Buying real estate in Portugal with 2021 update on the Golden Visa

HalloCasa: “This time, we talked to Antonio Barbosa, from Portugal. Tony is originally from the US and has lived in Portugal for 20 years and has executed his profession of real estate for over 20 years. He helps both domestic and foreign investors to buy real estate in Portugal. Antonio, why don’t you introduce yourself to our audience?”

Antonio Barbosa: “Michael, thank you. Thank you for having me here. I was born in Angola and moved to the United States early on, where I got my degree in Business Administration and then lived there for almost 30 years. During the last 20 years, I’ve been living in Portugal and I have dedicated the last 20 years to my passion of real estate.”

HalloCasa: “From Angola via the US to Portugal, great! What is the real estate market in Portugal right now? What is going on also with respect to COVID? And obviously, also, with respect to the Golden Visa?”

Antonio Barbosa: “Sure, last year, the market has been very different from previous years. Myself and most colleagues of mine have been doing very well with the domestic market during the past year. This is important to mention because Portugal is a service oriented industry which means we are very dependent on tourism and external investment. However, this year was mainly driven by first-time domestic homebuyers, wanting to have their own home. Apart from low interest rates, there are many factors that contributed to that growth market domestically. Foreign investment purchases, on the other hand, have dropped by around 40%, especially in Lisbon, since this is mainly a premium area and there’s nobody coming in to visit those properties currently.”

HalloCasa: “Do you see a certain trend going on and certain motivation, which has been triggered by US investors to buy in Portugal?”

Antonio Barbosa: “Yes, it is true. Sometimes, I think that there might be a lot of Americans who are finding out that Portugal exists. Of course, the current situation in the US helps a bit. A lot of US people aren’t happy. A lot of Americans are looking for quality of life and that’s when they get attracted to Portugal because it is what Portugal has to offer in that sense, because it really is about it.” 

Additionally, when they compare what they can get in a lot of other countries, like for example, in Mexico, Spain, or Italy, they’re discovering Portugal, and what they’re discovering about Portugal is the quality of life.

Furthermore, you don’t have to be a millionaire. You can rent a property for 2,000 Euros or less, much less than that. That´s why there are many retirees who choose Portugal as their destination.

Additionally, Portugal has the Golden Visa program which grants you a second passport.

COVID definitely plays into that and foreigners realize that it’s good to have a second passport. 

The possibility to be mobile and because you are a Portuguese citizen can be priceless from people outside of Europe. The residency is a great tool in addition to the tax benefits for non-habitual residents. One of them is that they do not pay any income tax for a certain period. This motivates personalities like Madonna to choose Portugal because they’re not going to be paying any royalties on their income for the next 10 years.” 

HalloCasa: “Can you give us a quick overview how the Golden Visa scheme works, especially with respect to real estate?”

Antonio Barbosa: “The Golden Visa Program was created in 2012. To jump boost the economy after we had the financial crisis, Portugal created this mechanism. It’s a tool to increase investments in Portugal.

The program works generally in the following way: five years after your real estate purchase, you can apply for the actual citizenship. So, the Golden Visa is an authorization for you to live in Portugal for five years while you don’t have to live here all year around. It’s mandatory to live seven days the first year and around 14 days during the second year.

You have to renew the application each year. Which means you have to redo the application three times, in total.

This begins at the initial investment, the lowest investment and it doesn’t even have to be real estate. You can invest or secure a Golden Visa through an investment of 250,000 euros in art or culture.

Apart from that, you can buy a property in a low density area. The reason is that the government wants to promote investments outside of the big metropolitan areas. This starts at 280,000 Euros when buying a property that’s more than 30 years old in the low density area. 

The next level is a 350,000 euro investment, which you can buy in the center of a metropolitan area, because you’re going to be renovating an old building. Here, the government wants to push the requalification of the interiors of the cities, because there are a lot of old buildings. 

The last level is a property purchase for around 500,000 Euros. This is the simplest one and most investors choose this one.  

Once you choose any of these investment types, you obtain the authorization to live in Portugal.”

HalloCasa: “What is the process in detail like?”

Antonio Barbosa: “The process is an application which I would recommend to use a lawyer for.

Technically, you could do it via the internet on https://www.sef.pt, but it’s highly recommendable to use a lawyer because if you’re going to be living outside of Portugal, it’s convenient to have a power of attorney for the lawyer who can handle mail and fill in tax forms and conduct other legal tasks directly. So, a lawyer will do the applications and all the requirements.”

HalloCasa: “Now, why don´t you give us a quick overview about Portugal and its areas.”

Antonio Barbosa: “Portugal is very diverse and has a lot to offer. From beautiful cities like Lisbon, Porto, and Lagos to off-grid countryside and coastal landscapes without anyone in sight. 

In general, there are three main locations where foreigners like to buy: Lisbon and its surroundings around Cascais, Algarve, and Porto. 

If you like warm weather and nice beaches, you might be drawn towards the Algarve. If you like to be in the city center of vibrant cities then you can decide between Porto and Lisbon.

