Holiday home in Algarve

[Matilda762]

We are considering buying a holiday home in Algarve with the possibility of moving there in a few years when we retire. What are the best areas to live? what things do we need to consider? what will be the cost? we will break even if we rent part of the year.

What’s your budget?

350k so probably an apartment and not in the golden triangle.

We have a home in Portugal, about a 10 minute drive from Albufeira, if you are considering it as a future home, go and look around in the winter, and see what is open locally and whether you are ok with it. Some areas can be a bit bleak in the winter because there’s nothing open and most of the properties are holiday lets so there’s no one around.

Portuguese bureaucracy can be an absolute nightmare to deal with, that is the worst part of owning property there so it is helpful to have someone who is Portuguese who can help you navigate the system, and things seem to happen a lot more easily if you are a local than a foreigner!

If you can stretch to it, I would recommend a house over an apartment, because you have complete control over what happens, where as in a condominium it’s a joint decision between all of the owners to make stuff happen. It can also be tricky if someone doesn’t/can’t pay their share of the condominium fees, for example one of our neighbours died at the start of last year and we’ve all had extra to pay to cover the costs of running the condominium because where in the UK it would have been paid by his estate and there would have been a bit of urgency to get the place sold, over there there doesn’t seem to be the same urgency to get it sold and no obligation to pay - the debt passes to the new owners when it sells. I know of another condominium locally where one owner hasn’t paid any fees in over a decade.

To rent you need a licence, and licensed properties are subject to higher IMI (council tax) and utilities, you should also check the deeds to make sure the property was registered as it should have been, otherwise you would need architects plans drawn up and re-registering. Our apartment was registered as a studio by the builder (to save money on the registration) and then a wall put in before sale to make it a one bed. I’m not sure how common this is, but not unheard of, this is why we only rent to friends and family as you don’t need a licence for this. One of our neighbours rents his apartment pretty much full time and he uses an agency to manage it all for him.

Really long pot but hopefully this is helpful and isn’t too negative, it’s a beautiful place and I can’t wait to get “home” again. I travel to a lot of different places, but Portugal is 100% my happy place. If you have anything you want to ask just shout!

I recently visited a town called Silves in Faro, it was within driving distance of lots (the closest being 20 minutes) of beaches and the property prices are more reasonable than the ones right on the coast.

It was really nice actually.

I'm also thinking of a holiday home there, we liked Aljezera area, but pretty expensive. I think there is a deal where you can get a passport if you buy in particular areas?

Thank you. This is super helpful. I didn’t know reg the license. We need to check/consider everything before we purchase.

Do check out weather and on what terms you can buy/live there full time. Post Brexit it’s not straightforward. Unless you’re an EU passport holder.

Will look at Silves. Thank you for the advice

Whether not weather!!

Some properties do come with a licence already in place - it usually is shown on the sales listing. AL licence is what you are looking for

Hi,

Thank you for the information; we just returned from Algarve, saw property and are about to send holding deposit.

It ls a new build in East Algarve, small condominium; the agency said they will apply for the AL; any idea how long and easy is this. Everything is posible for the agent of course as they just want the sell.

All fees are 8% and this includes 5% transfer tax; what is this exactly?

We loved the property and the Algarve and are quite excited but also want yo make sure we are going to rent it to help cover the costs as we are getting a mortgage there.

Can you negotiate prices with new builds? Or is this fixed? Not sure what’s common in Portugal.

What about freehold and leasehold. I imagine this is not like the UK and everything is freehold.

Thank you

I don’t know much about the buying process, I was 18 when ours was purchased (jointly with my parents) so I just signed the papers and let them get on with it! I don’t think they have freehold and leasehold like we do, in our condominium we all own a % share of the whole place (based on size of the apartment).

Not sure on how long AL takes, but be prepared, everything is slower than you expect in Portugal, especially anything involving the council! Once you are sorted with your purchase, get your solicitor or the agent to help you set up your log in for the portal das financas, this is where you pay your IMI each year (council tax) our solicitor set ours up and then spent years denying she had the log in so we were paying several hundred euros a year for her to deal with that one bill. 🤦🏼‍♀️ now we have the log in we can do it ourselves.

Thank you very much. So this means we can include the kids as owners too? Or maybe not as we are getting a mortgage

Hi @Matilda762. I'm considering doing this and wondered how you are getting on? Were there any hiccups with the purchase, and have you managed to rent out at all? Would be super helpful to learn a bit more about your experience as we get ready to take the plunge. Thank you!

Hi, we are doing everything through a reputable agency and solicitor in PT. Still in process. The government has stopped short term rental licenses in Algarve and Lisbon since October last year. Not sure if new government will revoke the decision or not.