However, payment for the transaction will in all cases be made by transfer and not in cash. Another step is to reserve the Portuguese property. To do so, you will have to pay a reservation fee of 10% of the value of the property. This contribution means that the seller withdraws the object from the sale and no one else can buy it. Payment is made by transfer to the seller. If you wish to buy the house or apartment quickly, you can do without the reservation fee and proceed directly to the conclusion of the preliminary contract (Contrato de Promessa de Compra e Venda), subject to the agreement of the parties.

Preliminary Real Estate Contract

After the reservation of the property, the seller and the buyer conclude a preliminary contract. The document contains :

  • A description of the property
  • Its price
  • Terms and conditions of payment
  • The rights and obligations of the parties

At this stage, the buyer pays a deposit corresponding to between 10-30% of the price of the property. If, after the conclusion of a preliminary contract, the seller refuses the transaction, he is obliged to pay the buyer double this deposit.

If it is the buyer who refuses the transaction, he loses this deposit and can be brought before the court by the seller to pay compensation. In the case of a mortgage purchase, the bank’s refusal to take out a loan is not attributable to the buyer and the deposit is returned to the buyer. However, this condition must necessarily be stated in the contract.

Check the condition of the property you want to buy

Between the signing of the preliminary real estate contract and the contract of sale and purchase, it takes between one and six months. During this time, the lawyer collects all the necessary documents confirming the legal and technical condition of the property.

property purchase Portugal inventory of fixtures

These include the following documents:

  • Extract from the land register (Centidão de Teor). It shows the location of the property and its type.Extract from the tax office (Caderneta Urbana / Rustica Predial) or House Book (Caderneta Predial). A document on the tax registration of the property which also contains data on its location, plot size, yardage, number of rooms, presence of a garage, etc.
  • Housing certificate (Licença de Habitação). A document from the municipality confirming the property’s compliance with building codes. This only applies to buildings constructed after 1951.
  • Technical file of the property (Ficha Técnica de Habitação). This is a document of ownership including a certificate of housing and an extract from the tax inspection. It also specifies the contact details of the contractor, the client and the suppliers of building materials on which you can, if necessary, claim the quality of the construction. A data sheet is only required for properties with a housing certificate issued after March 30, 2004.
  • A document from the Portuguese Institute for the Protection of Historical Monuments (IPPAR). Required for properties that are historical monuments. Published in the IPPAR and the municipality, it confirms that these institutions do not intend to exercise their right to prohibit the sale.
  • Energy Certificate (Certificado Energetico). It indicates whether the building meets the new energy consumption standards.

After signing the preliminary contract but not less than three days before the final transaction, you will have to pay the property transfer tax and stamp duty to the local tax inspectorate.

Conclusion of the contract of real estate sale

The final transaction (Escritura) takes place at the notary’s office. First of all, the specialist verifies the completeness and accuracy of all the documents presented as well as the receipts for the payment of taxes. At the same time, the remaining amount of the transaction is paid, and the seller receives the rest of the funds that are either in the buyer’s personal account or in the lawyer’s Portuguese bank account.

Before the parties sign the real estate sales contract, the notary must read it aloud. The reading is done in Portuguese, which is why it is important if you do not speak the language to be accompanied by an English-speaking person. Contact me if you would like me to put you in touch with an independent estate agent in Lisbon who has my full confidence.

Registration of the real estate transaction by the Portuguese State

When the main agreement is signed, notarised copies of the document are sent to the Land Registry of the Conservatoria do Registo Predial for registration of the new owner and to the tax authorities. After this, the new owner receives the renewed Certidão de Teor registration certificate and the Caderneta Predial.

After the change of ownership, the contracts for telephone services, electricity, water and gas supply and co-ownership services are renewed.

Property purchase costs in Portugal


Property purchase costs in Portugal

Stamp duty (Imposto de Selo)

The stamp duty (Imposto de Selo) corresponds to 0.8% of the price of the Portuguese property which is indicated in the contract. If the transaction is carried out with a mortgage loan, the fee will increase further from 0.04 to 0.6%.

