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Buying a Property in Algarve/Portugal

Discussion in 'Portugal Property' started by alvarojustino, Jan 31, 2007.

  1. alvarojustino

    alvarojustino New Member

    Hope some of you can find some of the anwers you seek in here:

    Q. Who sets the price of the property?
    A. If you are purchasing a holiday property on a new development in the Algarve, it will have been set by the developers/management company. Regardless of agent's commissions, you should still pay the same price whoever you purchase through ... whether you go direct or through a third party. Resale properties in the Algarve are usually handled by Government licensed Real Estate agents.

    Going through a licensed company has several advantages: You will get to see a wide range of properties that suit your requirements; you will have the benefit of our many years experience, as well as fully staffed offices to support you in the all of the bureaucracy of the paper work. It will eliminate any possible language problems and it helps take away the stress and strain associated with purchasing a holiday home in the Algarve.

    Q. Do I need a fiscal number?
    A. Yes you need a fiscal number: an application has to be made to obtain a fiscal number. Without this fiscal number document, a buyer will not be able to complete the deed of purchase.

    Q. is there any condominium costs for the property?
    A. When buying a property in a condominium there are condominium costs. This condominium costs cover the maintenance of the condominium, example: garden, pool…. communal areas. Average charged prices per year: one bedroom apartment € 500, two bedroom apartment € 700.Independent villas don’t pay condominium.

    Q. What additional costs are there?
    A. You may be looking into your budget to purchase a property in the Algarve. You should be aware of the following costs (estimated)Notaries and registration fees - 1.5% of the purchase priceIMT transfer tax, as similar to UK stamp duty - up to 8% (depending on the type of property and price).

    Real Estate Agent's fees (PAID BY THE SELLER ONLY, NOT BY THE BUYER) are usually subject to agreement.


    Q. Do I need permission to purchase a property in the Algarve?
    A. Generally, no. Where necessary, a lawyer can apply for the permission for you.

    Q. Do I have to be in the Algarve to complete the transaction?
    A. In the event that you will not be able to attend the signature of the promissory contract and the "escritura", your lawyer will provide you with a power of attorney and advise you of the necessary formalities for this document to be prepared abroad and accepted in Portugal.

    Q. Can I take money in and out of the Algarve freely?
    A. Yes.

    Q. In whose name should I purchase the holiday property?
    A.There are a number of ways to purchase the property in the Algarve: In your own name, in the joint names of you and your partner, or co-purchaser(s), in the names of your adult children, or in the name of somebody who will eventually inherit the property from you, or In the name of your Company.

    Q. Should I make a Will for my property in Portugal?
    A. It is strongly recommended that once you have purchased a property in the Algarve Portugal in your own name, you instruct your lawyer to prepare a Will. You are allowed to have a Will for your Portuguese assets only, without replacing the main Will you may have in your own country. The most common type of Wills is also signed at the Portuguese Notary's books and is strictly private and confidential. With the right people assisting you, purchasing an overseas property can be an enjoyable and rewarding experience ... If you still have questions having read this section, please don't hesitate to contact me!

    Q. What are the legal steps required to purchase a holiday property in the Algarve?
    Step 1 - Property searches: we would call this phase the essence of buying a property in the Algarve. In order to make sure that the property you are willing to buy has a good clean title searches must be carried out, at least, in the following public departments: (Conservatória do Registo Predial) - Land Registry Department. This is a department where you will find information about property, i.e. ownership, description, mortgages, encumbrances and charges.( Repartição de Finanças) - Finance Department. You will also find in this department information about properties - their description and taxes, namely predial tax "IMI". Câmara Municipal - City Council. In this department you will find information about planning permission, possibility of construction in country areas, rules applicable to certain developments, approval of projects, building licences and habitation licences.

    Step 2 - Promissory contract In order to secure the deal, it is advisable and usual in Portugal to sign a promissory contract "contrato promessa de compra e venda", whereby all conditions for the sale agreed with the vendor will be stated including completion date. A deposit is payable at the signature of the said contract and its amount subject to agreement between the parties. This promissory contract is also signed by both the vendor and the buyer and an agreed deposit is paid by the buyer to the vendor (normally 10% of the value of the property). This contract safeguards both parties; should the vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the buyer. Should the buyer not complete the purchase, the vendor is entitled to retain the deposit paid.
    At this stage you will need to decide whether you purchase the property in your name or you follow a different route. Nowadays with the changes in the law affecting offshore ownership companies this is no longer a route often chosen. A tax efficient way to purchase properties must be looked into case by case.

    Step 3 - Notarial deed of purchase and sale completion is known in Portugal as "Escritura Pública de Compra e Venda" whereby the ownership of the property is transferred to you. All the property documents must be submitted to the notary, together with the proof of payment of tax on the transfer of the property known as Municipal Transfer Tax (MTT) whenever applicable. This "escritura" is signed at a Notary's book on the date you have agreed to close the deal. At this same time the balance of the purchase price is paid to the vendor.

    Step 4 – Registration: Even though you have become the owner of the property, when you signed the "escritura", it is the registration of the property in your name, at the Land Registry Department, which grants you full security of ownership, as it will protect against claims by third parties.

