Purchasing a property in Portugal is a relatively straightforward process. We have explained here the key points to consider.
FIRST STEPS
There are a few fundamentals you must consider at the start of your property search.
Always deal with a Government licensed agent-if you are in doubt, every licensed agent must display their licence in their office, and on all advertising-For example our licence is AMI 5604 (you will always see AMI followed by a series of numbers).
Licensed agents have professional insurance, other guarantees and are accountable for their actions.
If you deal with an unlicensed agent you will have no legal protection in case of problems/queries.
Select a lawyer/solicitor who normally carries out property conveyancing, and who is able to respond in a given timescale to your requests. We have relaible English speaking lawyers that we work with on a regular basis and provide a good service at a reasonable cost.
SELECTING PROPERTIES & ARRANGING VIEWINGS
We have a wide variety of types, shapes, sizes and ages of property in the Algarve. You can help us to select the correct properties for you by giving us as much information as possible regarding your requirements, for example:
-Desired location -Type of property required: Attached/detached villa, apartment, farmhouse, land/ruin (with approved project/with ruin/agricultural) other (please specify) -Number of bedrooms -Needing refurbishment or ready to move in? -Is a pool required (or space for a pool) -Size of plot preferred -Is this a holiday home or permanent residence? -If your purchase is cash or you require finance here in Portugal (or offshore, or in UK) -Your timescales for buying (including dates of your next visit to Portugal) -Your budget -Any particular dislikes which must be avoided (e.g. age of property, neighbours)
Please remember that arranging viewings can, at times, be a little complicated (particularly when we have non-resident owners and during the holiday season). If you can be flexible with your viewing times, it is likely that we can show you a greater selection of properties.
MAKING AN OFFER
So, you’ve found that dream property, what next? The first step is to make an offer for the property. Our advice is to give as much positive information as is possible to the vendor to support your offer. You should consider: -How quickly you wish to complete the purchase -If you need finance -How much deposit you are prepared to pay (constructors in particular often offer a discount when a large deposit is paid) -If you wich to buy any of the fixtures and fittings Please discuss an offer with us-we often know the client well and can help to negotiate a deal which is agreeable to both vendor and purchaser.
PROPERTY DOCUMENTATION
Firstly, your lawyer will be responsible for checking all documentation is in order. However, we believe you should understand the various parts of the purchase process, and we will always explain this to you.
When a property is placed on the market for sale, the following documents will be needed:
Certidao de Teor (Land Registration) This document shows that the owner has good title (i.e. owns the property) and also if the property has any loans/mortgages outstanding on it. There is a description of the registered details of the property (area of construction and land, type, location, boundaries) which should match the actual property. This document is obtained from the Land Registry (Conservatoria).
Caderneta Predial (Financial Registration) The financial registration of the property, which should concur with the details on the land registry. Also gives information about the valor patrimonial (rateable value). This document is obtained from the Financas (Tax Department).
Caderneta Rustica A similar document to the caderneta predial, but only required for rustic properties. It gives the same information.
Licença da Habitação/Utilização (Habitation Licence) Properties for habitation must have a habitation licence, confirmimg the property has been constructed in accordance with the plans submitted to the Camara (Council). Properties constructed before 1951 are exempt from this requirement. Properties for other uses (eg storage) will havea utilization licence, not a habitation licence. These documents are obtained from the Camara (council)
BI (Ficha Tecnica) A new requirement which has come in to effect from the 16th August 2004. All house which were completed after 30th March 2004 must have a ficha tecnica, which gives technical details of the construction type, materials etc. This document is provided by the constructor of a property.
CONTRACTS
Once a price has been agreed, your lawyer will check all of the above documents relating to the property and draft a contrato promessa de compra e venda (promissory contract). This contract states: -The identification of the buyer and seller -The identification and description of the property -That the vendor agrees to sell and the buyer agrees to buy -The amount to be paid on signing of the contract (normally between 10 and 20% of the purchase value) -The timescales for completing the property purchase (signing of the escritura (deeds)) -Any other relevant points (e.g. an inventory of the property contents) The contract is signed by both the buyer and seller, normally in front of the notary. Once the contract it is signed it is binding on both parties (similar, but not the same as exchange of contracts in the UK). Should the seller not sell the property, he has to pay the buyer double the deposit as compensation. Should the buyer not buy the property, he loses his deposit. We normally expect to sign a promissory contract within 30 days of having agreed an offer.
COSTS
The following costs will be incurred:
Legal fees These will vary but expect to pay around 1.5-2% of the purchase price.
Notary and registration fees Again variable, (for example fees are higher when you have a mortgage on a property). Can be 1.5-3% of the purchase price.
IMT (used to be SISA) This is the tax you must pay when you purchase a property. The calculations are a little complicated, however we have provided a table at the bottom of the page to give you some guidelines.
Please remember we are selling properties day in, day out. If you need some more information, or you have a doubt regarding anything to do with purchasing property in Portugal, contact us and we will help you.
This information is provided as guidelines only and is no substitute for proper legal advice. Azul Homes accept no liability for any mistakes or omissions herein and subsequent issues. All text copyright Azul Homes 2005.
Important notes:
This chart only calculates IMT for predios urbanos (urban buildings). To calculate the IMT to be paid, enter the purchase price in the box at the bottome left of the table and click on the "calcualte" button. For predios rusticos (rustic) a flat rate of 5% IMT is applied. For land for construction & urban properties not for habitation (eg Armazens), the rate is 6.5% For predios mistos, the rustic part attracts the flat rate of 5%, with the urban part rated either as this chart or 6.5%. Offshores are charged at 15% (if they remain offshore).
For permanent residents, the following table applies:
Value of property
Rate to apply
Deduction
Up to €85,500
0%
Nil
€85,501 - €117,200
2%
€1,710
€117,201 - €159,800
5%
€5,226
€159,801 - €266,400
7%
€8,422
€266,401 - €511,000
8%
€11,086
Over €511,000
6%
Nil
Enter value of purchase
IMT payable
However, for clients buying a second home, this table would apply:
Value of property
Rate to apply
Deduction
Up to €85,500
1%
Nil
€85,501 - €117,200
2%
€855
€117,201 - €159,800
5%
€4,371
€159,801 - €266,400
7%
€7,567
€266,401 - €532,700
8%
€10,231
Over €532,700
6%
Nil
Enter value of purchase
IMT payable
This is only a simulation and clients must always consult their lawyer, or the Financas to establish the exact amount to be paid.