Tax on Transfer of Ownership (Imposto Municipal Sobre as Transaccoes)

The property transfer tax (Imposto Municipal Sobre as Transaccoes / Transmissoes Onerosas or IMT) depends on the type of property, its price, the nature of the residence (primary or secondary residence) and the location of the property (mainland Portugal or island). LMI tax rates are reviewed annually. Below are examples from 2015 not updated. You’ll have to do your research to find out the exact rates are updated regularly and therefore may have changed, but this will give you an idea.

Main house in Portugal (Property value: Tax rate / Deductible amount )

  • Up to 92407 € : 0% / 0 €.
  • From 92407 € to 126403 € : 2% / 1848,14 €.
  • From 126403 € to 172348 € : 5% / 5640,23 €.
  • From 172348 € to 287213 € : 7% / 9087,19 €.
  • From 287213 € to 574323 € : 8% / 11959,32 €.
  • From 574323 € : 6% / 0 €

Second home in Portugal (Property value: Tax rate / Deductible amount )

  • Up to 92407 € : 1% / 0 €.
  • From 92407 € to 126403 € : 2% / 924,07 €
  • From 126403 € to 172348 € : 5% / 4716,16 €.
  • From 172348 € to 287213 € : 7% / 8163,12 €.
  • From 287213 € to 550836 € : 8% / 11035,25 €.
  • From 550836 € : 6% / 0 €

IMI Municipal Tax (Imposto Municipal de Imoveis)

The owner must pay the IMI (Imposto Municipal de Imoveis) municipal tax every year. The tax rate varies from 0.3% to 0.8% of the estimated value of the property. If the IMI tax does not exceed €250, it is paid in April of each year.

If the amount of the tax is higher, then it is paid in equal installments, 2 or 3 times a year: in April and November or in April, July and November.

Legal fees, notary, real estate agent and administrative procedures

The real estate agent’s commission in Portugal is 5% of the transaction amount without VAT, which is 23% in Portugal. This commission is payable by the seller. The lawyer’s services will cost between 1% and 1.5% of the transaction amount and the notary’s services from 1%.

The Portuguese tax identification number costs €7.5. For the registration of property rights, you will have to pay €250 and €100 to €200 for the change of your electricity bills. When buying a mortgage, the property is valued by a professional whose services cost from 300 €.

Mortgage of a property in Portugal

It is quite realistic for a non-Portuguese resident to take out a mortgage, but the specific conditions of the loan will depend on the applicant’s personal situation and mainly on his income. The initial payment is 30 to 40%.

The rate on mortgages at most banks is linked to the Euribor rate of the last three months, increased by two to four percentage points. At the same time, monthly payments should not exceed 35% of the borrower’s income.

The duration of the loan depends largely on the age of the applicant, with the amount of the loan not exceeding 75 years. In other words, a 30-year-old can get a mortgage for 45 years.

The set of documents required may vary from bank to bank. However, an approximate list is included:

  • Photocopy of passport;
  • Portuguese tax identification number TIN;
  • Bank statement of personal accounts.

Employees will also be required to present:

  • Last year’s tax return;
  • Pay stubs for the last three months;
  • Certificate of employment and position in the company.

In the case of businesses:

  • Income tax return for the last year;
  • Bank statement from the company’s account for the last six months.

Documents must be translated into Portuguese or English. The transfer is obligatory and certified by the Consular Section of the Embassy of the Portuguese Republic in your country.

Purchase of building land in Portugal

Purchase of building land in Portugal

In order to begin construction of the land, a permit from the municipal authorities will be required. In order to obtain it, it is necessary to:

  • The selection of a plot of land and the presentation of the construction details to the Portuguese municipal authorities (obtaining a prior opinion on the possibility of obtaining permission to build a specific property).
  • The choice of the architect and the definition with him of the technical specifications.
  • A topographical overview of the region.
  • The drafting and presentation of the plans to the local municipalities.
  • Obtaining the necessary approvals.
  • Providing a final project with all details to the municipal authorities.
  • Obtaining the building permit (usually valid for one year and can be extended once).

Any changes to the project must be reexamined and approved by the municipal authorities. In practice, it takes 1 to 1.5 years to obtain a building permit. A fast-track procedure is provided for sites located in the loteamento area. Depending on the project, the building permit can be issued within 21 days. It should be noted that for a construction cost of more than 12,500 euros, you will have to use an approved construction company or obtain your own building permit.

