Buying property in Portugal
Buying property in Portugal from the UK involves a different legal process, additional taxes and costs, and a currency transfer that can shift significantly between offer and completion. Our buying in Portugal guide covers what you may need to know at each stage, so you are better placed to protect your budget before you start.
The process of buying property in Portugal
Get your NIF number
Before making an offer, you must obtain a fiscal number (NIF), required for everything from a property purchase to a phone contract. Apply at any tax office (Finanças) with your passport. It’s free and usually issued same day. UK buyers also need a fiscal representative, at an annual cost.
Find a property & make an offer
Once you’ve found the right place, your offer goes through the estate agent. Instructing a lawyer early lets them start checks as soon as your offer is accepted.
Reserve the property
You’ll sign an Offer and Reservation form and pay a holding deposit to take the property off the market while your lawyer confirms it’s legally the owner’s to sell. Read the terms though, as the deposit’s usually only refundable if those checks find a problem.
Sign the promissory contract
Your lawyer then prepares a Promissory Contract (Contrato de Promessa de Compra e Venda), legally binding on both sides. You pay a deposit (sinal), typically 10%. Pull out and you lose it. If the seller pulls out, they owe you double.
Sign the final deed
After transferring the funds, the final deed (escritura) is signed by both you and the seller in the presence of the notary, who also ensures the purchase tax (IMT) is paid before the property changes hands.
Register the property
The transaction is complete and the property is yours. Your lawyer finalises it by registering the sale with the Land Registry (Registo Predial) and updating the record at the local tax office.
Costs and taxes when buying property in Portugal
In addition to the property price, buyers should budget for several additional costs when purchasing property in Portugal. These vary depending on the purchase price, the location, and whether the property is a first or second home.
Notary & land registry fees
Just like in the UK, there are fees for the buyer to cover the notary’s work and registering the property, usually around 1–2% of the property’s value.
Transfer tax (IMT)
Known as Imposto Municipal sobre Transmissões Onerosas de Imóveis, this varies depending on the purchase price, the location, and whether it’s a first or second home in Portugal.
Stamp duty
This is a flat rate of 0.8% of the purchase price, payable in addition to transfer tax and notary fees.
How exchange rates impact your budget
If buying property in Portugal from the UK, you’ll need to convert pounds to euros. Even small GBP to EUR fluctuations can increase the amount needed if the pound weakens before completion. A 2% movement on a €300,000 property could mean paying around £5,000 more or less, depending on whether the pound weakens or strengthens against the euro.†
Protecting your budget
When you’re making a property purchase abroad, exchange rate changes can quickly affect your budget. Lumon supports buyers with large international payments and helps them plan their transfers around the purchase timeline.
†The information provided in this case study/scenario is hypothetical and is intended for illustrative purposes only. The exchange rates referenced in this case study/scenario are interbank rates and should not be used as an indication of past, current or future performance or constitutes a recommendation of any kind.
Working with Lumon
Our team of currency specialists has the local market knowledge to help you navigate the process of buying a property in Portugal. With our international real estate expertise, we’re here to help make the process hassle-free.
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Mortgages for buying property in Portugal
Getting a mortgage in Portugal is possible for UK citizens, although lending criteria differ from the UK in some important ways. A broker who specialises in Portuguese property can help you find the right lender and navigate the application process.
Typical mortgage conditions
Portuguese lenders can require a deposit of up to 30-40% for non-residents, which is higher than most UK mortgage products. Life insurance linked to the loan value is also standard, and lenders will not approve a mortgage without it, so it needs to be factored into your budget.
Factors lenders consider
Lenders will look at your income, employment status, existing financial commitments and credit history. The property’s location and value also affect the decision. Getting your documents in order early, particularly proof of income and bank statements, can help avoid delays when you’re ready to make an offer.
Buying a property in Portugal?
Lumon’s buying guide explains everything you may need to know about buying property in Portugal. It covers the step-by-step process of purchasing property, the taxes and costs involved, and legal considerations for UK citizens.
Download your guide
Can foreigners buy property in Portugal?
Yes. There are no restrictions on overseas ownership and you don’t need to be a resident to buy. You will need a Portuguese tax number (NIF) and a local bank account.
