EXCLUSIVE HOT PROPERTIES – PORTUGAL

From our office in Costa del Sol where we have company directors on the ground we are able to help International property buyers and Investors in many ways. Some of services include the following.

Buying the Best Property in Portugal

Very simply we offer our International clients the best of both worlds in that we have proven experienced local knowledge on the ground as well as international expertise from having made many different transactions throughout the world.

If you need to buy a stunning luxury villa on the beach or just want to acquire the best real estate available for Investment our local team will be able to help you.

Golden Visa

For those of you who don’t live in the EU you can make Portugal your new home simply by investing 500,000.00 Euros in Spanish real estate. This will entitle you to Permanent Residency which can eventually be turned into Citizenship.

Setting Up a Business in Portugal

Very simply our professional directors can help you with the set up your company structures in the most tax efficient manner possible. We only use the very best Lawyers, Accountants and professional advisors to make sure your company structure is 100% safe and secure and the very best you can have in the Spain

We also have the best connections to the right Government bodies to assist all your needs in relation to setting up a business in Portugal

Commercial Leasing and Rental requirements

If you’re looking for the right office premises for your business or you need to find your newly recruited Ex-Pat staff the right quality accommodation so they can focus on working 100% for you without any issues then our professional local team can help you with access to the very best residential and commercial properties available in the local market.

Asset Management

If you’re an investor and already own assets in Portugal or just acquiring them then our team of professionals can offer you the complete asset management services including property management and project management here in Spain

These are just a sample of the key services that Exclusive Hot Properties Portugal provides and should you need any further information do not hesitate to contact us directly.

Exclusive Hot Properties Portugal

Email:    Portugal@exclusivehotproperties.com

EU          +44 20 7558  8355

Asia        +63 977 829 1489

Why Invest in Portugal Property?

Last updated January 2018

PORTUGAL PROPERTY MARKET

Portugal has always been seen as the poor relation to its Iberian neighbor Spain but not anymore as there are many more compelling reasons to invest in Portugal with buying costs in relation to Spain especially can be as much as 70% lower. Buying taxes are much lower at the bottom end of the scale.

An example of this would be on a property purchased for 250,000 the buying taxes would be around 4% compared to at least 8% in Spain and on 500,000 would be around 6.4% still much less than Spain, For investors this can be a major deciding factor. The only issue is Portugal has decided to levy high taxes on high end luxury real estate to pay for its increased social spending

For investors however there are very good yield to be had and prices continue to rise especially in Porto and the capital Lisbon where city center apartments are producing  excellent yields. Property prices in Portugal rose by 3.84% (2.97% in real terms) in October 2016 from a year earlier, to an average price of €1,081 (US$1,130) per square meter (sq. m.), based on figures released by Statistics Portugal (INE). After more than three years of depression, house prices in Portugal started to recover in 2014.

In Lisbon metropolitan area, property prices were up by 2.59% (1.72% in real terms) y-o-y in October 2016, to an average of €1,308 (US$1,367) per sq. m. House prices rose in all the country’s 24 urban areas. Santa Maria da Feira recorded the highest increase of 12.2% during the year to October 2016, followed by Oeiras (10.4%) and Barcelos(10.4%), Odivelas (9.9%), Porto (9.7%), Villa Franca de Xira (9.6%), Cascais (8.1%), Leiria (7.8%), Loures(7.7%), and Amadora(7.6%).Strong house price rises were also registered in Sintra (6.6%), Setubal (6.5%), Gondomar (6.2%), Maia (6.2%), Almada(6%), Lisboa (5.3%), Vila Nova de Famalicao (5.1%), and Seixal(5.1%).

Property price rises by property type

  • Flats prices rose by 3.31% (2.44% in real terms) y-o-y in October 2016
  • Villa prices rose by 4.77% (3.89% in real terms) y-o-y in October 2016

Rental yields on Lisbon apartments good, ranging from 5.4% to 6.2% Lisbon´s property market is now reasonably priced.  Comparatively speaking, Lisbon housing prices are among Europe’s lowest:

Apartment yields in Lisbon range from 5.4% to 6.2%, with smaller apartments earning proportionately more. These are good yields and the purchase price is attractive for a European capital city, though Lisbon is hardly at the center of things. Villas in Lisbon have similar gross rental yields. In Algarve, a 120 sq. m. apartment costs on average EUR 1,800 per sq. m., or EUR 215,000. Algarve apartments return rental yields which range from 3.5% to 3.8%. Our rental yields figures assume long-term lets; short-term rentals may earn higher returns. Villas in the Algarve generally earn lower returns.

