Navigating the purchasing process: a step-by-step guide for UK residents buying property in Portugal 

Are you a UK resident eyeing the sunny shores and vibrant culture of Portugal for your next property investment?  

From the tranquil Algarve to the bustling streets of Lisbon, Portugal offers a diverse range of landscapes and lifestyles, making it an attractive destination for property buyers. Named the seventh safest country in the world, and with no restrictions on foreign property ownership, Portugal boasts a sought-after yet affordable real estate market, with potentially high investment returns. 

However, purchasing property abroad can be a daunting task, especially when navigating a foreign market. Fear not, as this step-by-step guide is tailored to help UK residents understand and navigate the process for buying property in Portugal. 

1. Research and planning 

Before diving into the property market, it’s essential to conduct thorough research and define your goals and preferences. Consider factors such as location, property type, budget, and amenities.  

Portugal offers a plethora of options, from luxurious seaside villas in the glamourous municipality of Cascais, to city apartments in the up and coming riverside districts of Porto, so be sure to clarify what suits your lifestyle and investment objectives best. (Our article on the best places to buy property in Portugal is a good starting point!)

If you plan on letting the property seasonally or otherwise, research areas with higher rental demand or locations with a high volume of tourists.  

Understanding your budget is crucial when purchasing property abroad. Factor in not only the property price but also additional costs such as taxes, legal fees, and maintenance expenses.  

2. Budget and financing 

Moreover, explore financing options available to UK residents investing in Portugal, including mortgages from Portuguese banks, or leveraging equity from existing properties. 

You should also allow for anywhere between 10% and 15% of the purchase price to cover the costs of buying your new property in Portugal. This will cover transfer tax as well as land registry, notary and legal fees. 

3. Legal and tax considerations 

Navigating legal and tax requirements is paramount when buying property overseas. Seek advice from a reputable lawyer specialising in Portuguese real estate to ensure compliance with local regulations and to understand any tax implications, including property taxes and capital gains tax. 

You will also need to acquire your unique taxpayer identification number (NIF) in order to buy a property or conduct any notable economic activity in Portugal. These can be obtained from the Portuguese tax office. 

One other key legal aspect to bear in mind is that UK citizens can generally only spend a maximum of three months in the country without having to secure a residency permit. 

4. Property search and viewing 

Once you’ve outlined your preferences and secured financing, it’s time to start the property search. Utilise online listings, real estate agents, and property exhibitions to explore available options.  

Schedule viewings to personally inspect properties of interest, considering factors such as location, condition, and amenities. 

5. Making an offer 

Found your dream property? It’s time to make an offer. Work with your real estate agent to negotiate a price that aligns with market trends and your budget.  

Once your offer is accepted, a notary can put it in writing. You might also need to sign a reservation contract or preliminary contract and make a small down payment. 

6. Due diligence and legal checks 

Before finalising the purchase, conduct due diligence to verify the property’s legal status and ensure there are no outstanding debts or encumbrances.  

Your lawyer will perform a thorough legal check, including reviewing the property’s title deed, land registry records, and planning permissions. 

7. Signing the promissory contract 

Once all legal checks are complete, you’ll sign a promissory contract (Contrato de Promessa de Compra e Venda) with the seller.  

This legally binding agreement outlines the terms and conditions of the sale, including the final purchase price, payment schedule, and completion date.  

At this stage, an additional payment, it’s customary to pay a deposit of typically around 10%-30% of the property price. 

8. Finalising the purchase 

The final step involves completing the purchase at the notary office (Cartório Notarial). Both the buyer and seller, or their legal representatives, attend the appointment to sign the deed of purchase (Escritura).  

Any remaining fees, along with applicable taxes are paid, and ownership of the property is transferred to the buyer. Congratulations, you’re now a proud property owner in Portugal! 

Purchasing property abroad can be a rewarding experience, offering the opportunity to invest in a new lifestyle and diversify your assets.  

For UK residents considering buying property in Portugal, understanding the buying process is essential for a successful transaction. By following this step-by-step guide and seeking professional advice when needed, you can navigate the Portuguese property market with confidence and ease. So, why wait? Start your journey to owning a piece of paradise in Portugal today! 

How we can help 

As part of your property purchase, it’s likely you’ll need to transfer funds abroad. This could be spending money to cover everyday expenses, regular transfers for a Portuguese mortgage or bills, or transferring a large lump sum to cover a deposit. 

We could help you save time and money on your transfers to Portugal, through our expertise and range of specialist services. 

For instance, you can set up a forward contract with us. This allows you to lock in the current exchange rate for up to a year, protecting you from currency volatility and giving you peace of mind through the purchase process. 

You can also automate regular overseas payments, taking the hassle out of monthly expenses like bills or pension payments. 

If you want to find out more, get in touch with the team at algarve@currenciesdirect.com or call +351 289 395 739.