Updated: February 09, 2022 | 9 minute read

    Introduction  

    Investing in real estate in Portugal has become a popular option for foreign nationals. Aside from the consistently growing real estate industry since 2014, it is also a gateway to obtaining the Portugal Golden Visa or the Portugal Residency Visa, which entails even more advantages to successful applicants.   

    Buying a property provides a Portugal residence permit, as long as you stay in the country for a minimum of 14 days each two years during that period. That means you can buy a property in Portugal and get residency!  

    Moreover, you may apply for citizenship and subsequently an EU passport five years after obtaining residency. A passport entitles you to stay in Portugal indefinitely, live, work, and study anywhere in the European Union and Liechtenstein, Norway, Iceland (EEA), and Switzerland. You may also travel visa-free to 186 countries.    

    Residential properties in Portugal     

    Portugal has had a minimum of €4 billion flowing into properties since the launch of the resident permit scheme in 2012. The country has no restrictions on foreigners buying properties. To qualify for the Golden Visa application, invest in the following real estate options within Portugal:     

    €500,000 in residential real estate 

    Foreign investors can buy a residential property (which may be rented out) in inland territories or the Autonomous Regions of the Azores and Madeira (except Porto and Lisbon). The minimum investment amount is €500,000 anywhere in the country.   

    The rules encourage individuals to consider properties in potentially high-growth regions, such as the Douro Valley, Aljezur and Peneda Gerês. The amount has been reduced to €400,000 for properties in a low-population area.   

    €350,000 in 30-year-old real estate that needs renovation   

    Purchasing a property in Portugal under the Renovation Investment Programme requires a property at least 30 years old and needs renovation and refurbishment. The property must be located in designated urban rehabilitation areas. The total sum of the rehabilitation work and property value must be at least €350,000. Investors must deposit the difference between the property purchase price and the minimum rehabilitation investment.   

    €280,000 in a property for renovation/refurbishment in any of Portugal’s designated low-density areas

    Low-density areas are those with less than 100 inhabitants per square kilometre. The GDP per person is less than 75% of the national average. You may opt to buy a property that has been constructed at least 30 years ago and requires renovation or refurbishments. The total sum of the rehabilitation work and property value must add up to at least €280,000.       

    Locations to buy a property in Portugal    

    Since its launch, the success of the Golden Visa programme has led to a steady appreciation in property prices in popular locations like Lisbon and Porto. House prices in Portugal rose by 4.6% in 2017, 6.1% in 2018 and 8.3% in 2019. In a bid to promote investment in low-density interior regions, post-July 2021, investors are advised to buy properties outside of popular areas, such as the Algarve, Setubal and Silver Coast.   

    Buying a property in Portugal’s low-density areas has its benefits. Properties in these areas are affordable, providing you with an option to buy multiple properties and maximise returns. Cities in the interiors of the country are popular with students, and as the population grows, so does the opportunity to serve the growing needs of these cities.   

    Most low-density areas are located in Portugal’s interior regions, except for the coastal areas south of the River Lima and North of the River Sado. Madeira and Azores are also excluded. The most popular low-density regions include:   

    • Peneda-Gerês   
    • Douro Valley   
    • Alentejo  

    The Process to Buy Immovable Property in Portugal  

    The country will require completing accounts, contracts, and payments before investing. Here is the step-by-step process of buying a property in Portugal:   

    1. Open a local bank account and obtain a Personal Fiscal Number from the local tax office.   
    2. Browse through online property portals to shortlist desired property or use a local estate agent.   
    3. Engage with an independent solicitor to check contracts and ensure the property is surveyed.   
    4. Sign the Contrato de Promessa de Compra e Venda (Sale Contract) after agreeing on the sale price and physical check.   
    5. Make a down payment or deposit.   
    6. Pay for the property transfer tax or Imposto Municipal sobre a Transmissão Onerosa de Imóveis (IMT).   
    7. Sign the Escritura Publica de Compra e Venda (Deed of Purchase and Sale).  
    8. Get the property registered in your name.  

    Beyond the IMT, property buyers also have to pay stamp duty at a flat rate of 0.8% of the home’s value. The notary and land registry fees could amount to around 0.2% to 1.2% of the property cost.  

    Complicated? Here are your other options

    While investing in Portugal is beneficial for foreign nationals, it comes with added requirements. To apply for Portuguese citizenship, the applicant has to pass the Portuguese language exam and wait for approximately eight years from the start of the process to obtain a passport. This makes some people consider options like the Malta Permanent Residency Programme (MPRP) or the Malta Citizenship for Exceptional Services by Direct Investment.   

    The one distinct difference is that Malta uses English as one of its official languages. Therefore, applicants for the Malta programmes need not learn any language to succeed. Additionally, Malta, a member of the EU since 2004, also has a robust real estate industry, attracting high-net-worth foreign investors. And through the Maltese Citizenship for Exceptional Services by Direct Investment, you can obtain Maltese citizenship after five to 16 months.  

    If the process of moving to Portugal is a bit complicated for you and you are seeking potentially simpler options, get in touch with us, and we will walk you through all the available programmes.