Portugal may be a small country, roughly the size of Scotland, but it packs a mighty punch. Its varied scenery, from the wide, sandy beaches of the Algarve up to the green, mountainous Minho and its affordable and healthy lifestyle based around fresh seafood and local wine have enticed tourists since the 1960s. Today over 50,000 Brits live here year round and a further 150,000 own a holiday home, mainly close to the Algarve with its winning combination of glorious golf courses and a temperate climate offering over 300 days of annual sunshine.
As befits a nation of great explorers, Portugal has nearly 600 miles of coastline but a new generation of British holidaymakers and house buyers is discovering that there is much more to this corner of Iberia than just sand and golf. Lisbon, Portugal's historic and vibrant capital with excellent restaurants and a buzzing nightlife, is surrounded by beautiful countryside complete with World Heritage Sites and traditional villages. It's this mixture of old and new - along with easy accessibility and low-cost flights - that makes a home in Portugal so appealing.
Portugal might not be as easily accessible as Spain or France, especially for drivers wanting to bring their own car, but there can be few countries in Europe whose transport system has improved as rapidly in the past 20 years.
Mainland Portugal has three international airports at Lisbon, Porto and Faro. All three are large, modern and within seven miles of the city centre. Faro is particularly busy, especially at the height of the summer season.
The holidaymakers who blazed a trail to the Algarve in the 1960s and 1970s made sure that airlines understood the importance of regular flights from the UK. Faro Airport, the gateway to the Algarve and the obvious entry point for visitors to the southern region of Portugal, has flights from 24 UK airports and an impressive selection of low-cost airlines. Over 4.7m visitors from northern Europe travelled through Faro airport in 2006, making it bustling and busy and consequently travellers should expect delays over peak weekends.
Despite its long Atlantic coastline, there are no ferries that connect Portugal and Britain. The best bet if you want to take your car is to use the Channel Tunnel and then prepare for a long drive through France and Spain or else to take a ferry to northern Spain. The two ferry routes are Plymouth to Santander, a twice-weekly service run by Brittany Ferries from March to November taking 24 hours, or Portsmouth to Bilbao, also twice-weekly and run by P&O. This route takes a stomach-churning 35 hours. You should allow a long day's drive from there to Portugal, especially if you are headed for the Algarve.
With low-cost airlines making flying so affordable, train travel can seem rather an expensive option. But as a way of seeing other countries en route - namely France and Spain - it can be an enjoyable journey. Allow around 27 hours from London to Lisbon travelling via Paris.
If you plan to travel by train once you are living in Portugal, you'll find an affordable though not yet fully integrated service.
Portugal became a member of the EU in 1986 and the benefits are seen very clearly in its rapidly improving road system. Further improvements were made when the country hosted the football European Cup in 2004. Most major cities have a good system of motorways and highways around them.
All Portugal's autoestradas (motorways) were built in the last 22 years and are privately run. Most motorways run north to south with a good network around Lisbon. The A22, also known rather regally as "The Way of Prince Henry The Navigator", runs east to west along the south coast, linking Faro with the once isolated western Algarve and has done wonders for the fortunes of this beautiful, windswept region.
Remember though that Portugal has a justified reputation for poor driving and a sad record at the top of the league tables for European traffic accidents and deaths per capita. The government is trying to address this but a combination of careless drivers and poor road surfaces in rural areas means that you should be extra vigilant. And remember to drive on the right.
Porto and Faro both have an integrated system of trams and buses and modern metros that work well. Buses in Portugal are generally cheaper than trains and run efficiently although in the countryside they are fairly infrequent. There are several long-distance bus operators who all use their own terminals.
Portugal has a Mediterranean climate although as the most westerly country in Europe, it is heavily influenced by the wild Atlantic. Summer months are hot and sunny throughout the country though cooling winds can bring welcome relief on the coast. Winters on the coast are mild though often cloudy and as everywhere in Portugal, November to March are wet months.
In the mountains and plateaus of the north, summers are cooler and winters can be very cold and snowy. This region doesn't suffer the summer droughts found in the south where temperatures can rise so alarmingly that in some areas forest fires are becoming a regular threat.
Spring is almost perfect in Portugal when the wildflowers carpet the country in colour. For residents this is a favourite time of year before the summer hordes arrive. Spring and autumn are also a favourite time with the numerous golfers who flock to the courses along the Algarve.
