Are you ready to buy in Portugal but a little anxious about the purchase process? Fear not, here are some pointers that should settle your nerves and help you purchase with confidence

Get yourself a lawyer
A golden rule wherever you buy a new home is to hire independent legal representation to protect your interests during the purchase. Generally speaking, Portugal’s deep-rooted legal system combined with its seasoned property market make it a safe place to buy property. That said, Portugal doesn’t shy away from bureaucracy, which means buying a property involves paperwork and the ticking of boxes. Fear not though, these are things your lawyer will take care of for you. Choose an experienced bi-lingual lawyer and they will do everything necessary to protect and guide you throughout the whole process. It’s common for buyers to grant their lawyer power of attorney to complete the sale on their behalf – saves time and money flying back and forth to Portugal!

Could this be your ideal home in the Algarve?

Setting your budget
On top of the purchase price you agree with a vendor in Portugal, you will have additional buying costs. The largest of these is property transfer tax (for resale) called IMT, which is calculated on a sliding scale from 1 to 8 per cent of the declared purchase price. Other costs to pay include stamp duty (0.8 per cent of purchase  price), stamp duty on a mortgage (if applicable), a land registration fee, notary fees and your lawyer’s fees.

As a guide, a €300,000 purchase will incur around 8 per cent of additional buying costs. Note too, if your new Portuguese property will be your primary residence, you will pay less IMT tax. To help you budget for IMT and stamp duty, see the on-line ‘tax calculator’ by clicking here.

Don’t forget, if the funds you plan to use for your Portuguese purchase are in pounds, consider how movement in the £/€ exchange rate could affect your budget in euros. When and how you transfer your money to Portugal could mean you have less buying power than you first thought. For peace of mind, speak to currency transfer specialist Smart Currency Exchange before you commit to a property purchase.

Be ready to reserve!
Once you have found a property and had your offer accepted, it is likely you will be asked to sign a reservation agreement and pay a small refundable deposit, typically around €3,000. This is not a binding agreement, but is done in good faith and should remove the property from the open market so no-one else can bag it. Get your lawyer to check over the agreement. Without any unexpected delays, the whole buying process from this point until completion could feasibly take just 4 to 8 weeks.

Exchanging contracts
All being well, you will move smoothly to the promissory contract stage, which is comparable to the exchange of contracts in the UK. The promissory contract is a prelude to the title deed and outlines the details of the sale, including the purchase price, the deposit to be paid, any stipulations on the completion date and any agreed conditions relating to the property. On signing, the buyer will be required to pay a deposit, typically between 10 and 30 per cent.

“We always provide a copy of the promissory contract translated into your preferred language,” points out bi-lingual lawyer Victor Ferreira of law firm “We do that before we sign the final contract in Portuguese, which will only be signed upon your authorisation.”

Reassuringly, if a vendor backs out of a deal after signing the promissory contract, they must refund the buyer double the value of the deposit. If the buyer walks away, they lose their deposit. For this reason, gazumping is not common in Portugal! The final stage, namely completion, is the signing of the title deed in the presence of a notary, as well as your lawyer (and yourself if you wish). This is when you pay the remaining balance to the vendor and receive the keys to your property as the new official owner. Your lawyer will have organised payment of any taxes and fees due, and will ensure that a certified copy of your new title deed is filed at the Land Registry. Meanwhile, you can break out the champagne…

Written by Overseas Guides Company.

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If you are considering an overseas property purchase, whether for lifestyle or investment, opening a no-obligation account with FCA-authorised Smart Currency Exchange will enable you to benefit from their competitive exchange rates and specialist currency knowledge, ultimately saving you money and time. For more information, download Smart Currency Exchange’s free report or visit the Currency Zone.