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Challenges when buying a house in Portugal

29 de April, 2019

Challenges when buying a house in Portugal

Discover the main obstacles to overcome when buying a house in Portugal and learn how to deal with each one.
Reading: 8 min

As everywhere in the world, buying a house in Portugal requires you to overcome a lot of challenges, some easier, others more complicated. Take advantage of the following article to find out the main obstacles when buying a house in Portugal.

Obstacles to overcome to buy a house in Portugal: the top 12

1. Decide if it’s worth buying in Portugal now

The first obstacle to buying a house in Portugal is whether it is really worth it. The short answer is yes. Rents are at least double, if not three times the amount of a loan.

And you can expect that prices will continue to rise, even taking into account the entire valuation of the first half of 2019, as explained in the article on the Portuguese real estate market in 2019.

The conditions for appreciation continue to be present: growth in tourism, economic, fiscal and quality of life advantages for the transfer of residence from Europeans to Portugal, a strong European and Portuguese economy, with jobs and income that facilitate the purchase of home ownership.

Perhaps some regions of Lisbon have reached the limit, where the price has already exceeded €10,000 per square metre, but the most peripheral region of Lisbon and the rest of the country will continue to appreciate as long as there is a growing economy, unemployment is falling, wages are rising in an environment of low interest rates in Europe.

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2. Obtain the NIF

The second obstacle to overcome is to obtain a NIF (tax identification number) for each of the buyers. This is an indispensable document to buy a house, open a bank account and even to make a simple registration in the school. It is an identification equivalent to the Brazilian CPF.

To get the NIF you will need the following documents:

Proof of identity: civil identification document – only for Europeans – or passport. A child under the age of ten may also use a birth certificate or equivalent document;
Proof of address: consumption accounts or rental contract;
Tax representative: only residents in Portugal can apply for an NIF, if they do not have a residence permit or European citizenship, a tax representative with Portuguese citizenship or residence in the country will be required.

3. Opening a current account

With the NIF in hand, the next obstacle is the opening of a current account in Portugal to pay for the purchase of the property and additional expenses, such as property transfer tax (IMT), stamp duty, notary’s and solicitor’s fees.

To open the account in Portugal you will need the following documents:

  • Proof of identity: Identity Card (ID), Citizen’s Card or Passport;
  • NIF (Tax Identification Number);
  • Proof of address (consumption invoices or rental contract);
  • Proof of professional activity, such as your work card, pay slips or company documents in which you are a partner;
  • Initial deposit.

4. Definition of the ideal property

The next obstacle is the setting for the type of property you will search for, including:

  • Size, number of rooms and bathrooms;
  • New and used or under construction;
  • Balcony and/or garden;
  • Modern or classical architecture;
  • Exposure to too much or too little sun in the morning or afternoon;
  • In front of the street or in the back; on high or low floors
  • Near the bus, subway or train or near the roads, or both;
  • Downtown or on the outskirts;
  • Close to shops, schools or hospitals;
  • Close to leisure and sports;
  • View of sea, river, city or country;
  • Types of essential equipment such as air conditioning, central heating, built-in cabinets, full kitchen, among others.

It is important to define as precisely as possible the goals and important points of the lifestyle you will have in Portugal to fit with the ideal property. The more details you set, the better the search.

If you have no experience in the real estate sector, we recommend that you do all this process advised by a broker. The Euro Tips Team recommends Atlantic Bridge professionals to help you purchase your property safely and make the best deal. Make a budget without obligation and see if it is worth it for you.

5. Trip to visit the properties

It is time to choose properties according to the defined characteristics and make the visits. It is not possible to buy a house in Portugal without first visiting, so at least one trip will be required.

Contact the brokers a week in advance and schedule visits. Adjust the minimum requirements to the reality you find, especially if there is a budget constraint.

6. Beware of the beak

The next obstacle is to avoid buying a monkey. Find out which are the most desired regions, the true first line finishes and the preferences of the Portuguese market in relation to sun exposure and views to be able to buy something that is valued and desirable in the local market.

Take great care with the construction pattern. Until recently the government approved projects that should not have gone off paper, generating a lot of houses that do not reach the minimum of comfort for human use.