Once a quarter, the technical manager (Technico Responsavel) will monitor the progress of the construction work and the municipality’s inspectors will also have the right to visit the construction sites. At the end of construction, the construction company or a representative of the technical control and the owner of the property sign the technical sheet of the dwelling (Ficha Technica de Habitacao), a copy of which is given to the municipality, the second copy is presented when the property is sold to a potential buyer.

The last step is to obtain certificates confirming the conformity of the building with the project. This procedure can take up to six months. Until the certificates are received, advertising of the property and its sale is not allowed. In practice, it takes at least two and a half years between the purchase of the building land in Portugal and the sale or occupancy of the built property.

Renting a property in Portugal

It is important to keep in mind that the law emphasizes the protection of the tenant’s rights, so it is important to focus on the terms of the lease. All the terms of the agreement must be set out in the contract, but they can be changed annually. The term of the lease can be any length of time, but for properties that are leased on a long-term basis (and not seasonal rentals), the minimum lease term is five years. This period is automatically extended by three years. The rental price depends on the type of property, its location and the season.

The average rent in Portugal is around €500 per month but becomes much higher in cities such as Lisbon which have become very touristy in recent years. With a short term rental contract, the rental cost is fixed for the entire duration of the contract. In the case of a long term rental contract, the rate may increase. However, the increase in the rate cannot be made by the owner arbitrarily and must be included in the contract.

In order to conclude a contract, especially for the rental of a large property (villa, commercial space), it is recommended to contact a lawyer. The cost of his services will be equivalent to approximately one month’s rent. Upon moving in, the tenant is required to pay the equivalent of two months’ rent, unless the parties stipulate otherwise in the rental contract. The last month, the tenant does not pay rent. If the tenant’s furniture is damaged during finishing or is missing, the tenant is liable to pay damages.

The grounds for evicting a tenant are as follows:

  • Late payment of rent;
  • Use of the property for purposes not specified in the contract, including illegal purposes (e.g. subletting);
  • Major works without the consent of the lessor.

Real estate market in Lisbon

The Lisbon real estate market is in full motion over the years 2016 – 2017 and one thing is certain, it still promises many changes in the years to come. Changes that unfortunately are not to the advantage of buyers as investors, developers and sought-after seasonal rentals are driving up property prices in Portugal and especially in the capital. In order to understand the evolution of the real estate market, it is important to have a vision of the trend in recent years.

Between 2008 and 2012 the market recorded a decline: even if it was only 10% it had the merit of existing. But the point that should be noted is that this decrease in Lisbon was 15 points less than in the whole country. This shows that real estate in Lisbon is a market apart and that buying homes in more remote areas will not be a problem at all.

As an example, you could buy in 2008 a 3 room apartment of 100 square meters for around 300,000€ and 270,000€ in 2012. A significant drop that still allowed for great deals but that time is over. At the moment the price per square meter in Lisbon is around 4000€, that is to say 400 000€ for a 100 square meter apartment, a big difference compared to 2012.

You will therefore need to plan a realistic budget if you wish to buy in the capital. Prices are of course lower in Greater Lisbon and elsewhere in Portugal. According to the Serviço de Estrangeiros e Fronteiras (SEF), the number of residents in Portugal increased considerably in 2019 and Brazilians constitute the largest community of foreigners in the country. As a result of these factors, real estate in Portugal is increasingly in demand.

This article will help you learn more about real estate in Portugal. Here you will find information on how to buy, the best offers, prices and the Visa Gold.

Real Estate Portugal

Properties in Portugal: typologies of real estate properties

There are several types of real estate in Portugal :

  • Apartments: properties in buildings, located on the “ground floor” (located on the ground floor), intermediate floors or the top floor
  • Duplex: houses or apartments that are divided into two floors and connected by an interior staircase.
  • Houses: ground floor houses
  • Rustic houses and farms: rural properties, generally housing far from the city centre
  • Penthouses: luxury buildings on the roofs of buildings.

The nomenclature of apartments in Portugal is different from what you might be used to. When researching properties in Portugal you will see:

  • T0 : no room
  • T1: one bedroom apartment
  • T2: apartment with 2 bedrooms
  • T3: apartment with 3 bedrooms, etc…
  • T1+1: apartment with 1 bedroom + 1 room without window. Whenever you have the “+1”, it means that you have a smaller room, usually without a window.

