Buying your dream home in Portugal? See how it works in practice

From sunny beaches to serene mountain villages and vibrant cities, Portugal attracts an increasing number of Dutch residents seeking to realize their dream: a second home, a rental property, or even a permanent residence. But how does buying a house in Portugal work? What should you pay attention to, and how can you ensure you begin this adventure well-prepared? In this article, we'll walk you through the buying process step by step, including all the practical aspects involved. This way, you'll avoid surprises—and realize your dream faster.

Why buy in Portugal?

Portugal has been popular with the Dutch for years. The combination of sun, space, safety, and hospitality makes it an appealing destination for both vacations and extended stays. Furthermore, Portugal offers a stable real estate market, a good rental market, and attractive tax regimes—especially when compared to the Netherlands. The most sought-after regions are the Algarve, Alentejo, the Lisbon area, and the Silver Coast. Each region has its own charm and price tag. The Algarve is appreciated for its climate, sea, and golf courses. The Alentejo offers tranquility, space, and nature. Find out which region best suits your needs.

Step 1: Define your goal and budget

Before you start looking, it's important to be clear about your objective. Do you intend to use the property as a vacation home? Rent it out for income? Or do you intend to move permanently? Your objective determines, among other things, which regions, towns, or cities suit your needs, what type of property is suitable, and which licenses or taxes are relevant. Also, establish a realistic budget, including all additional costs. Expect acquisition costs to be around 7–10% of the purchase price.

Step 2: Mortgage or equity?

Even foreigners can obtain a mortgage in Portugal. Most Portuguese banks finance up to 70% of the purchase price for non-residents. It's wise to contact a mortgage advisor or broker with experience working with foreign clients in advance. They can help you obtain an indicative pre-approval, so you know where you stand before making an offer.

Step 3: The first formalities

To purchase a property, you need a NIF (tax identification number). This is easily obtained from your local tax office or through your lawyer. You also need a Portuguese bank account, among other things, to make payments at the notary.

Step 4: The right follow-up

A local real estate agent who speaks your language and understands Portuguese law is a godsend. The Portuguese real estate market operates differently from the Dutch, and there is no mandatory disclosure requirement like in the Netherlands. Therefore, a good agent and an independent lawyer are essential. The lawyer verifies the title deed, licenses, any debts on the property, and ensures that all documentation is correct. This is called due diligence and is crucial to avoid legal problems.

Step 5: Purchasing process in Portugal

The process unfolds in three phases:

1. Promissory Purchase and Sale Agreement (Contrato de Promessa de Compra e Venda) After agreeing on the price, a promissory agreement is drawn up. Typically, a 10% deposit is required. The lawyer ensures legal compliance.
   
   
   
2. Financing In the following weeks, the mortgage is arranged, if necessary, and further inspections are carried out.
   
   
   
3. Public Deed (Escritura Pública) The purchase is officially formalized at the notary's office, and the remaining amount is paid. You then receive the keys and the certificate of ownership. You are then registered as the owner at the land registry office.
   
   
   

Step 6: Taxes and Costs

When purchasing a property you pay, among others:

• IMT (Municipal Transfer Tax) – between 1% and 7.5%, depending on the type and value of the property.
  
  
• Stamp Duty – 0.8% of the purchase price.
  
  
• Attorney's fees – usually 1% + VAT on the purchase price.
  
  
• Notary, registration and other costs – these depend on the value and complexity, but on average are around €1,500–€2,000.
  
  

In addition, you pay IMI (Municipal Property Tax) annually , based on the property value.

Attention: legal traps

In Portugal, some properties are built or expanded without permits. Always ensure legal counsel. A house with a magnificent view may have illegal construction. Never buy anything without thorough investigation.

Rent? Get the license

Want to rent out (part of) your property? You need a Local Accommodation (AL) license to legally rent to tourists. The rules vary by municipality—be sure to read up. Also consider the tax on rental income in Portugal.

After the purchase: living in Portugal

After writing, there are still some practical tasks:

• Utility contracts in your name (electricity, water, internet).
  
  
• Possible registration with the chamber (if permanent change).
  
  
• Property and contents insurance.
  
  
• A local accountant can help with annual returns (rent and residence).
  
  

Want to move permanently? This also includes registering with the NHS, exchanging your driver's license, and possibly applying for residency.

Tip: Work with professionals

A reliable network of professionals makes all the difference. A real estate agent, lawyer, mortgage consultant, tax professional, and, in the case of renting, a property manager can save you a lot of hassle. And always make sure you understand what you mean.

Finally: dream with your feet on the ground

Buying a house in Portugal is a wonderful adventure, but also a serious investment. Take your time, get informed, and don't just be guided by emotion. This way, you can enjoy your little corner of the Portuguese sun without worry.

Want to learn more about buying, financing, or renting a home in Portugal? Contact Divine Home , a local Dutch-speaking agent who can assist you in your language and at your own pace, offering all the services mentioned under one roof.

Chantal Visser-Bruining

www.divine-home.pt | +351 289 501 664 or +31 (0)10 497 3311 | info@divine-home.eu