My Personal Experience Buying a Property In The Algarve

Important Pointers When Buying A Property in the Algarve

Last year, I embarked on a journey to purchase a property in the Algarve, and I learned quite a bit about the process. I want to share my experience and the updated information to help others navigate this journey more easily. The process is quite simple if you put your trust in others. For instance, a good Lawyer and Surveyor are paramount.

Most of the buying process was completed whilst I was back in the UK on business and arranging transport of our personal belongings, making the process less stressful. A few phone calls and sending of documents were all that was needed on my part.

Finding Your Algarve Property

After scouring the numerous websites advertising Algarve Property For Sale, I came across the Gatehouse International Algarve website. Being an international portal for agents to advertise their property portfolios, you will find over 1,000 properties for sale in the Algarve from various agents all in one place. This made the searching process much more manageable.

Once I had found my dream home, Gary contacted the agent and advised me on the buying process. He also connected me with reliable professionals within his network, who made the whole process a breeze.

Instructing A Lawyer

I realised the importance of hiring a Portuguese property lawyer. They meticulously checked all the necessary documents, performed all relevant searches, and ensured no outstanding debts were against the property. I also gave my lawyer Power of Attorney, saving me trips back to the Algarve for property-related issues. Most lawyers here speak English and typically charge around 1 to 1.5% of the property’s value.

Property Surveys

Even though my mortgage lender did a valuation, it wasn’t a complete building survey. Depending on the property’s age, I recommend getting a structural assessment done by a qualified professional. They will find any faults missed by the mortgage survey and recommendations for resolving any problems the property may face.

Fiscal Number (Numero de Contribuinte)

I needed a fiscal number to proceed with the buying process, which my lawyer obtained for me for a small fee. You can do this yourself, and it is pretty simple. It can be completed online here. This number is essential for opening a bank account in Portugal and handling utilities.

Promissory Contract (Contrato Promessa de Compra e Venda)

Once I agreed on the price with the seller, we signed a ‘Promissory Contract’. I paid a 10% deposit at this stage. This binding contract outlines all agreed terms, such as price and completion date. A breach of this contract means losing the deposit or, in the seller’s case, paying back double the deposit amount. So, it is essential to be sure that the Algarve property you are buying is your dream home!

Final Deed (Escritura de Compra e Venda)

The final step was completing the purchase, where I paid the remaining balance and officially transferred ownership. This process involved signing documents in the presence of a Notary, who confirmed the receipt and transfer of funds.

Will (Testamento)

Owning property in Portugal made it advisable to have a Portuguese Will, simplifying inheritance processes. If you leave it to chance, this can be a long-winded process for family members to resolve should the unfortunate happen.

Residency (Residência)

Since I planned to stay in Portugal for more than six months a year, applying for residency was necessary. This process has been simplified recently, especially with proof of property purchase. You can apply for a temporary residence visa for two years. Then, a permanent residence visa that lasts for five years. The applications are simple forms backed up with your documents and proof of identity. There are other visa options available depending on your circumstances. For more information about the visas on offer please see here.

Fees / Costs

In addition to the purchase price, I accounted for an additional 5% to 8% for various fees. This includes the IMT fee (Imposto Municipal Sobre Transmissões), stamp duty, notary, and lawyer’s fees. Here’s a revised table that shows the current IMT calculations:

Capital Gains Tax and Inheritance Tax

The rules around Capital Gains Tax and Inheritance Tax can be complex, especially for non-residents, so professional advice is crucial here.

Offshore Ownership

Though offshore ownership used to have benefits, recent changes in legislation have made it less attractive. Again, professional advice is vital in these matters.

Disclaimer: While I’ve ensured accuracy, laws and regulations can change, so it’s always best to consult a professional for the most current advice.

This has been my journey in purchasing property in the Algarve. I hope sharing my experience in this personal and detailed manner helps demystify the process for you!