How to buy a property in Portugal

Buying a property in Portugal is not such an easy task, especially if the purchase is financed. Among other things, you need to have the money for the down payment and present your income tax to check whether or not your bank approves the financing. You must keep in mind the purpose of the purchase, whether you want to live or make an investment, to rent to other families, whether you want to live in the centre of Porto or Lisbon or whether you want to buy on the outskirts of Porto, Lisbon or see the houses for sale in the Algarve and other regions. Several factors can influence your real estate purchase in Portugal :

  • The location
  • Proximity to work
  • The proximity of supermarkets, the subway…
  • The price
  • Among other things…

But before that, choosing the ideal property is not easy either. You have to make this choice before you apply for bank financing. To learn more about the real estate purchase procedure, I invite you to read the article dedicated to the contract of purchase and sale of real estate in Portugal.

portugal property contract

Main property search sites in Portugal

It is important to search carefully to find a property you like for the price you want/can afford. Here are some of the main real estate properties search sites in Portugal :

  • Imovirtual
  • Sapo
  • OLX

The main real estate agencies in the country are :

  • Remax
  • Frontal
  • Century 21
  • Imovirtual
  • Era
  • Umseisum imobiliária
  • Chave Nova

Caution, from experience and faced with the problems you might encounter, I strongly advise you not to go ahead with a property purchase in Portugal without support: documents in Portuguese, hidden defects, difficulties with administrations, etc… If you wish to be accompanied by a professional, use the contact button above.

Visa Gold to buy a property in Portugal

For example, many Brazilians buy real estate in Portugal worth 500,000 euros or more (if the property is located in a low density territory) in order to obtain a Gold Visa and to be able to live in any European country. But beware, from 2021 the Golden Visa for real estate investments in Portugal will no longer be available for Porto and Lisbon.

In order to contain real estate speculation in the major centres, the Portuguese government has limited this type of investment to the interior of the country and to the autonomous regions. To apply for a Golden Visa for Portugal if you intend to stay in the country for more than 90 days, the following documents are required:

  • Tax Identification Number (TIN)
  • The last three pay slips
  • Personal identification (passport)
  • Statement of the last six months of your current account
  • Last statement of your income tax
  • Professional evidence (employment contract, professional licence or other)
  • In some cases, the report from the credit information system of the Central Bank of your country may be requested.

To find out all about Golden Visa, visit the dedicated page HERE.

portugal golden visa

Functioning of the real estate market in Portugal

The real estate market in Portugal is on the rise. Prices increased significantly between 2017 and 2018 (approximately 16%, according to Confidencial Imobiliário) and increased further in 2019. You will find all the details on the page dedicated to the real estate market in 2019 in Portugal.   The main reasons for the price increase are as follows:

  • Increase in demand for real estate in Portugal
  • High profitability
  • Increase in employment
  • A growing economy
  • Golden Visa
  • Low interest rates

Portugal is also increasingly sought after by foreigners (mainly Brazilians) because of the good quality of life the country offers its residents. It is recognized that it is much more advantageous to buy a property in Portugal than to rent one to live in. Payments can be as much as half the value of a rent, especially in the most central areas of Lisbon, Porto and the Algarve. As demand is high and availability is lower, properties are sold or rented out quickly.

Foreigners fight for the properties they find. From the investor’s point of view, this is an excellent market because it generates no loss (you can sell more easily), which reinforces the concept of value reserve. For you who intend to buy a property in Portugal to live in, a commercial option is to invest in the outskirts of the big cities, knowing that in the centres, prices are much higher. According to studies, the best deal for those who want to invest and get a good return is to buy in Oporto.

Real estate purchase Lisbon and Portugal

By validating the contact form, you authorize me to transmit your request to English-speaking estate agencies of reference which will be able to contact you directly. Nothing is automated: they are people based in Lisbon who are qualified to accompany you in your approach & your project.

Essencial Portugal is a website that connects individuals/companies with trusted, certified professionals in Portugal to carry out projects in the country. Only these certified and approved professionals are able to inform you, offer and invoice these services.

quality of life lisbon

Essencial Portugal

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