Portugal’s economic downturn was a bane to many investors, but to a select few, it’s an open door. Real estate prices are down, making it a good time to buy property in both the residential and commercial markets. There are risks, of course, but it can hardly be denied that prices like today’s–down as much as 40% in some areas–are few and far between.
The election of Pedro Passos Coelho, a Social Democrat, as the country’s new prime minister marks a period of austerity for the country. Passos Coelho is widely expected to make good on his promise of meeting the terms of the EU-IMF bailout it accepted in mid-May, which would mean tough austerity measures over the next two years. This may well equate to a drop in property prices, according to the International Business Times.
The good news for potential property buyers is that Portugal real estate isn’t as tightly regulated as that of its eastern neighbors, such as Spain and France. This has made it a popular choice for foreign investors for the last several years. The catch? Miles of red tape–one may have to deal with a dozen different offices and fill out reams of paperwork (and pay various administrative fees along the way) before a deal can go through.
Knowledge of local terminology can go a long way. An even better way is to hire a Portuguese lawyer. He or she will have a better understanding of the rules, and may even offer market advice from price negotiation to choosing properties Portugal for sale. A real estate agent (Agente Imobiliario) will also come in handy, especially in the planning and negotiation stages.
There are three main ways to buy Portugal property: buying directly with cash, refinancing existing property in one’s home country to raise the money, and taking out a mortgage. The latter is the most complex but most affordable option. It may involve a local bank or building society that specializes in international investments, or a Portugal mortgage provider.
All three methods will involve a number of fees, such as the government property tax (Imposto Municipal sobre Transmissões) totaling 5% to 8% of the value, notary and registration fees, stamp duties (Imposto de Selo , generally 0.8% of the purchase price), and a deposit if the property will be mortgage locally. Mortgage applications will require a residency card (Cartão de Residencia), a tax code (Numero Fiscal de Contribuinte), a local bank account, and other standard documents such as proof of income and credit rating.