PORTUGAL ECONOMY

 

Portugal gdp inflation the economy grew by 1.5% in 2015, thanks to an increase in exports, according to the Bank of Portugal. The improving economic condition comes after a series of dismal years. Portugal’s economy contracted 1.1% in 2013, 4% in 2012, and 1.8% in 2011, according to the IMF. In 2010, the economy grew by 1.9%, but in 2009 GDP contracted by 3%, after average annual growth of only 1.2% between 2004 and 2008.The economy is expected to grow by 1% this year and by another 1.1% in 2017.

According to the IMF.Portugal was the second euro zone country to exit its bailout program in May 2014, after three years of austerity. Portugal had sought its €78 billion (US$ 88.6 billion) bailout program in 2011, due to the government’s inability to meet its debt payments. Portugal still faces a huge public debt burden of around 129% of GDP in 2015, slightly down from 130.2% of GDP in 2014, according to the European Commission. The country’s public debt is expected to stand at around 130.3% of GDP in 2016 and to 129.5% of GDP in 2017. The country’s fiscal deficit stands at 4.4% of GDP in 2015, sharply down from 7.2% of GDP the previous year.

The deficit is expected to fall further to around 2.7% of GDP this year and to 2.2% of GDP in 2017, according to the European Commission. Inflation stood at 0.7% in 2016, from an inflation of 0.5% in 2015 and a deflation of 0.2% in 2014, according to the INE. The country had an average inflation rate of 2.6% from 2000 to 2012, according to the IMF.Unemployment stood at about 10.8% in October 2016, down from 12.4% during the same period last year. Portugal’s jobless rate averaged about 14.1% from 2011 to 2015, according to the IMF.

PORTUGAL INWARD INVESTMENT AND TAX INCENTIVES

Two major initiatives buy the Portugal government has increased inward investment namely the so called Golden Visa where a non EU Citizen can become a resident of Portugal and therefore the EU by investing in property in excess of 500,000 Euros. The second is the new Non Habitual Tax Regime and by its very name says what it does it offers very favorable tax rates to encourage people to become tax residents in Portugal thus brining more income into the country.

WHERE TO INVEST IN PORTUGAL?

This is very much a question if you are a lifestyle property investor or a professional property investor and there is a difference. In simple terms a Lifestyle investor is an investor who likes to get personal benefits from their investments and in relation to Portugal they are more likely to want to buy a holiday home in the Algarve and then get a rental income whilst it is not being used. On the Opposite side of the Equation a professional investor has no interest in using his assets for personal use and in Portugal these investor are investing in big numbers into Porto and especially Lisbon where they can get upwards of 6% yields on their investments.

INVESTMENT CONCLUSION

With low buying costs compared with other tourist based economies such as Cyprus and Spain pure investment in Portugal offers a much better opportunity to professional investors. However the low buying costs on properties under 250,000 Euros also offer good returns for those lifestyle investments but we would suggest that if you’re a lifestyle investor your decision will not be made the economic facts in this guide but to which culture your prefer to invest in such as Greek, Spanish and of course Portuguese.

The Buying Process in Portugal

Generally, no special permission is required to buy a property in Portugal (unless it is in a sensitive military area)

The Importance of a Portuguese Lawyer

The Portuguese legal system is based on the Napoleonic Code which is different to Anglo-Saxon, Middle Eastern and Far Eastern countries. Your lawyer in Portugal will make checks and enquiries on your behalf, the whole process is little more troublesome than the buying and conveyance of a property in your country of origin

Amongst other things, the lawyer should make a written Report on Title, checking that the vendor has true title to the property, that the property is free of any liens or mortgage and that the contractual documentation is fair and reasonable for both parties and that the vending company or individual is of good standing.

Problems can arise when prospective buyers decline to use a lawyer in Portugal and later find legal complications, which affect their ownership rights.

For this reason we insist that clients take legal advice in Portugal before buying. We can arrange for you to be put in contact with reputable lawyers in Portugal that speak your language.

Having instructed a lawyer to handle the conveyance and Due Diligence of the purchase, you have the reassurance that all the important aspects will be covered.