There are 200m Portuguese speakers around the world from Brazil to Cape Verde but for most English speakers, it is a difficult and unusual language to master. Its origins are Latin based yet to untrained ears it sounds closer to Russian than Italian. In the main cities and tourist hotspots English is widely spoken but in rural, inland areas a knowledge of everyday words could be useful. As with every European country, an enthusiastic stab at basic phrases will be warmly welcomed.
Key Portuguese phrases include:
As most British buyers will not have a good grasp of Portuguese, the most important rule to remember is to use a good, bilingual lawyer who is well versed in dealing with house conveyancing. The Portuguese legal system can appear complicated to a British buyer so you need to be confident that your advisors are impartial and reliable.
All British arrivals into Portugal require a valid passport but as a member of the EU, Portugal does not require UK citizens to have a visa. UK citizens also have no limit on how long they can stay in Portugal nor how often they can come and go.
Property ownership and the buying process
Start off by being well prepared and apply for a tax card and fiscal number (numero fiscal de contribuente) from the local authorities as soon as you begin your property search. You will need to nominate a Portuguese address and can use a local bank or property company for this. Your solicitor can arrange this for you.
Next consider how you plan to finance the property. You could get a local mortgage in Portugal where interest rates are slightly lower than those in the UK. See the finance section below for more information on mortgages.
Estate agent fees are around 3% (2007) though you may be quoted as much as 10% and are payable by the vendor. Once you have found your perfect property and verbally agreed a sales price your lawyer should carry out full checks on title deeds and building licences. The lawyer must also ensure that the property has a certificate of habitation and that there are no outstanding debts on the property. These attach not to the individual as in the UK, but instead attach to the property. The worst-case scenario is that along with your new home, you could inherit substantial debts that you knew nothing about.
In Portugal in the past, many foreign owners avoided certain taxes by buying property through an offshore company. These were easy to set up and were a common way to purchase. However since 2004 new laws have made this financially disadvantageous.
If you are buying a resale property, you should arrange for a structural survey to be carried out (costing around €950) and if it is a new property or you are buying off-plan, make sure you see all the building guarantees and that all planning permission is complete.
Once you are ready to sign the preliminary contract, Contrato Promessa de Compra e Venda, a completion date will have been agreed and you have to pay a non-refundable deposit of around 10%. If you are buying property off-plan, the deposit is generally lower and can be a flat rate of around €3,000. Along with much of Europe, if you pull out you lose this money but if the buyer should change their mind, they have to pay you double the deposit. With all this agreed, the contract is signed in front of the notary.
Both parties, again in the presence of the notary, sign the final contract, the escritura, and at this point the full balance must be paid along with all costs and taxes. The transfer of title should then be lodged with the land registry and also the local tax office.
Finally remember to carry a European Health Insurance Card with you so you can access the health service in other EU countries. This replaces the old E111 form. Portuguese healthcare varies widely from one area to another but many British buyers elect to use the private system, especially for more serious problems.
Fees and taxes
As with most of Western Europe, buying costs in Portugal are higher than in the UK and can also vary depending on where you are buying. It is important to have a full understanding of what you are liable for as these charges are payable before you can sign the final contract.
The main charges (in 2007) are:
Once you own a property in Portugal, you have to pay an annual property tax of around 0.7% based on the assessed value of the property and local rates of around 0.8%.
Portugal Telecom (PT), once state-owned but now privatised, is the national provider of landline telephone services throughout Portugal and owns all the line rentals. Other telecom companies operate in both the business and domestic market. To get a standard landline you need to show your passport details and a tax number and provide proof of your address. From there installation of your line should happen within four days if you live in a town or city and up to two weeks if you are more remote.
PT provides cheaper off-peak calls between 9pm and 9am and on Sundays.
There are several mobile phone service providers but the main ones are Vodafone, Optimus and TSM. Mobile coverage is generally wider than fixed-line coverage. As of September 2005 there were 9.6m registered mobile phone users in Portugal - not bad for a country with a population of 10.5m.
Netcapo, Sapo, Telepac and Claranet are the main internet providers in Portugal. PT Wifi is Portugal Telecom's wireless internet with just under 1,000 hotspots nationwide. Other names are Kanguru and Novis. Cable and DSL are available. Portugal's internet penetration in early 2006 was high even by European standards with over 6m internet users according to the Computer Industry Almanac. Speed is good and the industry has an able and strong regulator.