    Step 5 – Installation of water, gas and electricity—Applications for installation of water, gas and electricity where appropriate, are made to the authorities concerned, after the deeds have been affected.

    Q. Is there Inheritance Tax in Portugal?
    A. Inheritance Tax in respect of property has been abolished for persons with Portuguese residency - those with tax residency elsewhere will be liable (or not) under that jurisdiction.
    A Will, It is highly recommended that once you have purchased a property in Portugal, in your own name, you have a Will for your Portuguese assets only.

    I hope that the above summary will help you through the procedures of buying your home in the Algarve Portugal.
     
  2. indian

    indian New Member

    Hi alvarojustino,

    I am interested to find out what process I need to follow if I want to aquire planning permission to build a villa on a plot on land. It hasn't got a ruin, but I am lead to believe its in an urban area, there is electricity, water etc very close by and there are several other properties with buildings on the same road. The plot is in Rio Seco - Castro Marim. Is planning persimmission possible. Any help will be appreciated. Thanks
     
  3. omostra06

    omostra06 New Member

    Portugal has some of the strictest planning laws in Europe, which were introduced in the early 1990s, and generally you will only be granted planning permission where a piece of land has an existing dwelling or ruin or is within an established urban area with mains services (water, electricity and drainage etc). However before you purchase a plot of land or ruin, it is advisable you contact the local Câmara and ask to consult it's PDM (Plano Director Municipal), which will indicate whether a plot is urban, reserva agricola (farmland) or reserva ecológica (ecological reserve). If you wish to construct a new building or even reconstruct a ruin it is important to to liaise with the local Câmara.

    Planning permission can be a time consuming affair in Portugal and it is not unusual for a project to take up to a year to be passed. Submitting planning permission in Portugal is a two fold procedure and it is best to work with an architect.

    The Projecto de Arquitectura (Architectural Project) is a comprehensive brief including architectural drawings, topographical survey and list of materials to be used. This is submitted to the Câmara first for approval.

    After you receive approval for the Projecto de Arquitectura you will be informed by the Câmara and asked to purchase an Aviso notice, which must be displayed on the ruin or land you intend to construct, to inform your neighbours of your intention of the construction. Failure to display this notice does result in a fine.

    Then the Projecto de Especialidades (Specialities Project) is then submitted. This part of the project covers the engineering required to complete the build, information on septic waste removal, water and so on and is usually compiled in conjunction with an engineer.

    Once the projecto de especialidades has been approved by the council your builder can then pick up the Licença de Obras from the Câmara. A Licença does cost money and that cost is worked out by a formula which includes the percentage of total coverage of your build and the length of time proposed the build to take.

    Once you have completed your build the Câmara will inspect the site and ensure the finished project adheres to the one you submitted for approval. If everything is in order the project will be signed off and the Câmara will provide a ficha technica (technical file) and habitation licence.

    For smaller jobs such as replacing a roof you may only be required to apply for a License, which is a speedier and cheaper process, therefore it is advisable you consult the Câmara on any work you proposed.
    Featured property for sale in central Portugal
     
  4. indian

    indian New Member

    Hi Omostra6

    Very comprehensive reply - thanks. I have visted the Castro Marim Camara Website and found the PDM, doesn't make sense to me. I wonder if you could have a look at couple sections for me a nd translate. The URL is below, there are references to Rio Seco in Artigo 33 Âmbito, usos e categorias
    Áreas urbanas de nível III:
    and Artigo 36.° Áreas urbanas de nível II


    Município de Castro Marim :: uma Terra com História


    Does this mean the area around Rio Seco is calssified as Urban

    Thanks in advance
     
  5. Annette

    Annette New Member

    Promissory Contract

    Step 2 - Promissory contract In order to secure the deal, it is advisable and usual in Portugal to sign a promissory contract "contrato promessa de compra e venda", whereby all conditions for the sale agreed with the vendor will be stated including completion date. A deposit is payable at the signature of the said contract and its amount subject to agreement between the parties. This promissory contract is also signed by both the vendor and the buyer and an agreed deposit is paid by the buyer to the vendor (normally 10% of the value of the property). This contract safeguards both parties; should the vendor not complete the sale, he is required by law to repay twice the amount of the deposit to the buyer. Should the buyer not complete the purchase, the vendor is entitled to retain the deposit paid.


    Q But what happens if the vendor sells to someone else and takes off with your deposit? What if he 'disappears'?
     
  6. yaj

    yaj New Member

    Portugal Investment

    Hey, Nice to hear with your good facts.
    I totally agree with what you say, and i can say that i have personally invested in portugal this year.The investment is emazing, with massive returns.If any one interested with investing in portugal, and that too in Praia da Rocha, the hottest region of algarve-Portugal, please contact me on
    07950469867.
    With guranteed cash backs, guranteed rental's,largest 5-6* hotel complex in europe,first man made marina in portugal,best planners in the world.WOW
    Speak to you soon,

    Kind Regards,

    Yaj
     
  7. mad_zzzb

    mad_zzzb New Member

    Great quality info, thanks. Will reference it in the future.
     
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