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Property for Sale in the Algarve - A buyer's Guide

Last updated at 12:15 GMT, Monday, 25 August 2008

The Algarve, the southernmost region of Portugal, is a beautiful area offering an excellent quality of life, friendly people, a low cost of living, a beautiful climate and easy access from the UK. It is easy to see why so many people are taking the plunge and buying property in the area. 

There are plenty of amazing places to choose from for your property location, whether it is a second home, a retirement home, or if you want to start a new life in the sun. Although Faro, the capital of the region, is popular, there are also 16 other municipalities to chose from including Lagoa, Silves and Quarteira, to name but a few.  So you are thinking of buying Algarve property, here are five things that you will certainly need to take into consideration.

Be aware of the nature of the market
Portugal revised their planning regulations in 1993. Since then authorisation for building completely new properties has been declined more often than not.  This means that the price of existing properties has gone up over the years and that house prices are generally higher than similar properties elsewhere (in Spain, for example.) 

Property prices have increased by around 15 – 20% each year since the change in regulations. Having said that, older properties suitable for renovation can always be found for very reasonable prices if you have patience and look carefully enough. Also on the plus side the 1993 changes have meant that the gorgeous scenery has been preserved – which, of course, is why you're moving to Algarve in the first place! New developments that are allowed have to fit in harmoniously with the existing environment, further preserving the area’s unique landscape.
 
Finding a property
The first thing that you are going to need to do is find a suitable property for sale in the Algarve. This can be something of a challenge in its own right.  The best way to find a property is going to either be a) online or b) from a visit to the area. Nowadays there are many website dedicated to finding and advertising the sale of newly developed and existing properties which have recently come up for sale that it can be a bit daunting but, if you persevere, you will find that they can be extremely helpful. 

Travelling to examine the property
Once you have chosen you property online, or if you want to look around for a property 'in the flesh', then you are going to want to book a trip to the area.  Luckily flights these days are extremely cheap. With a company such as EasyJet you can get a return flight for somewhere in the region of £60 - £70, depending on if you travel midweek and go off-season. Because of this it is often a good idea to start property hunting out of the holiday season because things will no doubt be cheaper and run more smoothly.

Find a Solicitor
Another thing that is vital is that you find a competent local solicitor who can help you go through all of the documentation that you are going to stumble across. A good solicitor is also going to be able to guide you through all of the red tape and advise you as to what taxes you will need to pay. How much the solicitor charges will depend on the price of the property you are buying, and is usually a percentage of the property price. This percentage varies from solicitor to solicitor but can range from 0.5% to 20% of the property for sale in the Algarve.

Arrange a Mortgage and Give a Deposit
It is always a good idea to arrange a mortgage before you give a deposit, as deposits are not always refundable. If you are purchasing your property through an agent you should check if your deposit is refundable or not. If you are purchasing from someone other than an estate agent, you may find yourself in hot water if you decide not to buy the property, after giving a deposit, or if your mortgage application falls through. There are laws in Portugal that state that if the seller pulls out of a property transaction they will have to compensate you twice the deposit. If you, as the buyer, pull out you will most likely simply lose your deposit.

Promessa de Compra e Venda
Once you have chosen your property you will need to sign what is known as a Promessa de Compra e Venda, or a promissory contract. This is simply an agreement between you and the seller on details such as overall price of the property, the amount of the deposit and the date that you intend to pay the full amount, which can be anything up to six months. Other conditions can also be added to the document such as details of any work that needs to be done to the property before payment is made in full.

Numero Fiscal de Contribuinte
Property buyers in the Algarve need to get a Numero Fiscal de Contribuinte, or a fiscal number, which is very similar to the UK's National Insurance number. It is a good idea to get your solicitor to help with this as, aside from their expertise and advice, you may be able to use their address in correspondence. Basically you need to visit the local tax office, known as the Reparticao de Financas, with proof of your identity. You will also need to pay a small administration fee of around 5 euros. Of course, once you have moved in to your new property you will need to notify the tax office once more of your new address. Once you have a fiscal number you will be given a representative for 5 years and during this time he will be able to undertake a tax inspection. 

Purchase Tax
3 days before you complete your transaction and buy the property in full you will need to pay property tax. When buying a property for sale in the Algarve the price of this payment largely depends on the area that the property is in, how old the property is and whether it has any extra features such as a swimming pool, garden or garage. In Portugal this tax is known as the Imposto Municipal Sobre Transmissao Onerosa de Imoveis or IMT tax.  There are also different scales of payment depending on whether you intend to use the property as your sole property or as a second/holiday home. Once again, if you have a solicitor they can sort this out on your behalf.

Receiving the Deed and Registering the Purchase
After you have completed all of these stages, and have paid for your new property, you will be able to collect the deeds.  Both the final payment and signing of the deeds will be performed in a Notary office with both you (the buyer) and the seller present so that you can all sign the appropriate forms.  Finally you will need to take an official copy of the deed to the land registry office so that they can officially record that you are the new owner.