Buying doesn’t grant the right to stay long term. UK citizens can spend 90 days in any 180-day period without a visa. Beyond that, the main routes are:
- Residency Visa: for permanent moves. Valid four months, during which you book an appointment with AIMA to apply for your residency permit.
- Temporary Stay Visa: for stays over 90 days. Valid up to a year with unlimited entries, covering work, study, professional training or travel.
- D7 Visa: the Passive Income Visa, for non-EU nationals with income from pensions, rentals or investments. Thresholds track the Portuguese minimum wage and currently stand at €11,040 a year for the first adult, plus 50% for each additional adult and 30% per child. Permanent residency is available after five years of legal residence.
The Portuguese property market
Portugal remains one of the most popular property markets for UK buyers, thanks in large part to its cost of living and lifestyle. The cost of living is on average 30% lower on the Algarve than in the UK, and Portugal is generally cheaper to live in than its neighbours, according to the Numbeo Europe Cost of Living Index by City, Lisbon ranks only 153rd, while London is 15th and Paris 24th.
Prices vary significantly by region, from the sought-after resorts of the Algarve’s Golden Triangle to the more affordable Alentejo and central Portugal, so where you buy will have as much impact on your budget as when you buy.
Where to buy property in Portugal
The Algarve
Located in the southernmost region of Portugal, the Algarve is famous for its stunning beaches, golf courses, and expat-friendly communities. It’s a top choice for retirees and holiday homebuyers.
Lisbon
The ‘city of seven hills’ offers ancient ruins, terracotta rooftops with the Atlantic Ocean beyond. Portugal’s buzzing capital offers strong rental potential, a vibrant lifestyle, and beautiful historic neighbourhoods.
Porto
A cultural gem in the north with river views, Portugal’s second largest city has a lot to offer: great food, world-famous wine and an increasingly popular property market.
The Alentejo
Authentically Portuguese and away from the tourist hotspots, Portugal’s largest region covers a third of the country. Rural renovation projects and move-in farmhouses come cheap here.
The Silver Coast
Nicknamed ‘The Real Portugal’, this refreshingly undeveloped coast runs 150km of golden sand between Porto and Lisbon. Caldas da Rainha and Aveiro draw expats with affordable prices.
Central Portugal
Head inland for mountainous vistas dotted with lakes, rivers and remote hamlets. Towns like Leiria and Tomar are building a reputation with buyers hunting the country’s biggest bargains.
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Pitfalls when buying property in Portugal
Buying property abroad can present challenges, particularly for buyers unfamiliar with the local legal system. Being aware of common pitfalls when buying property in Portugal can help reduce risk and make the process smoother.
- Underestimating total costs
- Exchange rate fluctuations
- Incomplete property checks
- Relying solely on seller recommendations
Frequently asked questions
Is buying property in Portugal a good investment?
Buying property in Portugal can be a strong long-term investment, especially in popular regions like Lisbon and the Algarve, which attract strong international demand. Buyers should still consider local prices, rental potential and ongoing maintenance costs before purchasing.
Do you pay UK stamp duty on Portuguese property?
No. UK stamp duty applies only to property bought in the UK, so a Portuguese purchase attracts none of it. When buying in Portugal, you’ll pay the Portuguese taxes and fees set out above instead.
Do I have to declare a Portuguese property to HMRC?
You don’t need to declare the property itself to HMRC, but any rental income received or profits made from selling the property must be reported, as these may be subject to UK tax obligations. It’s a good idea to keep accurate records of all income and expenses related to the property.
How can I legally reduce UK tax on my Portuguese property?
The UK and Portugal have a double taxation agreement designed to prevent the same income being taxed in both countries, and a qualified tax adviser can help you understand how it applies to rental income or capital gains from overseas property.‡
‡The information provided is for general information purposes and does not constitute legal, tax or other professional advice from Lumon, and it is not intended as a substitute for obtaining advice. it is recommended you seek professional advice from a financial advisor or any other professional.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Lumon or its subsidiaries, and it is not intended as a substitute for obtaining advice from the relevant professional services. We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
Your property buying guide
Our property buying guide is packed with information and resources to support you on your property journey, including:
- Important considerations when buying a property in Portugal
- Information on navigating local taxes, visas and other regulations
- A handy checklist for ensuring you’re on track
