Buying a holiday home in Portugal

Buying a holiday home in Portugal after Brexit

If you’re wondering what will happen to holiday homes in Portugal after Brexit, the short answer is nothing. Portugal currently has no restrictions on foreign nationals investing in real estate. So, even though the UK is no longer part of the European Union, UK residents and other non-EU nationals can still buy property. Furthermore, mortgage rates (more on this later) are based solely on your ability to pay back loans rather than your citizenship, except Portuguese citizens have access to more credit options. 

Buying a vacation home in Portugal is one thing; living there is another. Post-Brexit, British citizens have the right to stay in Portugal for 90-days during a six-month period. If you plan to live in your home for longer than that as a non-EU national, your best bet is to look into the Portugal Golden Visa. Once approved, you can live in the country without visa restrictions and apply for Portuguese citizenship at the end of five years. There are other visa options to explore. However, the Golden Visa is highly recommended for those planning to acquire property. 

The process, from start to finish 

As exciting as it is to buy a holiday home in Portugal, patience is key. Most people plan for the process to take up to six months, from start to finish. The first step is to think about the big picture. Where in Portugal do you envision your home? Will this be your primary residence or one you plan to rent out as a side income? Research the regions you resonate with most and get an idea of prices–the total price of the home and the initial deposit, plus taxes, you’d be required to pay upfront. 

Once you’ve nailed down the basics, it’s time to hire help; a real estate agent, solicitor, financial advisor, or all three. After an initial home search:

1. Narrow your options to a shortlist and ask your agent to set up in-person visits.
2. When you’ve found the perfect home that checks all the boxes, make an offer and (hopefully) close the deal. You’ll likely have some back and forth while the paperwork is finalised.
3. Sign away when you’ve nailed down all the logistics and are crystal clear on the terms. 

Getting a mortgage for a holiday home in Portugal 

Unless you plan to pay the total price of your property upfront, getting a mortgage for a holiday home abroad is a must. Finding out how much you can borrow from the bank will help determine the price range of the homes within your search. 

Timing-wise, the Portuguese housing market is doing well, and there’s real potential for future growth. Despite the pandemic, banks continue lending money to prospective homeowners worldwide. As a note, getting a mortgage is essential when applying for a Golden Visa. The visa requires a minimum threshold of €280,000 in lower-density areas of Portugal and up to €500,000 in higher-density areas. 

Let’s talk numbers. For non-resident buyers, most banks will access a mortgage at a ratio of 60-70% of the price. If you are a fiscal resident and pay taxes in Portugal, you can get around 80-90% of the valuation price. The bank determines the minimum deposit amount primarily based on citizenship, with Portuguese citizens accessing more credit options. Don’t let this discourage you; getting a mortgage in Portugal as a foreigner is still relatively easy. 

Choosing your overseas holiday home insurance 

While overseas holiday home insurance is not required for everyone, it’s always a good idea. Plus, to take out a mortgage, most banks need you to have at least a minimum level of home insurance. There are different policy levels within a single plan, ranging from basic to extensive. 

Basic coverage is needed for most mortgages, covering damage to the building, while higher-tier insurance also covers theft. If you already have home insurance from abroad, ensure the policy includes Portugal coverage. Close to 80 insurance companies operate in Portugal, with Allianz, Santander and Zurich being some of the most commonly contracted.

The best place to buy a holiday home in Portugal

The Algarve has long since been a beloved holiday retreat for travellers near and far and arguably the best place to buy a holiday home in Portugal. As the country’s most well-known region, the Algarve is split into 16 municipalities and takes up the country’s southern coast. Lagos, Portimão and Albufeira are among the region’s most visited areas. With an average of 300 days of sunshine per year, picture-perfect beaches, and dramatic landscape and rock formations, it’s hard not to fall in love with this coastline.  

Lisbon, with its big city status yet small-town feel, is naturally number one on many buyers’ lists. As colourful as it is full of character, Lisbon is a perfect blend of old and new. Thanks to Lisbon’s foreign-friendly mentality, Lisbon has become a hub for entrepreneurs, digital nomads, and freelancers. Some stick around for a few weeks at a time, while others choose to keep Lisbon as a base. As with many capital cities, prices are at a premium in Lisbon compared to less touristy places in the country. Of course, Lisbon is reasonably affordable compared to other cities like New York or London. 

Madeira is another popular spot to buy a holiday home. The picturesque island boasts a subtropical climate all year long, although summers can get pretty darn hot. Compared to holiday home prices in Lisbon, Madeira is substantially more affordable. More than likely, investing in a house here will see significant benefits over time, especially as tourism grows in the region. 

Holiday home support and services in Portugal

Not able to manage bookings directly? No problem. In today’s increasingly digital world, services are in place to help list your property regardless of your physical location. Property management companies in Portugal are great at connecting holiday homeowners with on-the-ground support. They’re there to deal with any and all situations that might arise during one’s stay. 

Depending on the management company you choose, services often include:

• Hiring and managing cleaning staff.
• Ensuring that guests can check in and check out.
• Answering any questions guests have during their stay.

If any maintenance issues need immediate attention, they’re who you call. Sometimes, a property management company also handles all advertising and promotional efforts. 

Ahead of purchasing your holiday home, real estate agencies are an excellent resource for ensuring that you can view the property as many times as needed and that you are securing your home for a fair price based on the current market. Of course, agents work for commission, so the higher the house sells, the more money they make. So, it’s always wise to do your research, too. 

Listing your holiday home

Airbnb and VRBO typically get you the most exposure for short-term rental platforms. Many owners create profiles on both sites to attract more customers. Whereas VRBO operates within the United States, Airbnb operates in more than 220 regions and countries. If you plan to appeal primarily to a US audience, then VRBO is a smart option. If, however, you’d like to reach people living in Europe, sites like Belvilla or Casamundo put you directly in front of your target customer. 

Once you define your audience and choose the booking platforms you wish to use, the next step is marketing. High-quality photos can be a game changer, as you only have a few seconds to make an excellent first impression on potential renters. Hiring a photographer and using the resulting images as marketing material might be worth hiring a photographer. Create a detailed description that not only summarises the features your home offers—things like outdoor space, air conditioning and accessibility to nearby public transport–but also gives them an idea of how it might feel to be in your home. For example, maybe the kitchen table faces floor-to-ceiling windows where one might enjoy a morning coffee. 

As you get more bookings, reviews will start rolling in. The better the ratings, the more traffic your listing will receive from potential renters. Positive reviews are a huge motivating factor for travellers, so it’s essential to take all feedback and make changes to improve the experience for guests.

To sum it up

To buy a holiday home in Portugal, patience and positivity will get you far. There might be lots to do along the way, but it will all be worth it in the end, so keep your eyes on the prize. Kyero is here to help you find your sunshine with confidence with our advice site resources on buying your overseas property in Portugal, whether in Lisbon, Madeira, the Algarve or somewhere in between.