Buying Guide

Buying Guide

It is a straightforward process provided you stick to the letter of the law and are advised or represented only by competent and reputable specialists who are fluent in a language you understand.

Deal with an Estate Agent who is Government Licensed (Mediador Autorizado), with an AMI Number and whose conduct is subject to enforceable rules. Algarve Homes Lda is a legally formed Company and is the earliest Government licensed agency in the Algarve (AMI License Nº 175 & APEMIP member Nº 342) 

Deal only with Lawyers and Solicitors (Advogados or Solicitadores) who are fully qualified and whose conduct the Portuguese Law Society controls. You can give your Lawyer or anyone else specific power of attorney to sign documents on your behalf, but closely follow that the proper steps are being taken without any undue delay. Lawyer’s fees are generally between 1.0 and 2% of the purchase price of the property. Some lawyers will quote you a fixed fee dependent upon the work involved and the type of property.  Your lawyer will carry out all the necessary searches on the property.

Land Registry Certificate

Local Land Registry (Conservatoria do Registo Predial) to check that the seller has clear title of ownership, that no one else has rights, charges or mortgages over it. Also check that what is registered conforms to what is actually built as well as the area of land.

Tax Document

Official tax document (Carderneta Predial) relating to the property from the seller and check that the description of the property (number of rooms, area of house, area of land, etc.) is the same as in the land registry.

Habitation License

Habitation License (licença de utilizaçao) from the local town hall (Camara Municipal). For residential property you will need a Habitation License (licença de habitaçao), which confirms the town hall has inspected the property and that it complies with the planning permission and building regulations.

Fiscal Number

Your Lawyer will apply for a fiscal number (numero de contribuinte) at the local Tax office (Finanças) as you must have one to purchase a property. It will come in the form of a card, which you will need for payment of annual property taxes or to open a Portuguese Bank Account and, setting up of utility bills.

Once all checks have been carried out your lawyer will prepare a Promissory Contract. You will normally have to pay the seller (via their lawyer), a deposit of 10% of the full purchase price at this stage. The contract can be signed in front of a Notary or Lawyer. It is legally binding on both the buyer and the seller. If the buyer defaults he forfeits the deposit. If the seller defaults he has to pay the buyer double the deposit (or, if a clause of specific execution is included, the vendor cannot withdraw and the purchaser can legally force the vendor to sell to him).

Proper title to the property comes with the final deed of conveyance (Escritura) which is signed in the office of a public notary. All the relevant documents have to be checked before the final contract is read aloud and, unless the buyer understands Portuguese, interpreted in the buyer’s language.

IMT (previously known as SISA) – Purchase taxes.

This is the Portuguese Purchase Tax and will need to be paid prior to completion. The amount payable varies with the value of the property and your lawyer will always advise you of this figure before you incur any expenditure. Tax exemption applies to purchases below Euros 80.000 and a maximum of 6% applies to purchases above Euros 500.000. Between these amounts there is also sliding scale from 0% to 6%. The above-mentioned figures only apply to residential villas or apartments. Different percentages are applicable on land or non-residential property and in those cases, it is a fixed percentage, which does not vary with the price. Rustic Land is 5% and other non-residential purposes and urban land it is 6.5%

Lawyer, Notary & Registration Fees

These will have to be paid by you on completion and as a rule will be approximately 2% of the value of the transaction.