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Property Investment for Expats in Portugal

Submitted: September 2014

Portugal does not impose any foreign investment restrictions on property investment. Property rights are generally well protected, though it’s best not to have to take disputes to the courts.  There are buy-to-let opportunities in Portugal, but this will require a lot of care and patient capital.

The cost of buying and selling property can be expected to be around 15%, which is moderately high. For purchases made from 2016, this is more likely to be closer to 10%.

It is Portugal’s policy to discourage property investment through offshore companies in blacklisted jurisdictions.


Portuguese housing market generally

The Portuguese real estate market has been plummeting since the Euro-zone crisis, and there are signs the trough has been reached.

Prices per sqm are quite cheap: central Lisbon property sells for just above €2,000 per sqm, whereas they can dip well to the low €1,000s elsewhere in Portugal.



Mortgages are available for residents and non-residents. However, non-resident mortgages are not offered by all banks.

Get your documentation right before applying for a mortgage, and do it early to avoid disappointment. Think about the purpose of your mortgage as well. In Portugal, mortgaging solutions are available in the following situations:

Portuguese banks tend to sell variable rate mortgages only. Fixed rate deals are quite rare. Consequently, the borrowing costs are exposed to any future decision by the European Central Bank to hike interest rates (currently at close to zero). While this is not expected anytime soon, a mortgage could commit you for decades. Consequently, you might wish to think twice for that matter.

From a financial point of view, remember that:

If you do things well, the effective interest rate on a Portuguese mortgage can be expected to be close to 3.5%, even for a buy-to-let mortgage or a non-resident mortgage.


Property taxes

Property taxes (Imposto Municipal sobre Imóveis – IMI) are levied by local authorities. The rates may vary strongly from one local authority to another. As higher property taxes mechanically shrink property values and rental yields, it is essential to check in advance how much property taxes you can expect to pay.

Seriously punitive property tax rates apply for properties held by offshore companies incorporated in blacklisted jurisdictions. Doing this may result in a negative rental yield.


Letting your property

The two main problems in Portugal are that:

The rights and obligations of landlords and tenants are generally regulated by the New Urban Property Letting Regime (Novo Regime do Arrendamento Urbano – NRAU). Rents can be freely agreed, but their revisions are strictly regulated. Tenants cannot be evicted without a valid reason.

Further information on the NRAU is available here.



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