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Rural property in Portugal: all you need to know

In this article we explain how you can get your own rural property in Portugal and what your options are.

Do you want to know what you need to do if you want a rural property in Portugal?

The number of foreigners living in Portugal has been increasing over the past few years, partly because of the tax benefits given to those who enjoy the non-habitual resident status

Some come to work, others to enjoy their retirement. And while most choose to live in the city centres, some prefer the refuge afforded by Portugal’s countryside. Located in the country’s rural areas, these are spaces where you can relax, enjoy your holidays or invest in a guesthouse. 

And while some will be looking for a ready built house, others prefer to build from scratch. 

In this article, learn all you need to know about rural property in Portugal. 

Buying a house

One advantage of buying a house is time. Even if it needs some refurbishing, you’ll be able to move in quickly and so the whole process takes less time. 

Besides that, the cost of the real estate is determined at the time of the purchase, thereby avoiding going over budget, as often happens when you build from scratch. There are some disadvantages, however, as you won’t be able to choose for yourself what your future house will look like. 

Although it is not mandatory, a promissory contract of purchase and sale is often signed. This way the buyer guarantees that the seller will not accept any other offer. The price of the house is determined, as is the deposit, and all those involved in the process are duly identified. 

You’ll need to gather a number of documents to present on the day the deed is signed.

These are:

  • The ID of everybody involved;
  • Permanent Certificate from the Real Estate registry – which contains a log of all the registrations of the real estate. 
  • Description of the Property, or Request for registration (IMI Form 1), as issued by the Tax Authority;
  • The real estate registry certificate – which includes the make-up of the real estate, ensures the legitimacy of the seller and states whether there are any mortgages or garnishments;
  • Signed sale agreement for the property, if there was one;
  • Usage permit, for all real estate built after 1951;
  • Housing license; for all usage permits issued after 30 March, 2004;
  • Energy and air quality certificate;
  • Insurance policies for fire (mandatory if the real estate is na apartment) or home multirisk (which includes fire) – as well as life insurance, (in cases where there is a mortgage and the bank requires it); 
  • Proof of payment of stamp duty;
  • Proof that right of preference was waived, where applicable;
  • Toponymic certificate, if it exists;
  • Proof of payment of Municipal Property Transfer Tax (IMT), or proof of exemption, if applicable;
  • If you are using a bank loan then you must present a copy of the mortgage in the bank’s name as well as a statement of the total amount of the loan. 

Click here for more information on how to purchase a house in Portugal.

Building your own house

Another alternative for having your rural property in Portugal is to build your own house. 

Although this is a longer process – from buying the plot to finishing the construction, including obtaining all the required building permits – there is a definite upside to it, since the house will be exactly to your taste. 

The Legal framework for Urban Planning and Building lays out the steps to follow: 

  • The first thing to do is to confirm whether you can build on that land, and naturally you’ll want to do so before you buy the plot, to avoid the risk of buying land you cannot build on. You can confirm this through a request to the local municipal council. You should have a reply within 20 to 30 days;
  • Once you have confirmed that you can build on the land, make sure that the local Municipal Directing Plan (PDM) allows for construction of housing on that particular plot;
  • You’ll then need a topographic survey of the land where you plan to build your house, and have the architectural project approved by the council. You will need the help of professionals in this phase. Expect 30 days for approval of the project;
  • This is followed by the sewage, water, gas, power and communications plans, which should also be presented to the council;
  • The Municipal Council usually takes up to 45 days to evaluate a permit request.

When you finally have your permit you can begin construction. The best is to hire a specialised crew, including a licensed foreman with an insurance and a civil engineer to oversee the work. As owner, you will be responsible for everything that goes on during the construction. 

When the work is done, if there is no change regarding the initial project, word is sent to the council, which will do an inspection. If the result is satisfactory a housing permit will be issued. 

Be careful with your budget

When deciding to build your rural property in Portugal set your budget carefully. 

You should bear some things in mind, such as:

  • The price of the surrounding land and houses, before purchase. This way you will know if you are paying a fair price and you will also know how much your house might be worth once it is built;
  • The size of the house;
  • The choice of building methods;
  • The finishing materials.

Taxes and other expenses

When you buy your rural property in Portugal you will need to pay Municipal Property Transfer Tax (IMT). You will also have to pay stamp duty

Other taxes will have to be paid yearly, such as property tax (IMI) and the additional property tax (AIMI), both of which are local taxes. However, you only need to pay AIMI if: 

  • The value of your property, for tax purposes, is above 600 thousand euros; 
  • The total value of the rural property and any other you own in Portugal is above 600 thousand euros.

Besides the taxes, you should also count on legal fees as well as the costs of the deed and the registration at the Land Registry Office. 

Favourite locations for foreigners

If you are undecided as to where to buy or build your rural property in Portugal, and you would like to live near a larger expat community, then you’ll be interested in knowing that according to the Foreigners and Borders Service (SEF) the district in Portugal with most foreigners is Lisbon, followed by Faro, with over 12 thousand British subjects, eight thousand Brazilians and four thousand French citizens. 

The most recent figures from the National Statistics Institute (INE) say that 42.8% of real estate purchases by non-residents are in the Algarve, whereas 35% are in the larger Lisbon area, which also had the highest average purchasing price, at 276,8 thousand euros. 

These same figures show that 24% of these purchases were of rustic buildings (located in or out of urban areas, but which are normally used to generate agricultural income), 1.2% are mixed buildings (any building which cannot be ranked as mainly rustic or urban) and 74% were urban buildings (all non-rustic).

If you have decided to move to Portugal, find out more about the NB Golden Key account and merge all your financial and banking services into one solution.

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