But apart from that, there are other very interesting areas, such as the Silver Coast which goes from Sintra all the way up to Nazaré, Peniche, Baleal. It is great because of its mild weather and its proximity to Lisbon with around a one hour car drive. 

Additionally, there are even international schools which are being established increasingly due to foreigners settling in all those places. 

The area outside of Lisbon along Cascais in the Comporta area is quite interesting and very expensive. There, you have around 60 kilometers of beach line. 

Then, there is the area of the Vincentine Coast, in the Alontejo Region. This southwest region is very affordable and has a high quality of life, in terms of what you get for your money and the value of a property but with all the necessary infrastructure.

And then, there’s always the client who wants to live off grid. You can find this in places like Castelo Branco which has seen a 30% price increase, lately.

Generally, Europeans are looking increasingly in those areas to buy properties.” 

HalloCasa: “How was the domestic demand in terms of buying properties in 2020?”

Antonio Barbosa: “Last year, nobody from outside Europea was coming in to buy properties, in a country in which 70% of real estate purchases are being sold to international buyers. This totally flipped last year to 70% coming from domestic purchases. Interestingly, this did not have any impact on the property market or the value of properties. Within the last 20 years, the properties here and the market have always been steady. Unlike the financial crisis with banks not issuing loans or mortgages, Covid does not have this impact. Interest rates remain very low throughout the Eurozone. 

So, a couple of elements triggered the motivation to buy a home: not wanting to pay rent for the same price when you can pay a mortgage which you can later call your home, moving outside of dense city centers and the low interest rates.”

HalloCasa: “Can you give us an overview of real estate prices?”

Antonio Barbosa: “In Lisbon, square meter prices range from 1,000 to 6,000 to 10,000 EUR. Apart from that, it really depends on the region and it ranges from 600 EUR per square meter up to the mentioned 10,000 EUR per square meter in Lisbon. If the audience wants to get exact numbers, I suggest looking into the National Statistics Institute of Portugal. They have all the data and those data are publicly available.”

HalloCasa: “Once owning a property, what determines the yearly tax rate on your asset value?”

Antonio Barbosa: “Every municipality has its own tax rate. It is called the Encosto Municipal de Novo, which is basically the property tax. So, each municipality has its own costs which are based on the infrastructure of each respective municipality.

If you live in Lisbon, you have certain infrastructures. So, the amount of tax on the property is based on this. If you live out in the interior area, this tax will be a lot less because you don’t have the infrastructure like basic sewerage, high speed internet, or other things. So, it varies from municipality to municipality and on the size of your property.”

HalloCasa: “Give us an overview of all the service lines you are offering to your clients.”

Antonio Barbosa: “I offer a lot of things, and it is not only about real estate. Helping buyers from abroad is not only about finding properties, it is about allowing them to access the Portuguese culture. So, I really accompany a lot of potential clients with consulting services, answering questions and being there in case they have certain questions. 

In terms of real estate listings, I am mainly focused on the northern region, north of Porto where I have listings. In case someone is looking for listings in the Algarve or in Lisbon or in Madeira or in the Azores, I can have a huge network of real estate agents and I go and find an adequate property for each buyer across Portugal.

So, among colleagues, we work together. While I represent the buyer, my real estate colleague represents the seller. Both parties represent their clients and make sure that the listing is not overpriced or underpriced and that the entire process the transaction runs smoothly.”

HalloCasa: “So, you offer more than the transaction itself.”

Antonio Barbosa: “You have to account for each client’s needs, in particular. Some are planning more than 6 months ahead and I guide them already through some questions and answers, taking into account the school of the children, when the new school year starts, for example. Others need support concerning the Golden Visa, others have questions about health care, etc. It is a wide spectrum of tasks.” 

HalloCasa: “How does the collaboration between real estate agents in Portugal work?”

Antonio Barbosa:  “Within my 20 years of experience, I have built a great network of real estate agents in Portugal. 

From a technical point of view, we unfortunately don’t have an MLS system here. We have things that are similar to the MLS, but there’s no multiple listing service.

However, this doesn’t stop you from having the personal connection with other realtors. And that’s the most important thing. 

There are a lot of great colleagues who like to share their listings and the commission. Some do not, which is fine, too.
Working with the ones who like to share has generally always been easy. You sign a referral agreement and all is set and you share commission. 

 While the seller’s agent normally has more work prior to selling the property, the buyer’s agent normally has more things to do after the sale with some follow-up services for the buyer. 

The seller’s agent generally does the work of getting the listing or the documentation, getting everything ready to do the closing, the buyer’s agent does the legwork. The other part of the job entails the qualification of the client, making sure that this is the property they’re wanting, and that they’re going to be getting the service after sale.  

The buyers´ service also includes setting up the Promissory Sale Contract, which secures the contract until the closing. And that’s the part I’m getting compensated, while the buyer doesn’t pay anything for that. 

