Accommodation in Portugal

Should you rent or buy when living in Portugal?

Naturally, the answer to this question is very personal — and depends to a large extent on your current circumstance and future plans. However, there are some essentials to take into account.

Renting a place allows for more flexibility — you can switch between apartments and neighborhoods and leave the country easily with no strings attached. With that, long-term renting options may be quite limited in popular neighborhoods. Plus, landlords tend to charge a lot for rentals in popular areas in the high season.

If you plan to stay in Portugal for the long term, buying property can be a good idea. What’s more, it can also be interesting from an investment perspective. With low interest rates and actively rising property prices, Portugal can be a great place to make a good return on investment. Plus, as the country is a popular tourist destination, you will be able to rent out your property practically all year round.

Renting in Portugal

The first thing that you should probably know before moving to Portugal is that if you are moving here for work, your employer probably won’t provide housing. This means that this is something you will need to take care of yourself. Renting in Portugal is not particularly complicated — but, just like in most places, there is some nuance that you should take into account.

When looking for a place to rent, the best place to start would be, of course, the Internet. There are several local websites as well as real estate agencies that put available rental listings online. Simply run a search for “apartamento para alugar” in the city where you plan to settle and plenty of websites should show up.

If you are in Portugal already, you can look through local advertisements as well. These can be found in major National newspapers line Dißrio de NotÝcias, Jornal de NotÝcias, Correio da ManhŃ and others.

Another option is to go through a real estate agent.

In this case, all you will need to do is contact a local real estate agency and explain what type of apartment or house you are looking for. The real estate agent will then show you the available options in your price range.

Good to know:

Stopping by a bank can also be helpful. Some banks have databases of available houses and apartments for rent in the area.

How much does it cost to rent in Portugal? As you can imagine, rental prices depend on a number of factors. Renting in big cities like Lisbon and Porto will cost you way more than renting a place in a smaller town or in the suburbs. Additionally, central and trendy neighborhoods in big cities are more pricey than more remote or less popular ones.

For reference, you can expect the following rent prices in Lisbon:

Leases and rental contracts in Portugal

Once you have found an appropriate accommodation, you will have to set up a lease agreement with the owner. A lease should be signed for both short-term or long-term rentals, to provide peace of mind for both the tenant and owner. The rental document should contain the following:

It will then be transformed into a legal lease agreement.

Note that you will have to pay a security deposit, which is equal to a month's rent, as well as the first months' rent before occupying the accommodation. Landlords may also request referrals from previous rentals, or from your employer, although some landlords may not request this information. You may also need to find a translator, to assist with the preparation and signing of formal documents.

You are also advised to obtain rental insurance, to insure your belongings and home goods.

Typically, the minimum duration of a rental contract is six months.

Buying property in Portugal

If you plan to stay in Portugal for a while and have the necessary funds, you may consider purchasing a property. In fact, Portugal is one of the most popular destinations for real estate investments in Europe.

Portugal has a very active real estate market — even in the aftermath of the COVID pandemic. So, even if you are not planning a life in Portugal, investing in property here may be a good idea.

First, Portugal has some of the most affordable real estate in Europe. Even large cities like Lisbon and Porto are quite affordable when it comes to buying property. With that, property prices continue to rise. For instance, in the metropolitan part of Lisbon, property prices went up by 5.83% by the autumn of 2020.

Second, as Portugal is a popular tourist destination (close to 28 million people visited the country in 2019), renting out property can be a viable source of income. Note that the fixed net rental income tax in Portugal is currently 28%. With that, repairs, maintenance and other related taxes are deductible. What this means is that income from renting out property in Portugal has quite a high yield.

In Portugal, you can also get residency by buying property. Foreign buyers from outside the Schengen Area can apply for the Golden Visa if they buy property in Portugal. To be eligible for the Golden Visa, you will need to acquire real estate valued at 500,000 EUR or more or acquire real estate that is located in urban regeneration areas for refurbishing with a total value equal to or above 350,000 EUR.

And that’s not all. Portugal offers a very friendly tax scheme for foreign investors. Acquiring residency via a purchase of property will also qualify you for the Non-Habitual Resident (NHR) tax regime. The program is designed to offer foreign investors reduced tax rates — as well as dull tax exemptions. This makes Portugal one of the very few countries in Europe where you have a chance of a 0% income tax rate with second citizenship.

Buying property in Portugal: process and prices

Around three quarter of Portugal’s residents own the places where they live. So, while renting is quite common, owning property is significantly more popular.

There are no restrictions or complications for foreigners who want to purchase property in Portugal. In fact, as we’ve mentioned above, buying property in the country (valued at 500,000 EUR or above) makes you eligible for residency (via Portugal’s Golden Visa). The Golden Visa not only gives you the right to work and study in the country — but also to apply for permanent residency after a five year period.

In order to purchase property in Portugal, you will need to first apply for and receive a Personal Fiscal Number (Numero Fiscal de Contribuinte). This is not hard to do — and you can obtain the needed documents at your local tax office. Plus, if you open a bank account in Portugal, you will get a Personal Fiscal Number automatically. This is probably a better way to go about it as you will need a bank account to make payments as you purchase property.

When looking for property to purchase, it is best to go through an experienced local estate agent. You will definitely be able to find private sale offers —┬┬┬┬ábut these can be quite risky, especially if you are not familiar with the real estate market.

Note that real estate agents in Portugal need to be government-registered and in possession of a license number (Associacao de Mediadores Imobiliarios). To find out if the agent you are planning to work with is officially registered, you can contact the Instituto da Construcao e do Imobiliario.

Another important thing to take into account when working with a real estate agent is that real estate agents in Portugal work in the interests of the seller — and get their commission from the seller as well. While this means that you won’t have to pay a commission, it also means that the real estate agent will look out for the seller’s interest before yours. This is why it is good practice to also take independent advice before signing any contracts.

Some of the biggest real estate agencies in Portugal are:

Once you’ve found your perfect home, you will need to make an offer. At this stage, it is especially important that you have an independent solicitor by your side who can verify the documents as well as the state of the property. As in most real estate transactions, you will also need to hire a notary to oversee the transaction. You will be able to find a notary through local resources or via large directories like the European Directory of Notaries.

If your offer for a property is accepted, your notary will go over the transaction, check the property you are about to buy in the Land Registry and with Inland Revenue to make sure there are no outstanding issues.

You will then go to sign the contract — once it is done, both the buyer and the seller will be obligated by law to complete the transaction.

After you sign the contract, you will need to pay a deposit and set a completion date. You will also need to pay IMT — which is the property transfer tax.

Finally, you will need to sign the Deed of Purchase and Sale (Escritura Publica de Compra e Venda) — after which you can register the property in your name.

Property prices in Portugal depend on a number of factors, with location probably being the number one price maker. With that, you should be able to find accommodation in Portugal within a varied price range. The median price per square meter across the country was around 1,117 EUR in 2020. Taxes vary according to property value and are set by local authorities.

Mortgages are available through most banks — and mortgage conditions vary depending on the bank itself as well as the property and its location.

Whether you decide to buy or rent during your stay in Portugal, it’s always advisable to do lots of research before settling on a decision that will affect you in the long term. Purchase and rent conditions will differ depending on the city, neighborhood, property type and other factors.

Useful links:

Buying property in Lisbon

Buying property in Porto

Neighbourhood guide to settling down in Lisbon

Neighbourhood guide to settling down in Porto

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Last update on 24 September 2021 13:25:18
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