Complete Guide to Buying Property in Algarve, Portugal (2025)

01: How to Research When Buying Property in Algarve

As with any financial commitment, when purchasing a property, research and preparation are crucial to starting right. And, especially when looking for properties in the Algarve, finding the right real estate agent is the first research section.

The Internet plays a crucial role in our lives today, allowing us to research practically anything from any corner of the world. This convenience is handy, especially for those abroad wishing to acquire property or relocate to Portugal's Algarve. It also helps you understand what properties are available in advance.

Regarding the Algarve property market, properties for sale are accessible to most real estate companies, allowing for an open market. The region is home to numerous real estate companies and agents, providing many options when searching for the perfect agent.

When looking for a real estate firm or agent, it's a good idea to research and approach each with an open mind. You don't have to commit to any particular agent when you start your search; you can begin the process by working with several agents. Although this approach gives you a pool of candidates, it's always best to stick with the firm or agent you feel most comfortable with.

We recommend researching and selecting a few firms or agents you connect with. However, you must narrow your choices to one, as you must trust them to execute your ideas to the best of their abilities. This matter is why LiveAlgarve Realty takes pride in itself as a real estate firm, as all our agents are well-versed in the field and have the knowledge and experience to back your trust.

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02: Travel to the Algarve and Organize your Property Viewings

03: Always plan ahead when purchasing a property in the Algarve

Before we continue, it is worth mentioning that although another step in the guide, we suggest ensuring all your documentation is in place before or during your trip to Portugal's Algarve. That way, you can have everything planned, making this less time-consuming and financially straining.

After researching companies and agents online, you can start planning your trip and organizing the necessary documents before your visit. Portugal has a lot of paperwork requirements, so we suggest you check that all the required documentation is in order before you go to view a property. It will save you time and avoid any potential issues:

Apply for an N.I.F. Number

An N.I.F. Number (Número de Identificação Fiscal) is a sequential identification number needed for identification purposes and practically doing anything in Portugal: opening a bank account, obtaining a Portuguese phone number, working or studying, etc. If you plan to live in Portugal for a more extended period or buy a property there, you will need a Portuguese tax number, NIF. The NIF is a unique tax number assigned to each citizen that is valid for life.

If you are not a resident of Portugal, you can register as a non-resident with limited tax liability with your address in your country.

Opening a Portuguese Bank Account

Once you have obtained your N.I.F., you can apply to open a Portuguese bank account. We recommend looking into banks that accommodate foreigners, such as B.P.I., Novo Banko, Santander, and Bankinter. It is important to note that opening a bank account in Portugal requires physical presence at a bank branch.

In addition to the standard documentation, you may be asked for proof of address (rental contract, recently paid community bills, etc.).
Most banks don’t charge for opening an account, but you will pay an annual administration fee (monthly or quarterly).
When looking for a bank, you should pay particular attention to the fees that banks charge for receiving transfers from abroad and making transfers to foreign countries.

An important point worth mentioning is that, in our experience, there have been occasions when people have lost out on a great purchase opportunity due to not having the correct paperwork in place in advance. So, we highly suggest people check their legal, financial, and fiscal status before viewing properties in Portugal and the Algarve.

Find Your Solicitor and Tax Advisor

We highly recommend that you find a qualified and trustworthy solicitor and a tax advisor if you are planning to purchase a property in Portugal. You must establish a good relationship with these representatives before you start negotiating, as this will work in your favour during the process. If you don't speak Portuguese, hire a lawyer who speaks your language to avoid any language barriers. Fortunately, the Algarve is an international region with many individuals who speak different languages, so you should be able to find a solicitor who can communicate with you in your language.

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04: Negotiation with the Property Owner in the Algarve

If you have found a property that you think is perfect for you, the next step is negotiating the buying process if a private owner owns the property. We recommend you follow some crucial steps during this critical phase to ensure a smooth process.

Making an Offer

When you decide to make an offer to purchase a property, we recommend that you write your offer. This is typically done through your agent in the form of an offer letter. The offer letter should clearly state the price you are offering, along with purchase conditions, payment terms, and deadlines.

Before making an offer, it's essential to understand what is included in the property sale, such as furniture and fixtures.

Presenting a sincere and well-thought-out offer is important to increase your chances of success. The more professional your offer seems, the better your chances of securing the best deal possible.

There have been cases where the buyer has decided to sit face-to-face with the seller and negotiate the offer. We have noticed that these negotiations are more personal and less controlled. When dealing with an agent or making an offer on paper, the process is much more controlled and gradual. In our experience, we have acknowledged that negotiating through an agent proves more beneficial to the buyer when agreeing on a final purchase price, primarily due to an agent's experience with the negotiation process.

Suppose you consider adding any special conditions or requirements you would like the seller to consider before purchasing a property. In that case, these contingencies must be clearly stated in the original offer.

Requesting a Technical Due Diligence

It is worth mentioning that before, during or even subject to making the offer, you can request technical due diligence to be performed on the property. Technical due diligence provides insight into the risks involved in owning property whilst still in the purchasing process. This means you can expect reports on minute details such as cosmetic problems (hairline cracks in plastering, signs of humidity, insulation and ventilation) or special attention to plumbing, pipes, boiler, gas, water tank, and electricity. Write down all these details, as they may impact the initial offer.

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05: Signing Contracts when Purchasing a Property in the Algarve

When the seller accepts your offer, you move on to the legal phase of the purchase process. When buying property, you will be asked to make the reservation and then sign a promissory contract and an official deed at the Notary on the day of completion. This is not the only way to proceed, but it is the most common.