It is definitely important to work with a buyer’s agent so that the buyer gets properly represented.” 

HalloCasa: “Very interesting, it is good to hear that such a referral and commission model works well.”

Antonio Barbosa:  “Yes, if I have a client I reach out to my network. If a colleague has a client and reaches out to me because the client wants to buy in my region, he or she sends me even in writing a referral agreement, which states that I’m going to accept that client, which is theirs. We sign it, and it’s valid for what it’s valid.”

HalloCasa: “The seller always pays the commission?”

Antonio Barbosa:  “Officially, the law permits that both parties pay, however, common practice is that the seller pays it. Being part of the National Association of Realtors, the NAR, you sign to comply to a code of ethics that you have to follow. 

Obviously, charging a client twice (both from the seller and the buyer agent) is strictly forbidden, but you can have a client who says to you: “listen, you’ll find me the property, I’m going to pay you the commission.”However, in general, the seller obtains the invoice and can then file it as an expense along his taxes by year end.  On the other hand, the buyer usually pays transaction costs and transfer taxes, stamp duty and other expenses which he has to expect during the purchase.” 

HalloCasa: “What are those expenses in detail?”

Antonio Barbosa:  “The commission which the seller pays is usually at 5%. Basically, this represents the marketing of the respective listing which the seller needs to incur in order to sell it properly and find a buyer. 

On the buyer’s side, you need to expect the stamp duty, which is the actual contract being prepared by the notary, the property transfer tax which reflects the main costs and this will be around 6-7% of the property value.” 

HalloCasa: “So, from a buyers perspective, the steps are: I know I want to buy a certain property, I then contact a competent real estate agent. Once he finds me the listing I want to have, we sign the promissory sales contract and then go to the lawyer, pay the fees and the property is mine.” 

Antonio Barbosa:  “Yes, the promissory sales contract is a binding agreement. In Portugal it is called the CPCV, it’s an acronym and it stands for “Contrato Promesa Compra e Venta” and it’s a promise to sell and buy at declared conditions. This goes along a down payment and upon signing it, the closing takes place within 30 days or 60 days. The content of the CPCV is negotiable between the two parties.”

HalloCasa: “How much is the required down payment normally?”

Antonio Barbosa: “Generally, the down payment is 10% of the property value. This is also the percentage which your bank asks you to pay down here in Portugal. So, the buyer has to have 10% of the property value and the bank will loan 90% of it. 

If the buyer then backs out, he loses the 10%. If the property seller sells it to somebody else, he has to give the buyer the double of what he paid down.

If the buyer, however, does not accept the double of the 10% and wants to buy the property, the seller has to compensate him for that for the whole amount of the property. 

However, for all these elements and points it is important to have a proper real estate agent who knows his job and knows some legal aspects, too and can advise both parties accordingly. That’s why it is highly recommendable to work with a real estate agent and not to try it to do it on your own. 

A huge part of my job is to inform the client about each of those elements so that everything runs smoothly.

You need to be a personal and professional guide along the entire process.”

HalloCasa: “Yes, I think it can become a nightmare to do that on your own without a proper real estate agent in between.”

Antonio Barbosa: “Yes, there are so many things that can go wrong on any given transaction. One might think that you save commission, but in the end, it might be much more costly, stressful and a nightmare. 

So, yes, always work with a professional real estate agent who knows everything by heart because he or she has been doing it for several years or even decades already.” 

HalloCasa: “Please share with us your final thoughts you would like our audience to know.”

Antonio Barbosa: “I really would like the audience to know about the beauty and the quality of life in Portugal at a very affordable price, not to mention the 365 days of sunshine, the safety, the food, the wine, and nature. Safety is very high. A lot of times I even forget to close my car because there is no necessity.  There are reasons why Portugal was ranked 5th as the best place to live by ExpatMagazine, last year.

So it’s one of the best countries right now to be looking at, to invest and to do business in: safety, taxes, infrastructure are only a few of the reasons. 

There is a reason why Madeira is now the first island for digital nomads with an entire program for that. I have now been living here for over 20 years and I can proudly say that I call Portugal my home.” 

HalloCasa: “This is definitely impressive and yes there are definitely a lot of reasons to live in Portugal!”

Antonio Barbosa: “Well, I am, I’m very thankful for the opportunity to promote Portugal as a country, to promote it in terms of business, living here, investing here.” 

HalloCasa:  “I really like the way you run your business and your client side. You invest a lot into relationships and have built a huge network with clients and real estate agents around the world.

How can people contact you if they want to reach out to you?”

Antonio Barbosa: “The easiest way, the easiest way is through my website or via my phone:

https://www.infinite-solutions.pt/ or via telephone: 00351 927 035 152″

HalloCasa: “Thank you very much for your time and all the valuable insights you shared with us!”

Antonio Barbosa: “Thanks a lot to you!”

About HalloCasa:

HalloCasa, the marketplace for international real estate properties. HalloCasa’s mission is to build trust for vendors and investors with respect to cross-border real estate transactions.

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