Authored by the expert who managed and guided the team behind the Portugal Property Pack
Yes, the analysis of Lisbon's property market is included in our pack
If you're reading this, it's likely that the charm of Lisbon has caught your eye, and you're thinking about buying an apartment in this vibrant city.
But what does the buying process entail? Is it straightforward? How long should you expect it to take? What challenges might you face along the way?
In this article, we'll walk you through each step of the journey.
Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Portugal Property Pack
The Steps to Buy a Condo in Lisbon
- 1) Research and Choose the Right Neighborhood
- Understand the different neighborhoods in Lisbon, such as Alfama, Bairro Alto, and Chiado, each offering unique vibes and amenities.
- Consider proximity to public transport, as Lisbon's hilly terrain can make commuting challenging.
- Evaluate the neighborhood's potential for appreciation, especially if considering it as an investment. - 2) Engage a Local Real Estate Agent
- Find an agent who specializes in working with foreigners and understands the local market intricacies.
- Ensure the agent is fluent in English to avoid communication barriers.
- Verify the agent's credentials and reputation through reviews or recommendations. - 3) Secure Financing and Understand Tax Implications
- Explore mortgage options available to foreigners, as some banks in Portugal offer specific products for non-residents.
- Be aware of the IMT (Imposto Municipal sobre Transmissões) property transfer tax and other fees specific to Lisbon.
- Consider consulting a tax advisor to understand the implications of owning property in Portugal. - 4) Conduct Due Diligence
- Hire a lawyer to review the property's legal status, ensuring there are no outstanding debts or legal issues.
- Verify the condo's registration in the Conservatória do Registo Predial (Land Registry Office).
- Check for any condominium fees and understand the rules of the condo association. - 5) Make an Offer and Sign the Promissory Contract
- Negotiate the price with the seller, often through your real estate agent.
- Sign a Contrato de Promessa de Compra e Venda (CPCV), a promissory contract that outlines the terms of the sale.
- Pay a deposit, typically 10-20% of the purchase price, which is non-refundable if you back out. - 6) Finalize the Purchase
- Obtain a Portuguese fiscal number (NIF) if you haven't already, as it's required for property transactions.
- Sign the Escritura de Compra e Venda (Deed of Purchase and Sale) at a notary's office.
- Pay the remaining balance and any associated fees to complete the transaction. - 7) Register the Property
- Register the property in your name at the Conservatória do Registo Predial.
- Update the property tax records at the local tax office (Finanças).
- Ensure all utilities and services are transferred to your name.
Get the full checklist for your due diligence in Portugal
Don't repeat the same mistakes others have made before you. Make sure everything is in order before signing your sales contract.
What You Need to Know Before Buying an Apartment in Lisbon
What are the average property prices in Lisbon?
The average price per square meter in Lisbon is approximately €4,000, but this can vary significantly depending on the neighborhood.
In more upscale areas like Chiado or Avenida da Liberdade, prices can reach up to €7,000 per square meter.
Conversely, in emerging neighborhoods, prices might be closer to €3,000 per square meter.
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How long does the buying process typically take?
The process of buying an apartment in Lisbon can take anywhere from three to six months, depending on various factors.
This includes the time needed for property search, negotiation, and legal procedures.
Delays can occur due to financing approvals or legal checks, so it's important to plan accordingly.
What are the legal requirements for foreign buyers?
Foreign buyers are required to obtain a Portuguese tax identification number (NIF) to purchase property in Lisbon.
Additionally, they must open a Portuguese bank account to facilitate the transaction.
It's advisable to hire a local lawyer to navigate the legal requirements and ensure compliance.
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=> What are the legal requirements for buying property in Lisbon?
What are the additional costs involved in purchasing an apartment?
In addition to the purchase price, buyers should budget for additional costs such as property transfer tax (IMT), which ranges from 1% to 8% of the property value.
Notary and registration fees typically amount to around €1,000.
Legal fees and real estate agent commissions can add another 5% to 10% to the total cost.
Is it possible to get a mortgage in Portugal as a non-resident?
Yes, non-residents can obtain a mortgage in Portugal, with most banks offering financing up to 70% of the property's value.
Interest rates for non-residents are generally higher than for residents, often starting at around 3%.
It's important to compare offers from different banks to find the best terms.
Buying real estate in Portugal can be risky
An increasing number of foreign investors are showing interest in Portugal. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.
What is the Golden Visa program and how does it relate to property purchase?
The Golden Visa program allows non-EU citizens to obtain residency in Portugal by investing in real estate worth at least €500,000.
This program provides the benefit of visa-free travel within the Schengen Area.
It's a popular option for those looking to invest in Lisbon's real estate market while gaining residency benefits.
How does the property market in Lisbon compare to other European capitals?
Lisbon's property market is considered more affordable compared to other European capitals like Paris or London.
Despite recent price increases, Lisbon still offers competitive prices and a high quality of life.
The city's growing popularity among international buyers is driving demand and price growth.
What are the best neighborhoods in Lisbon for investment?
Popular neighborhoods for investment include Baixa, Chiado, and Alfama, known for their historic charm and central location.
Emerging areas like Marvila and Beato are gaining attention for their potential and lower entry prices.
Each neighborhood offers unique characteristics, so it's important to align your investment goals with the area's profile.
What is the rental yield like in Lisbon?
Rental yields in Lisbon can vary, but they generally range from 3% to 5% annually.
Short-term rentals, especially in tourist-heavy areas, can offer higher yields but come with more management responsibilities.
Long-term rentals provide more stability and are subject to different regulations.
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Are there any restrictions on property ownership for foreigners?
There are no restrictions on property ownership for foreigners in Portugal, allowing them to buy freely.
However, it's crucial to comply with all legal and tax obligations as a property owner.
Consulting with a local real estate expert can help navigate any potential challenges.
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What should I know about property taxes in Lisbon?
Property owners in Lisbon are subject to an annual municipal property tax (IMI), which ranges from 0.3% to 0.45% of the property's tax value.
There is also a stamp duty of 0.8% on the purchase price, payable at the time of acquisition.
Understanding these taxes is essential for budgeting and financial planning.
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How can I ensure a smooth property transaction in Lisbon?
Hiring a reputable real estate agent and a local lawyer can significantly ease the buying process.
Conducting thorough due diligence on the property and understanding the local market are crucial steps.
Being prepared for potential challenges and having a clear plan can help ensure a successful transaction.