Buying in Portugal

The Algarve may have led the way for property purchases but buyers are now looking everywhere, from Lisbon – possibly Europe’s most underrated capital – to Porto, as well as hunting out inland bargains in the vast plains of the Alentejo or the wine-producing Minho region
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Quinta da Fortaleza, western Algarve. Prices start at €750,000 (£508,000)
Quinta da Fortaleza, western Algarve. Prices start at €750,000 (£508,000)
Portugal may be little bigger than Scotland but its 600 miles of Atlantic coastline has attracted sun-seeking holidaymakers since the 1960s. Today, about 50,000 year-round Brits live there, with a further 150,000 owning a Portuguese holiday home.

The Portuguese economy has been in recession since 2002, and recent growth rates still languish at the bottom of the European league tables. The infrastructure has benefited from an influx of EU funds though, and hosting football’s European Cup in 2004 led to impressive new roads and facilities.

The windswept western Algarve, once a tortuous three-hour journey from Faro airport, is now only 90 minutes away. If this makes you curious to see what is available just three hours' flying time from London, here are some examples of properties for sale in Portugal:

Quinta da Fortaleza, western Algarve
This development of 90 contemporary three- and four-bedroom beach villas in the western Algarve lies between the fishing villages of Burgau and Salema. There are good views across open countryside towards the Atlantic at Cabanas Velhas Bay.

The houses have large terraces and wide balconies with private pools, landscaped gardens and built-in barbeques. There is a beachfront bar and terrace on site, along with tennis courts and a communal pool, and owners can take advantage of a 30 per cent discount on green fees at the nearby Parque de la Floresta resort. Prices start at €750,000 (£508,000).

Contact Vigia Property Sales on 01223 316820;

Palacio das Janelas Verdes, Lisbon. Apartments from €790,000 to €1.88 million  (£535,000 - £1.27 million)
Palacio das Janelas Verdes, Lisbon. Apartments from €790,000 to €1.88 million (£535,000 - £1.27 million)
Palacio das Janelas Verdes, Lisbon
Lisbon's most prestigious residential areas are starting to boom, according to Frederico Clemente of CB Richard Ellis. “Lisbon combines history and excellent modern design,” he says. “Renovations are turning once grand buildings into top-quality apartments, the ladies who lunch are back in the designer shops of the Chiado area, a modern-art museum opened recently, and a high-speed train link from Madrid is under construction.”

The elegantly refurbished Palacio das Janelas Verdes, affectionately known as The Pink Palace, is in the heart of Lisbon opposite the River Tagus and the Museum of Ancient Art. The 15 apartments, spread over three buildings set around a landscaped courtyard, provide city-centre living in a tranquil environment. Three- to five-bedroom apartments with parking cost from €790,000 to €1,880,000 (£535,000 to £1.27 million).

Contact Hamptons International on 020 7758 8447;

Westin CampoReal, Silver Coast (north of Lisbon). Prices on the resort currently start at €370,000 (£251,000)
Westin CampoReal, Silver Coast (north of Lisbon). Prices on the resort currently start at €370,000 (£251,000)
Westin CampoReal, Silver Coast (north of Lisbon)
Thirty minutes from Lisbon and 15 minutes from the sandy beaches of the Silver Coast, CampoReal is a 372-unit sporting resort set in quiet countryside that was once the Portuguese royal family’s hunting ground. As well as all the usual facilities – 18-hole golf course, swimming pools, tennis courts, luxury spa and gym – there is a fantastic equestrian centre equipped for both beginners and expert riders.

“The Silver Coast is now experiencing growing interest from overseas property investors due to its affordable opportunities compared to the high cost of entry in the Algarve,” says Eduardo Netto de Almeida of Westin CampoReal. “Within the next 10 years, I believe that the Silver Coast will become a major European destination for overseas buyers.” Prices on the resort have risen by up to 68 per cent over the past four years and now start at €370,000 (£251,000) for a four-bedroom town house, or €600,000 (£406,500) for a fully furnished four-bedroom detached villa with pool.

Contact Premier Resorts on 0800 550 0611;

Casa Soalheiro, central Algarve. Priced at €495,000 (£335,500)
Casa Soalheiro, central Algarve. Priced at €495,000 (£335,500)
Casa Soalheiro, central Algarve
This two-storey villa overlooking the Cumeada valley in central Algarve lies in the heart of the Portuguese countryside, yet Faro airport is only 50 minutes away. The attractive town of Silves, with its Moorish castle and cathedral, is within 10 minutes, and the wide Algarve beaches are 20 minutes away.

The property is 17 years old and has three bedrooms, one reception room and a separate one-bedroom annexe. The gardens cover nearly two acres and feature a large pool. The price is €495,000 (£335,500).

Contact Knight Frank on 020 7861 1060;

Manor House in central Portugal. Guide price of €950,000 (£643,000)
Manor House in central Portugal. Guide price of €950,000 (£643,000)
Manor house in central Portugal
Inland Portugal offers some beautiful historic properties at remarkable prices. William Fitzherbert Brockholes sources property in the lush area between Nelas and Viseu. He says the low cost of living, affordable property prices, excellent climate and uncrowded villages are attracting more British buyers.

Live like a noble in this newly refurbished manor house near Viseu, complete with a 17th century chapel, spacious gardens and swimming pool. There are eight bedrooms and elaborate reception rooms with ornate tiling and panelled walls. Lisbon is two-and-a-half hours away, while it is 50 minutes to the coast and 30 minutes to both the Spanish border and to the Estrela Mountains. The house has a guide price of €950,000 (£643,000).

Contact Property For Sale in Central Portugal on 00 351 232 888 573;

Buying in Portugal: factfile

Tempted by Portugal? Here is what you need to know before you buy on this sun-drenched Iberian peninsula.

The buying process
First of all, you must obtain a fiscal number from the local tax office and arrange for a bank or property company to provide you with a Portuguese postal address.

Appoint an experienced and bilingual lawyer. After agreeing a price, the purchaser’s lawyer should carry out full checks on title deeds and ensure that the seller has no outstanding debts on the property. The purchaser’s lawyer should also ensure that the property has a certificate of habitation and is not being sold to you by an offshore company. This was a common way for foreign owners in Portugal to avoid certain taxes, but since 2004 new laws have made this financially disadvantageous.

A legally binding preliminary contract, Contrato Promessa de Comprae Venda, is signed before a notary and the buyer then normally pays a non-refundable deposit of about 10 per cent.

The process concludes when both parties sign the escritura or final deed in the presence of the notary. At this point, the full balance and all costs and taxes must be paid. The title deeds must be lodged at the land registry.

Buying costs
Buying costs in Portugal are significantly higher than in the UK. You should expect to pay about 10 per cent of the purchase price, including:
* The notary’s fees of two per cent
* Lawyer’s fees of between 1.5 and two per cent.
* Property transfer tax (IMT) on a sliding scale of between zero and six per cent based on purchase price. Properties less than €80,000 are exempt.
* Additionally, if you have taken out a mortgage you will need to allow for charges for registration and arrangement adding up to about two per cent.

Running costs and taxes
Owners pay an annual property tax of about 0.7 per cent, based on the assessed value of the property as well as local rates of 0.7 per cent again.

There is no inheritance tax on property transferred to direct family in Portugal. Other transfers are taxed at 10 per cent. Remember that UK taxpayers will still have to pay inheritance tax in the UK on all their assets.

VAT in Portugal is 19 per cent.

Residents are taxed on their worldwide income, while non-residents are taxed on income arising in Portugal. Residents are those who spend more than 183 days in any one calendar year in Portugal.

Capital gains tax is 25 per cent for non-residents.

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