  1. The title of the property is checked.
  2. The person/company selling the property actually owns it.
  3. Whether there any charges on the property.
  4. Building licenses and permissions are in order, where applicable.
  5. The terms and conditions stipulated by the seller are checked for fairness.
  6. A report of the findings in then compiled for you to consider, before proceeding with the signing of Promissory Contracts
  7. That there is a valid Energy Certificate on the property
  8. That IMI on the property is paid up to date
  9. That there is a valid Habitation Licence and or Construction Licence for the property
  10. That the vendor has obtained a negative reply from the Town hall regarding their First Preference rights (where applicable)

. After the signing of the contracts your lawyer will then arrange:

  1. The transfer of the title into your name. (Escritura)
  2.  For any obligatory fees and taxes to be paid.
  3. Registering the property purchase in the Local Land Registry.

Fiscal Representative

A non- resident purchaser of property in Portugal should appoint a Fiscal Representative in Portugal. The Fiscal Representative will arrange your Portuguese Tax Number (needed for the purchase) and manage any taxation liabilities that you may have from the likes of rental income in Portugal on an ongoing basis. This covers such things as Council Tax, Income Tax in the event of rentals and Capital Gains Tax in the event of future sale. Your lawyer should be able to recommend a specialist in this area to you.

Registering Your Property

After the signing of the Escritura, your lawyer takes the documentation showing you as the new owner to the Local Land Registry for registration and payment of registration fees. The registration process can take several weeks; your lawyer will handle this.

The Name on the Deeds

You should decide whose names are going to be registered as the final owners of the property before Promissory Sale and Purchase contracts are signed as there could be tax implications if you decide to change this between the signing of contracts and the Escritura. Inheritance tax and change of ownership taxes and fees may be levied when your property changes hands in the future. It is therefore advisable to take this into account during the purchase process purchase. Your lawyer and Fiscal Representative can help you with these decisions.

Financing your purchase. Many people buy properties without the need to raise finance from a third party. However, you may wish to obtain a mortgage on the property you own in your home country. We can give you advice and assistance in obtaining finance on this basis. Additionally we can recommend Portuguese banks that specialise in offering mortgage facilities to foreign purchasers where the only security required is the property or property “to be built” in Portugal.

Transferring money to Portugal. There are no restrictions in transferring money in or out of Portugal.  At a later date your Fiscal Representative can help you open a bank account in Portugal. In the meantime any transfers associated with the purchase should be remitted to your lawyers Client’s Account at the appropriate time.

Costs

Notary and land registry fees around 0.8% of the purchase price

IMT Tax (Property Purchase Tax) between 6.5% and 0%  of the purchase price, based on a sliding scale depending on the sale price of apartment, townhouse or completed villa purchase.

Notary & Land Registry Fees (Stamp Duty) 0.8% of the sale price

IMI Tax. Annual Council Tax. Charged at up to 0.4% of the Local Authority “tax” valuation of the property

 

Ongoing Commitments and Obligations

If you spend less than 6 months per year in Portugal then you classed as non-resident. However you are obliged to:

Appoint a Fiscal Representative in Portugal who will take care of paying your local annual property taxes IMI (Council Tax) and paying any applicable taxes on income derived from activities in Portugal, including that derived from renting your property

.

Insure your property and contents. Additional liability insurance covers if the property is to be rented out.

Pay car taxes and insurance where applicable

Pay electricity, water and other bills.

If you spend more than six months a year in Portugal you are deemed a permanent resident and would be expected to pay taxes and social security contributions. Many of the above points are requirements and income tax will often be assessed on your worldwide income. It is common practice for foreigners living in Portugal to employ the services of a tax accountant or gestor to advise on this.

You should consider taking out Private Medical Insurance with a company that has agreements with Portugal. We can help you with this.

Portugal Location Guide

Portugal is a southern European country on the Iberian Peninsula, bordering Spain. Its location on the Atlantic Ocean has influenced many aspects of its culture: salt cod and grilled sardines are national dishes, the Algarve’s beaches are a major destination and much of the nation’s architecture dates to the 1500s–1800s, when Portugal had a powerful maritime empire. The Portugal–Spain border is 1,214 kilometers (754 miles) long, making it the longest uninterrupted border within the European Union. The republic also includes the Atlantic archipelagos of the Azores and Madeira, both autonomous regions with their own regional governments.

Portugal has something for everyone From Porto famous for its wine, the famous mountain town of Sintra and the true gem of the capital Lisbon and its surrounding areas. Portugal is also famous for the Algarve a holiday destination for all nationalities in the EU and further afield and of course the lovely Island of Madeira.