Demystifying Property Purchase Costs in Central Portugal
Purchasing a property in Portugal is an exciting prospect, offering the chance to embrace a new lifestyle, invest in a valuable asset, and connect with a rich cultural heritage. However, before embarking on this journey, it's crucial to have a clear understanding of the associated costs involved. While the exact figures may vary depending on the property's location, condition, and size, here's a comprehensive breakdown of the expenses you can expect when buying a property in central Portugal:
Property Search and Initial Consultations
Your property search may involve enlisting the services of a real estate agent, who can assist you in locating suitable properties, arranging viewings. The average commission for a real estate agent in central Portugal is between 2% and 5% of the property's purchase price.
Legal Counselling and Legal Work
Throughout the property purchase process it's essential to seek guidance from a qualified lawyer. Their expertise can help you navigate the legal complexities, ensure the sale is conducted in accordance with Portuguese law, and protect your interests.
The work can affect finding errors in the areas of the properties, legal due diligence, negotiation, draft of promissory contract, check for compliance of the contract, reviewing and gathering all the documents for the deed, scheduling the deed, and if needed, your lawyer can also be your translator, if that is agreed and the fees for that work are established. Itâs not automatic.
With this you can avoid a lot of pitfalls when buying property in Portugal.
Surveyors and House Inspections
To ensure the property you're considering is in good condition free from any structural issues, it's advisable to appoint a qualified inpector/surveyor.
You might also need one when it comes to confirm the area of the land, which usually is not correct, and implies legal work to find out what is wrong and how to rectify it. The work of the surveyor will help to lawyer to define the path and actions that need to be taken in order to have everything correct within the papers, as is on site.
Unfortunately, itâs possible to by a property in Portugal with wrong areas in the documents, because the notary will only have to check if the tax office and registration office documents have the same area. But if the area in those documents, despite being coherent between them, is divergent of the real area on site, the notary does not have the obligation or the means to check that, but the deed can be done anyway.
So, you will always need to have at you side a lawyer that can look at the papers, advise you on the proper steps that have to be taken, in order for you to be able, with the lawyers help, to negotiate with the seller the rectification of these mistakes.
Such a thing can have an impact in your offer, because these costs if born by the seller might condition any downsize of the price, but if born by the buyer, will have to be considered in the offer to be done.
Specially if you are demanded to sign a written proposal through the real estate agency, which will bind you to an offer, that might be too high if these unforeseen costs appear along the way, or even worse, after the purchase is done.
The Buying Price
The buying price is the most significant component of the property acquisition cost. Average property prices in central Portugal range from âŹ50,000 for a small village house to âŹ500,000 or more for a larger villa or property in a sought-after location.
As Iâve highlighted before the final agreed price depends on a legal and building due diligence, to avoid paying more than you should.
The costs to be born if the buyer does not pursues this path of due diligence, will inevitably appear later on, if you, for instance, want to submit a project to the municipally and the areas are wrong and you canât rectify them (it happens), or if you find structural problems and need to hire a contractor to rectify concealed problems with the building, amongst other.
Trying to save money with a lawyer and a surveyor might imply much higher costs later on, when the problems come to surface.
Notary Costs
The notary is responsible for preparing and finalizing the legal documentation associated with the property purchase. Notary fees are variable and a budget should be obtained before the deed to know in advance how much will be paid.
Tax Costs
Transfer tax and stamp duty: These costs depend on the individual value of each property that is being sold (if you are buying several properties side by side, as a whole), being subject to different rates depending on its final purpose: rural, primary habitation, secondary habitation and other. A lawyer can explain you these costs and how much will they be, so you can be aware of them upfront.
Translation of the Deed
Being the property deed mandatorily in Portuguese, you'll need to have it translated into English by a qualified legal translator. We do not advice to rely on any translator, because this is a very specific document (the deed) with a lot of legal terms and information. For us, qualifying for translating a deed implies that either the translator has a long track record in this kind of specific work, or is someone with legal knowledge, because whatâs written has legal consequences at that moment of signing and for the future.
As an example, Iâve already asked to change the text of a deed, on the spot, because one of the things mentioned was wrong and would have created tax problems and costs (taxes and fines) to my client. I knew that due to my legal knowledge, but if the deed had been translated by someone that just happened to speak English, it would have gone by without notice. The consequence, would have been a tax office bill and fine to pay after.
Although, according to the law, you can choose whoever you want to do the translation, we do not advise to do it like that due to the above mentioned.
Registration Costs (Rural and Urban)
When purchasing a property in Portugal, registration fees are applicable. The rates vary depending on whether the property is classified as rural or urban. The amount to pay will also vary, because it will depend on the number of properties you are buying. A beautiful farm, with a farm house, can be one property or several propertyâs altogether side by side, and that is something to have in mind upfront.
If you buy with a loan and mortgage, you should also be aware of the bank fees, and the fees for the mortgagee registration.
Overall Cost Breakdown
Based on the above estimates, the total cost of purchasing a property in central Portugal can be variable, and one should do itâs home work in order to properly budget these costs.
Conclusion
While the property purchase process in Portugal can be complex, the overall costs are generally considered to be relatively affordable compared to other Western European countries. By carefully planning your budget and seeking professional guidance, you can navigate the process smoothly and secure your dream property in central Portugal with a proper budget in hand.
Nuno de Almeida e Silva
(Lawyer)
(Disclaimer: The information referred in this post is generic and cannot be considered has legal advice nor binds the author to any responsibility if anyone takes action upon it. Please, if you have any legal doubts our questions, contact a lawyer to analyse your case, and give you legal advice to your specific situation.)
