Buying Property in Portugal

Whether buying only land and needing planning permission, or buying a renovation project, it is best to consult a professional for advice. Property law in Portugal is very specific.
Written consent (a licence) from the local Council is required and in most instances and relatively easy to obtain, but sometimes lengthy timewise, in being issued. One must bear in mind, and build into one's planning, the slow pace of the official paperwork processing machine in Portugal.
Summary of Necessary Documentation
You can do the following all yourself (not easy if you don't speak the language), or have a professional do it for you. The following documentation is always required before one may live in a property. ·
1)Tax number ( numero de Contribuinte) ·
2)A Habitation License for any property which has been built after 1951 ·
3)A Certified insertion in the records of the local "Conservatorio" which is the Land Conservatory ·
4)A detailed "Caderneta Urbana" from the local "Financas" which is the Tax Office ·(If one has purchased rural property one will also need the "Caderneta Rustica" issued by "Financas")

Everyone coming to Portugal should immediately apply for a Numero de Contribuinte (Tax number) This is easily done at the local Tax Office. One needs this number for just about anything - to open a bank account, to have electricity and /or water supply connected , to have a telephone installed etc. etc.
One must ensure that the person(s) selling the property is/are legally able to do so, as many Portuguese who have inherited their rightful share of property after the passing away of parents, do not register this change of ownership with the conservatorio. Sometimes a property may be owned by, say, 12 children, each one having been designated a certain part of the land or even a room of the house. When selling the whole property, all 12 owners plus spouses have to agree to this, as well as sign the documentation. This can be a very long-winded process.
Buying from owners in the process of divorce is also a very difficult and treacherous element one might encounter. Divorce in Portugal is granted only 6 years after application, so if things go wrong, you could wait a long time.
NB: It is best to check thoroughly that all details on any paperwork pertaining to the purchase of a property in Portugal, are absolutely correct and it all agrees with any other documents relative to them. Before buying also make sure to check carefully whether all documentation complies with the requirements of your specific Conservatorio and Financas as sometimes there are small local differences in the interpretation of the general rules. It is also wise to do some searches relating to any form of debt (loans, taxes, bills etc) that might be hanging over the property, as one inherits these all with the purchase, and once one has agreed to purchase there is no easy way of getting out of such encumbrances. After the whole process has run its course through the 1. searches, 2. checking the documentation and up to the 3. agreement and payment of the deposit, the 4. completion of the purchase ends with payment of the remainder of the purchase price and the 5. transfer and new registration of the property into your name, in the presence of an official State notary.
The Escritura (Deed of Sale) is signed by all parties involved or can be carried out on your behalf by a power of attorney. Witnesses are also required to sign, but these can be recruited from amongst people present in the building. Considering inheritance law it is advisable to draw up a Portuguese will to avoid complications for your beneficiaries in the unfortunate case that you may pass away .
It is as important in Portugal as in other countries to insure your property. It is wise to have a policy which includes cover for fire, flood, storm damage and earthquake damage.
To be Paid: ·
1) Purchase price of property ·
2) IMT Tax 2006 (Purchase Price up to 83.500€ = 0%, between 83.500€ and 114.800€ = 2% minus 1.670€, 114.800€ to 156.500€ = 5% minus 5.114€, 156.500€ to 260.900€ = 7% minus 8.294€, 260.900€ to 521.700€ = 8% minus 10.853€ and all property above 521.700€ = 6%
3) Notary Fees (for drawing up the Escritura and being present at the completion and registration at the Conservatorio) ·
4) Estate agent's fees approx 5% to 10%( if one has one) ·
5) Lawyers fees approx 2% to 3% (if one has one) ·
6) Renovation costs (artisan @ £30..labourer @ £20 per man per day - Dec 2006)
(Note: If one is buying land only (rustica) with or without a ruin, the Tax is 5% on the whole amount)

If you are going to need a mortgage, try to get one agreed in principle before you start your property search. This could save you time and money. If you are choosing to finance the purchase with a mortgage, it is probably quickest and easiest to the loan against a property you own in the UK . Other avenues to consider are: loans from Portuguese or offshore banks. It is advised to shop around so as to secure a good deal.
Once one has decided to purchase and an offer has been accepted, a kind of promissory
contract is drawn up and signed, and an agreed deposit , anything between 10% and 50%, paid.
Should you later want to withdraw you are likely to lose the deposit and be required to pay some
compensation towards expenses incurred by the seller. Should the seller withdraw however, he is liable by law to return to you, double the deposit paid, as compensation.
"IMT" tax has to be paid prior to completion of the purchase. It works on a sliding scale: see note 2 above. Many people are persuaded to register the property at a price lower than the actual to save on this tax as well as the seller on his capital gains tax. It is best to tread carefully here and a lawyer's advice should be sought, if you are interested in following this route.
The above notes are presented in a general form and to my best knowledge correct. I cannot guarantee that what I have written is infallible as rules change and interpretations differ.
I would advise everyone when the professionals.