| Buying a home in Portugal (Algarve) has become much easier over the years due to a variety of factors such as: free movement of monies, equal currency, transparency of the legal aspects, multilingual Estate Agents, surveyors and lawyers. |
| However, there are still many people who are somewhat insecure with respect to how to go about buying a property "away from home". The following is a guideline, which covers the major points: |
| 1) Make up you mind from home that you really are going to view properties with the purpose of buying one. Do not purchase a property unplanned or on impulse! Over the Internet you can educate/prepare yourself prior to your travel. |
| 2) Decide your approximate budget from home and prepare the initial funds needed. Normally you will pay 10-15% deposit on any purchase. Do not let yourself be carried away because you see a fantastic property which is above your planned budget. On the other hand, you need to be ready to say "YES" if you see your "dream home" and be ready to go ahead quickly. Good properties move fast, and often you do not have time to think too long about it before the "dream" is gone. |
| 3) Work with a state licensed Estate Agent who you feel comfortable with and preferably someone who speaks your own language. See different areas of the coast before making up you mind. You might have to use 2-4 different Agents. Do not engage in being toured by the "coffee bar specialist", who just happens to have the right property for you at an amazing price! |
| 4) Once you have found the right property - make an offer. Normally, one can expect 3-10% off the asking price. The Estate Agent will assist you in the negotiation and in securing the best price possible. |
| 5) Once you have agreed on the price the next two steps would be to appoint a lawyer or solicitor to take care of the "paper work" and a surveyor to survey the property in question. Lawyers' fees lie between 1-2% and solicitors might charge a little less. It will cost you £ 400-1,000 to have a property surveyed depending on the value of the property. You ought not to buy a property without proper legal assistance and without a surveyor's report. |
| 6) It is now time to consider whether one wants to have the property owned by an offshore company or registered as a private ownership. The offshore set-up might give you some tax advantages whereas the private ownership might feel more comfortable for you. Here the Estate Agent and the lawyer can advise you what might be the best route for you to take. |
7) Additional costs to consider are:
• SISA tax, "change of ownership tax" (10% of the declared value, however not applicable for offshore companies). For properties under a value of 30 mill Esc there is a graduate scale replacing the 10% straight charge.
• Notary fee which is around 2% of the declared value (not applicable for offshore companies)
• Land registry fee, which is a nominal fee depending on the value of the property.
• In case one wants to set up an offshore company, there will be an initial charge of around £ 900 - 1,500 depending on the jurisdiction of the offshore company.
• Commission to the Estate Agent IS NOT paid by the buyer but by the vendor. |
| 8) The normal purchase procedure is to pay a deposit on signing the "promissory contract" (10-15%). The promissory contract ties the vendor and the buyer together. Should the vendor withdraw from this contract, he can be asked to pay the buyer his deposit back times two. Should the buyer withdraw from the contract, he can risk loosing his deposit. After 4-8 weeks the vendor and the buyer will normally complete the purchase and the balance of the sales value is then payable. The lawyer uses this 4-8 week interim period to check all the legal issues with regard to the sale. |
|
All in all to buy a property in Portugal is not much different from buying a home "at home". Be well prepared, do not buy on impulse, use professional assistance and stay within your budget.
|
Print
Send
Back
Algarve Guide