Portugal property market

Most people who live in cold wet climates dream of owning a property in the sun and more seem to be turning to the southern coast of Portugal. An unspoilt natural beauty, the Inland enjoys the blossoms of sweet smelling orange groves or the sharper perfume of the Pine and Eucalyptus trees. There is a large choice of property from luxury villas to more modest apartments and townhouses. Many people have chosen to build beautiful homes with swimming pools and often look inland and the mountains where land is a little cheaper, but construction costs can be higher and winters misty and cold.

There are no restrictions to the entry of foreign capital, albeit always respecting public order, public safety and health, and complying with the legal conditions and pre-requisites set in the applicable legal code. Foreign investors are not required to have a national partner. For buyers there are key differences from the process in most European countries. First, you must get a tax card and fiscal number from the local authorities and must nominate a Portuguese postal address for documentation. Second, only a small proportion of Portuguese finance houses lend to foreign buyers, so most Britons may need to arrange a mortgage at home. Third, many apartments in Portugal (especially those more than 20 years old) are community-run thus buyers must purchase a share in the organisation and be responsible for communal areas.

At a time when the property market in some of the European countries is slowing, the Algarve seems to be very much on the up. Prices have risen and are set to continue rising, meaning that investment opportunities are good. Portugal is an exceptionally pleasant place to live and certainly lures back scores of holidaymakers, year after year. The Algarve is most popular because of the weather - 280 days of sunshine a year - but it is Portugal's busiest, most developed region. The Estoril coast south of Lisbon is also popular and the northern coast including Oporto is fast becoming a new Algarve.

As always, new homes are more expensive than old. Prices have risen modestly in the past 18 months and the Algarve tends to have the largest capital increases.

Legal fees very from 1 to 2% of property value with deed registration a further 1%. Mortgage fees are often 2 per cent of the loan; stamp duty can be as high as 7.5 per cent of purchase price if you buy through auction, and there is transfer tax on second-hand homes which can be 10 per cent.

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