Portuguese Legal Procedures for a Re-sale.
(Existing Property).
Similar procedures are followed when purchasing a re-sale property (an established dwelling that has probably already been occupied.) This would include checking that the property actually belongs to the vendor and confirming that he has the legal authority to sell the property. This is shown in the Land Register.
Your lawyer will ensure that there are no tenants and that you will have vacant possession on completion of the purchase. Also, that there are no rights over the property e.g. that there are no plans to construct anything that would adversely affect the value of the property. All boundaries and measurements would be checked that they are as recorded and are accurate. The building permits and planning approval would be checked for good order and it would be ascertained that any existing property has been built in accordance with such plans.
"New Build" property must have a Certificate of New Work. This is to certify that the property has been completed in accordance with the building plans and a habitation licence. The latter is also required in order to obtain an electricity and water meter.
Your Lawyer will ensure that there are no encumbrances or liens attached to the property i.e. mortgages or loans etc. They will also ensure that any debts charged to an existing dwelling are cleared before you sign the Deed of Sale. Immediately prior to completion another search will be carried out to make sure that no debt has been added since the initial check and where a property is part of a community, checks will be made to ensure there are no outstanding Community charges. Verification will be sought to ensure that all the utility bills have been paid and are up to date.
Purchasing Expenditure.
The following is a guide to the costs that are likely to be incurred when you buy a property in Portugal. You should expect total expenditure of approximately 7-10% of the property purchase price, made up of the following items :
- Transfer Tax (IMT) must be paid on all residential property sales. It is on a sliding scale that changes yearly. Typically the charges range from 1% up to 6% depending on the purchase price.
- Notary & Registration Fees calculated as a percentage of the value of the property.
- Legal Fees
- Stamp Duty (0.8%)
Most taxes are paid by the buyer, with the exception of the selling agent’s fees.
Notary Fees.
The fees for the Notary who oversees a sale are fixed by law and are based on a sliding scale depending on the sale price.
NB : If you are buying a plot on which to build a house, you will have to pay notary fees for two Title Deeds, one for the land and another for the building.
Stamp Duty.
Stamp duty of 0.8% of the purchase price is payable on any property and is in addition to I.M.T.
Legal Fees.
It is always prudent to obtain a quote for legal fees from two or more lawyers but the range you should expect to pay will normally be between 1% and 2% of the purchase price.
Ownership Costs.
In addition to the fees associated with buying a property, you should also take into account the running costs as you would if purchasing a property in the UK. These include local property taxes (IMI), income tax on deemed letting income (if the property is indeed to be let), and your Fiscal Representative and tax consultants fees. There is also garden and pool maintenance (for a private villa), building and contents insurance, utilities and a management fee if you leave a home empty or let it out.
Lettings and Management Services.
We can direct you towards lettings and property management companies to ensure that the property is let out as often as possible and that it is cleaned and maintained between successive lets.
If you join us for an inspection visit, we are able to provide you with a written illustration of the potential income and expenditure costs for any property that you identify during your tour.