If the four Portuguese television channels (two state-run and two private) are not for you, then satellite and cable is the answer and these are easy to access and install in the main tourist and residential areas of the country. In the busy property rental market, most houses aimed at an international market come complete with Sky, providing the most comprehensive choice of channels for the British market.
On the Portuguese channels, most imported television shows and films are subtitled in Portuguese rather than dubbed.
Portugal adopted the Euro in 2002. Credit cards are widely accepted in most tourist areas though it is wise to rely on cash in more rural areas.
Portugal's banks may seem rather antiquated and slow compared with the high-speed, customer focused UK examples - especially when you require personal human service - but remember that they have come a long way in a relatively short time. Cash dispensers - multibancos - are modern and easy to find throughout Portugal. They have instructions in English and you can withdraw up to €200 a day.
There are bancos (banks) in most towns and cities throughout Portugal. Opening hours are generally 8.30am to 3pm from Monday to Friday though in popular tourist areas such as Lisbon and along the Algarve, they often open in the evening as well. Foreign banks operating in Portugal include Barclays, Citibank and Deutsche Bank though these are mainly in Lisbon and Porto.
Portuguese mortgages are available for up to 80% of the purchase price over a five to 25 year period and are generally repayment ones. There's a minimum loan of around €20,000 and current rates, based on Euribor, are 3.7% (as of March 2007). The problem with getting a loan in the local currency is that unless you earn your money in euros, you will always be at the whim of fluctuating exchange rates. This makes budgeting harder and could leave you vulnerable to sudden currency swings that you are powerless to influence.
Charges for getting a mortgage in Portugal include a registration fee of around 1% and an arrangement fee that averages 2.5%. The mortgage lender will require a bank reference and employer's or accountant's reference and your existing borrowing in the UK and overseas may well be taken into account.
The alternative for cautious buyers is to raise the money at home in the UK by increasing the borrowing on your property there.
The Ministério de Finanças collects taxes on a municipal basis but the onus is on individuals to complete and file a tax return. If you are not resident in Portugal, you should still fill one in. The authorities will be interested only in income that derives from Portugal such as interest from a Portuguese bank account or rental income. Portugal and the UK have a double taxation treaty meaning that you will not be penalised twice for the same income.
The taxman will consider you to be a resident in Portugal if you spend more than 183 days there in any tax year (January to December).
Income tax (in 2007) is between 12% and 42%. Capital Gains Tax for non-residents is 25%. There is no wealth tax.
There is no inheritance tax in Portugal on property transferred to direct family members. Otherwise the tax is 10%. As a UK taxpayer you will still have to pay inheritance tax in the UK on all your assets though. Portugal does not automatically transfer property between surviving spouses so it is essential to make a will in Portugal that details your wishes.
Portugal has an impressive 13 national holidays every year, celebrating religious festivals or significant national events. On public holidays expect to find almost everything closed and heavily revised transport timetables. The Portuguese value family and feasting and these days are occasions to get together and celebrate. If they fall on a Saturday or Sunday there is not normally a day given in lieu.
The main public holidays are:
National Day is also known as Camões Day after the country's greatest poet and writer who died on 10 June 1580. Arts and cultural events are held throughout Portugal.
Independence Day on 1 November marks the end of Spanish domination over Portugal in 1640 and Republic Day on 5 April marks the end of monarchy and the birth of the Portuguese Republic in 1910.
In addition there are regular summer festas or festivals, colourful occasions that are a good excuse for a lively party. Almost every city, town and village will hold a festival to honour its patron saint where women dress in traditional costumes embellished with lavish gold jewellery and there is dancing, music and sometimes fireworks. One of the biggest celebrations is in Lisbon on St. Anthony's Day, 13 June, when celebrations culminate in an all-night street fair.
Fatima, with its shrine for Catholic pilgrims, honours the Virgin Mary on 13 May each year, the anniversary of Mary's appearance to three peasant children. The vast Esplanade, twice the size of St. Peter's Square in Rome, can hold up to 1m pilgrims.
Feiras, traditional horse fairs found throughout Portugal and across the border into Andalucia, are also held, often centred on bull fighting. Unlike in Spain though, the bull is not killed in the ring. The region north of Lisbon, the Ribatejo, where the bulls are reared is the centre of bull fighting in Portugal. Their annual festival, the Festa do Colete Encarnado (Red Waistcoat Festival) is held every July complete with bull runs through the streets.
Cathy Hawker is a freelance property writer who contributes regularly to The Evening Standard and BBC Good Homes Magazine.
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