1. Reservation Contract

A reservation contract is a document signed by the buyer and vendor that allows the property to be reserved for an agreed-upon time, typically 7 to 30 days or more. A reservation fee is also applied in this instance by the seller for the buyer to pay. The payment size can vary from €2,000 to €10,000 or 1% of the purchase price or any other mutually agreed upon amount by both parties. A fee is paid for the property to be taken off the market during an agreed-upon time by both parties. If the buyer decides to go ahead and purchase the property, then the amount paid in the reservation fee goes towards the purchase price. However, suppose the buyer chooses not to proceed with the purchase. In that case, the buyer loses the reservation fee as compensation, as the property is off the market unless special conditions are included in the reservation contract that allow the buyer to back out without losing money.

2. Promissory Contract with a 10% or more down payment.

After the reservation contract is signed, you sign a promissory contract and then pay 10% of the purchase price, including the prior reservation fee (if you pay 1% at the reservation, you then pay the other 9%). A point worth mentioning is that, on occasion, it is possible to jump straight to a private 10% contract without signing a reservation contract. However, this is usually done if the purchase price is high and the seller cannot take the property off the market for a small reservation offer. This document will stipulate the conditions of the sale, the timeline and buyers' and sellers' obligations to each other to proceed to the deed, as well as indicate the legal identification of the property and methods and values of payment.

This contract penalizes the vendor if the property is not sold under the agreed terms previously set by the vendor. If the seller decides not to sell you the property, they must pay you double what you originally paid. Technically, this means the vendor can break the contract anytime; even though the penalty fee is high, the risk is low. If the buyer does not follow through with the property purchase, he loses the 10% paid, and the contract is no longer valid.

3. Mortgage

If you're considering applying for a mortgage in Portugal for your Algarve property purchase, it's crucial to start early. Mortgage approval in Portugal can take up to 2 months after submitting your application. By preparing in advance, you can streamline the process and ensure timely approval for your Algarve real estate purchase.

If you decide to go ahead and request a mortgage, the bank will also require additional documents, although they are mainly interested in proof of any recurring income. The usual conditions for a mortgage today are:

1. Completion of a Property Purchase in Portugal – Escritura da Compra e Venda

All parties involved in the completion must attend: buyers and sellers and/or their legal representatives or lawyers, bank personnel for redemption or subrogation of an existing loan, a bank providing a new mortgage, etc.

When you sign the title deed at the notary's office, you will immediately transfer possession and full responsibility for the property. The payment for purchasing the property is also made at the same time via bank cheques. In Portugal, this payment method is the safest for both parties, as the payment is made when the property is passed on to the buyer, and banks can give a fast and verified confirmation that the payment has indeed been made. You can now change all utility bill contracts, such as water, electricity, gas, telephone and HOA bills, into your name and bank details.

Once you have signed a notarial sale deed and paid all required taxes, the deed is registered at the Land Registry.

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06: What to keep in mind after purchasing a property in Portugal

Once the property has been purchased, the following steps ensure all taxes are paid, and your property ownership has been registered. This step can be done with help from your lawyer and solicitor.

People must understand that the expenses paid to purchase the property are not the only sum that needs to be paid and that additional costs will be incurred once the property is purchased.

Registering your property in the Land Registry

As mentioned in the previous step, you must ensure that the name and bank details on all previous utility and community bills are changed to your information. If you agree, a lawyer can help you do this.

Once all taxes are paid, the property must now be registered at the local property registry to guarantee your ownership rights over the property. Below is a list of what documentation is required, keeping in mind that your lawyer can do this step:

• N.I.F and authorized copy of your Passport or ID card
• IMT Tax Payment confirmation
• A copy of the seller’s IMI Tax Payment

Owning a property

As a new homeowner in Portugal, it is crucial to understand the various expenses of owning a property. Here is some helpful information on what you can expect to pay.

EXPENSES RELATED TO PROPERTY

Maintenance Fees

The money and effort required to maintain a property depend on its size and type. For instance, a large villa with a garden and pool will require more maintenance costs (e.g., cleaning, repairing, reforming, utility bills, and garbage collection) than a small apartment.

Community Fees

Owners of a property that is part of any development, building or complex with shared common areas are legally obliged to be members of the Community of Owners and pay community fees for maintenance of the common areas and any other services that the community votes for at the annual general meeting.

Property Ownership Tax (IMI)

Local tax on ownership depends on whether the owner is a resident. Based on the "valor cadastral" (administrative value usually lower than market value) set by the town hall, the tax rate ranges from 0.3% to 0.5% of the valor cadastral, depending on the region. The IMI tax is calculated every November.

07: Conclusion

If you're considering buying a property in the Algarve, it's essential to have everything organized and a clear understanding of the purchasing process in Portugal. This may seem overwhelming, as there is much information to process. Therefore, it's imperative to have an experienced and trustworthy real estate agent to guide you throughout the process and provide moral support. Your realtor should be someone you resonate with and feel comfortable with, like your professional matchmaker who will introduce you to your dream home. That's where LiveAlgarve realtors come in, as they have the expertise and experience to help you find your perfect property.

LiveAlgarve Realty is a company built on three essential pillars: knowledge, trust, and experience. We work with clients worldwide and help them find their dream homes in the Algarve. Our real estate agents are experts in their field and dedicated to providing you with the best possible service. They will be your tour guide, consultant, and problem solver and have a long-lasting relationship with post-sale support. We are confident that, once you are in your new home, you will look back at your experience with us and be glad you put your trust in LiveAlgarve Realty.