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Back when the worldwide financial crisis happened in 2008, Portugal was one of the most impacted countries. We are still seeing the effects of the recession being felt today. At the time, Portugal had huge spikes in unemployment, and the overall economic pressure saw austerity introduced in the country. At the time, the picture looked very, very bleak. However, Portugal has recovered far better than anyone could have imagined.
That is why Portugal has certainly become a worthy place to consider if you are interested in adding another property to your investment portfolio. Below, we will reveal more about purchasing a property in Portugal, as well as the property portfolio finance options you should consider for this part of the world. If you love the area, the people and the climate there, there are great opportunities for investing in property there. Let’s look at how you can go about it.
What is the property market like in Portugal?
So, let’s delve a little bit deeper into the incredible recovery Portugal has made since the lows experienced between 2009 and 2012. Today, the country is outperforming the average Eurozone member. We have also seen that government debt has decreased considerably when compared with the situation two decades ago.
This is important because when you purchase a property overseas, you need to make sure that the economy is stable. The improvement in unemployment, government debt, and the economy as a whole has certainly resulted in a strong property market in Portugal.
Portugal is considered one of the most dynamic property markets in the whole of Europe at present. It is clear to see why high-net-worth individuals are attracted to this part of the world. It is also comforting to know that the government have confirmed that visas and tax incentives for foreign investors are going to be in place for the foreseeable future.
We will explain more about what these incentives and visas are in the coming sections. So, if you are looking for property in a country that has a stable government, is on the rise, and offers attractive incentives for oversea investors, moving to Portugal is certainly a place that is well worth considering.
Portugal’s golden visa
You may also be interested to learn that the golden visa program is in operation in Portugal, as is the case for Ireland, Malta, Greece, Cyprus, and Spain. Portugal introduced this back in 2012, giving EEA and non-EU citizens the right to a special residence permit if they made a five-year investment in Portugal. This meant that they needed to invest at least half-a-million euros in a property.
Applicants were also able to move freely around the EU, and after a six-year period, they could make an application for Portuguese citizenship. This program resulted in an extra 4.8 billion EUR being invested into the Portuguese market between the years 2012 and 2019. This gave UK citizens a lifeline before Brexit, enabling brits the opportunity to purchase one-bedroom flats for the address and rent them out permanently to digital nomads who were flocked to the vibrant cities like Lisbon.
This has been incredibly beneficial for the property market because it has meant that there has been a massive investment in many of the ancient buildings in the country, which were crumbling and crying out for some help. At the same time, a huge injection of capital was made into the new build market in Portugal as well. Aside from the evident benefits to the property market in Portugal, especially in the higher end, this has resulted in a massive boost to the national and local economy as a whole.
Tax incentives
There are also a number of tax incentives that may tempt you to purchase a property in this part of the world. A non-habitual tax resident scheme was introduced around the same time as the golden visa. The chief elements of this scheme mean that you are only going to pay a flat 20 per cent on your Portuguese income as a skilled professional, with your overseas income not being considered for an entire decade. As you can imagine, this was quite a pull for a lot of people, resulting in many new developments and luxury properties being in high demand here.
Securing a mortgage for your Portuguese property
Now that you have a better understanding of the Portuguese property market and what makes it so attractive, let’s take a look at how you can go about securing a mortgage in this part of the world. When looking at mortgage markets in Europe, it is vital that you do not overlook the fact that the UK has one of the world’s most liquid mortgage markets. While Portugal is one of the better countries in Europe in this regard, you will typically find that you are better off securing a deal with a bespoke lender who can put together a property portfolio loan that is perfectly tailored to your needs and circumstance.
At the moment, the banks in Portugal typically offer between 60 and 70 per cent LTV, and they will usually work on margins that fall somewhere between 1.7 and 2.5 per cent, depending on your financial situation as a borrower. Nevertheless, the vast majority of high net work people are looking to make the most of Portugal’s property sector with a bespoke arrangement that enables them to achieve their goals in the best manner.
Considering we have contacts with more than 300 lenders around the world, ranging from niche lenders and private banks to conventional banks, we always have a broad range of options available. You can, therefore, be sure that we will be able to secure the funding that makes the most sense for you.
Final words on purchasing a property in Portugal
As you can see, Portugal is a country that is certainly performing well. In fact, it recovered from the worldwide crisis in 2008 way better than anyone predicted. Because of this, it presents a great opportunity for anyone who is looking to invest in property overseas. If you have any questions about this or you would like to get started, why not find a broker to help you explore your financing options so that you can make your new property purchase?
