Reasons you should buy a house in Portugal

With no restrictions on foreign property investment, along with a favourable tax system and its Golden Visa scheme, Portugal has become one of the most popular destinations for expats looking for a holiday home or investors.

If you do buy a house in Portugal, here’s a few things you could benefit from.

Choose the beach or city life

As a holiday destination Portugal is mostly known as a resort location with some of the best beaches and weather in Europe.

And it’s also a reason many foreigners look for homes in Portugal within easy reach of the beach.

But Portugal offers a little bit of everything for an investor and there’s plenty to choose from either close to the beach, closer to a bustling city environment or even something in the countryside for those looking for a more secluded option.

Lagos is a consistently popular choice for foreign property investment with ongoing development making it a hotspot for tourists and expats.

Great retirement location

The increasing investment seen in Portugal around infrastructure, communications, hospitals and housing has been largely driven by the popularity of the country as a retirement destination for expats seeking to retire to warmer climates.

The Algarve in particular is a popular retirement destination with its milder winters, warm summers and no end of leisure activities available - especially when it comes to golf resorts.

Portugal also has one of the most affordable costs of living in the EU. You should be able to live comfortably with a monthly budget of around 1,500€.

Excellent investment potential

Portugal is one of the most attractive destinations for foreign property investment not just in the EU, but in the world.

In part this is down to the country’s unique “Golden Visa” scheme (more on that below) which helps fasttrack applications for full residency.

There are also no restrictions on lending to foreign investors from Portuguese banks, although you’ll need to meet certain criteria for some mortgages.

What makes Portugal so popular, is the high standard of living, business opportunities and economic stability.

This means whether you’re looking to relocate for business, retire, or are looking for a holiday home that you can also rent out during the year, there are plenty of attractive options available.

The Portuguese government has also worked to attract more interest with its focus on infrastructure and tourism investment, as well as a favourable tax system for foreign investment.

Tax efficient

“Non-Habitual Residency” NHR was first introduced by the Portuguese government in 2009 as a means of attracting “high value” residents to the country.

The scheme effectively reduces tax rates and provides some extra exemptions for people moving to Portugal during their first 10 years in the country.

Anyone moving to Portugal to work would benefit from a flat 20% income tax rate under NHR for their first 10 years (rather than the usual scaled tax system which increases to 40% at the higher end) as long as they worked in an area like science, the arts or a technical profession.

If you’re receiving income via another means, like through dividends, it’s possible you could pay no tax at all on the money.

Before April 2020 it was also possible for foreign pension income to be taken without tax in Portugal, even received from another country. However, this was changed to a new flat rate of 10% on pension income - although this only applies to applications made after April 2020.

If you were already receiving the NHR pension benefits before this date then you’ll continue to receive them.

Golden Visa

Portugal’s Golden Visa scheme is a residence permit that can be used by non-EU nationals to gain citizenship within five years if they invest in property and meet certain criteria over that period.

And it is by far the most popular visa scheme of its kind in the world.

This is because investors who qualify are able to move their family and live, work and study in Portugal during the investment period, and benefit from various tax incentives.

After five years the investor is eligible for full-citizenship, including an EU passport.

While the rules are changing from 2022, with restrictions on the eligible investment areas, this Golden Visa scheme is a highly valuable scheme for investors looking for fast-tracked citizenship in a growing, reliable economy and strong real estate market.

Affordable cost of living

As well as the various friendly tax schemes set up to encourage foreign investment and the Golden Visa scheme, Portugal is also highly affordable as a destination for foreign investment.

This is particularly the case for those looking to move for work, or looking to retire in Portugal.

Many locals are able to live off 750€ a month (on average) so a couple with a budget closer to 2,000€ or 3,000€ could live extremely comfortably.

Some expats are put off Portugal because it doesn’t perform well in the OECD’s Better Life Index, but this is because earnings in Portugal are typically lower than other western European countries due to the low cost of living.

In relative terms, Portugal provides a much better work/life environment than the stats would suggest, and many expats agree - which is why Portugal is so popular.

House prices are also fairly affordable for expats, considering the stability of the housing market. You could expect to pay between 100,000€ and 200,000€ for a two-bedroom home in popular locations like the Algarve.

If you’re looking for property in a more rural location you could find property at the higher scale around 120,000€.

Why you should buy a house in Portugal

Portugal has spent the past few decades investing to become a hotspot for foreign real estate investment and expats looking to relocate to warmer climates.

With a highly favourable cost of living, choice of resort and city living, and tax incentives for foreigners, it is a highly sought after destination for investment.

Whether you’re looking for a retirement home or an investment opportunity you’ll be able to find something that fits the bill.

And we can help.

Click here to find out what’s on offer in Portugal.