The solution for these properties always involves great expenses and an agreement of the entire condominium, which never arrives unanimously. These are properties that are condemned to be increasingly degraded and devalued.

The danger is that Brazilians don’t notice these structural problems and end up buying a nice apartment, but that will give a huge headache later with many works and great discomfort.

consultant buy house in portugal

Know the six biggest mistakes of Brazilians when buying property in Portugal.

7. Negotiation

The Portuguese culture accepts well the negotiation and although the market the place is very heated, the prices of the ads embed more and more fat for negotiation.

Don’t be afraid to make offers below the asking price. On average a property in Portugal is sold with a discount between 5% and 10% on the price of the ad.

Be careful not to exaggerate your discount request and be quick to counter-propose. Remember that there may be other people making proposals and, therefore, you run the risk of losing a good property if it is not extremely agile.

8. Avoid loss through fraud

An important obstacle in buying a house in Portugal is the part of documents. The general rule is to check if the seller is the real owner of the property, if the house is unoccupied, if there is any right of preference of third parties, if there is no outstanding debt and if the licenses and certificates are up to date.

Good legal support will assess the risks, request and evaluate the necessary documents, make independent checks, assess the reputation of the seller and finally approve the payment safely that the business is solid.

9. Contract review

The next hurdle is to make a quality contract so you don’t have a headache. Be aware that, according to the law, there is no obligation to return the amounts in case of withdrawal, except for conditions provided for in the contract.

It is necessary to describe the property in detail, put the right clauses for protection if something goes wrong, as well as determine the deadlines for delivery of the documents and the property.

Lisbon, Porto or Algarve? Know the best place to buy property in Portugal.

10. Money remittance

If there is a contract and a verification of the documents is already safe to make the remittance of the entry or sign, which should be between a few thousand euros up to 20% or 30% of the acquisition value.

For the payment of the acquisition of the property is possible to remit the resources of Brazil directly to the owner of the property – when you pay less IOF – or send to your Portuguese current account and pay by transfer.

11. Obtaining financing

The next hurdle is to get your real estate financing approved. As a general rule and in accordance with the government’s recommendation, the benefit may not exceed 50% of income, less taxes and other benefits and obligations.

Few know that banks are free to break this rule for very special cases, usually reserved for clients with large assets who undertake to use other banking products, such as financial investments.

The type of income accepted for verification changes from bank to bank. Some accept only salaries or income from liberal professionals, others even include dividends and interest from investments and there are even cases in which the bank accepts the income composition of a third party that is a guarantor, but all accept income from Brazil.

Be aware that the maximum term for Brazilians is 30 years, and the sum of age and term can not exceed 75 years. Compulsory life insurance is very expensive from the age of 60 and can make financing too expensive.

Know that Brazilians receive financing of only about 70% of the value of the property, so expect to have to pay for 30% of the property.

With the approval of the financing, the bank will issue a knowledge document such as FINE which is proof that the operation is approved and that it is already possible to mark to solve the last obstacle.

Know also our step by step guide to buy property in Portugal and know more details.

12. Scripture

The last of the obstacles to be overcome to buy a house in Portugal is the final formalization of the transfer of the property through the deed, which transforms the purchase of the house into a fait accompli. It will be signed in the presence of a solicitor or notary appointed by the banks, when financed, or by the parties, when not financed.

On the same day, any remaining amount is paid by cashier’s check, in addition to Municipal Transmission Tax (IMT), Stamp Duty, registration fees and solicitor’s fees.

It is usually when you receive the key and possession of the property. The solicitor will then arrange for the registration at the registry office (notary’s office) and at the Finance Department, which can be followed up on the Internet.

Okay, now the house is officially yours!

If the 12 obstacles to overcome to buy a house in Portugal seem complicated to you, don’t worry. Do the whole process accompanied by an experienced broker and be reassured. It is better to invest in a purchase or financing with complete security and counting on committed professionals than to save a little and be susceptible to fraud or bad business. Get in touch with Atlantic Bridge and know the team’s work.

Article published on the Euro Tips website: https://www.eurodicas.com.br/obstaculos-a-ultrapassar-para-comprar-casa-em-portugal/

Author: Marcio Fenelon
Real Estate Investment

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