As you are planning your move to Portugal, one of the key things that you will need to decide is where you are going to live. You have two main options: renting or buying. In this article, we will give you a quick overview of the Portuguese real estate market so you can make an informed decision.
Should you rent or buy when living in Portugal?
Naturally, the answer to this question is very personal and depends to a large extent on your current circumstances and future plans. However, there are some essentials to take into account.
Renting a place allows for more flexibility. You can switch between apartments and neighborhoods and leave the country easily with no strings attached. With that, long-term renting options may be quite limited in popular neighborhoods. Plus, landlords tend to charge a lot for rentals in popular areas, particularly when it comes to Lisbon and Porto, which are currently going through a major housing crisis.
If you plan to stay in Portugal for the long term, buying property can be a good idea. What's more, it can also be interesting from an investment perspective. Although interest rates have skyrocketed over the last year, property prices show no signs of slowing down, with growth rates of over almost 10% in the country's two biggest cities since September 2022. As such, Portugal can be a great place to make a good return on investment. However, don't expect to be able to turn your property into an Airbnb since current regulations have downright banned the creation of new tourism rentals in most major areas.
Renting in Portugal
The first thing that you should probably know before relocating to Portugal is that if you are moving here for work, your employer probably won't provide housing. This means that this is something you will need to take care of yourself. Renting in Portugal is not particularly complicated — but, just like in most places, there is some nuance that you should take into account.
Online searching is the best way to find accommodation in Portugal, with all major rental agencies listing properties online. Short-term rentals can be found on Airbnb, but the prices are usually higher as you are competing with tourists looking for holiday accommodation. As in other popular European countries, many property owners are turning to holiday rentals to meet the needs of the tourism market, which often means there are fewer (and more expensive) options left for residents and expats.
Major online rental sites in Portugal include Sapo, OLX, Remax and Idealista. If you are already in the country, contact multiple real estate agencies, as they can help you find a property within your budget, but be prepared to pay their hefty fees. A real estate agency will be especially helpful if you are not fluent in Portuguese. Another place to look for is the Marketplace on Facebook, which offers better prices and quicker response.
Another option is to go through a real estate agent. In this case, all you will need to do is contact a local real estate agency and explain what type of apartment or house you are looking for. The real estate agent will then show you the available options in your price range. On the other hand, stopping by a bank can also be helpful. Some banks have databases of available houses and apartments for rent in the area.
How much does it cost to rent in Portugal?
As you can imagine, rental prices depend on a number of factors. Renting in big cities like Lisbon and Porto will cost you way more than renting a place in a smaller town or in the suburbs. Additionally, central and trendy neighborhoods in big cities are more pricey than more remote or less popular ones.
For reference, you can expect the following rent prices in Lisbon:
- Bedroom in a shared apartment (downtown): 525€
- Studio apartments: 1,000€-1,200€
- Two-bedroom apartment: 1,300€-1,500€
- Three-bedroom apartments: 1,700€-2,000€
Leases and rental contracts in Portugal
Once you have found an appropriate accommodation, you will have to set up a lease agreement with the owner. A lease should be signed for both short-term and long-term rentals to provide peace of mind for both the tenant and owner. The rental contract should contain the following:
- Duration of the lease (including any penalties for breaking the lease early);
- Amount to be paid monthly for rent;
- Contact details of tenant and landlord;
- The tenant will need to provide a Portuguese tax ID number;
- Any additional conditions or stipulations as required.
Do not hesitate to report any damage for which you are not responsible. The lease document should be handwritten in three copies and should be filed with the Tax Administration Department by the owner. It will then be transformed into a legal lease agreement.
It is also important to budget for your security deposit and to have enough to pay for one or two months of rent upfront (or more if you don't have the necessary documents, such as a contract with an employer). Also, keep in mind some renters may try to demand larger security deposits and the payment of a higher number of months upfront. However, according to Portuguese legislation, 2 months-worth of rent is the most they can ask for each portion (2 months for security deposit 2 months upfront).
Landlords may also request referrals from previous rentals or from your employer, although some landlords may not request this information. You may also need to find a translator to assist with the preparation and signing of formal documents.
Typically, the minimum duration of a rental contract is six months.
Buying property in Portugal
If you plan to stay in Portugal for a while and have the necessary funds, you may consider purchasing a property. In fact, Portugal is one of the most popular destinations for real estate investments in Europe. Portugal has a very active real estate market — even in the aftermath of the COVID-19 pandemic. So, even if you are not planning a life in Portugal, investing in property here may be a good idea.
There are no restrictions or complications for foreigners who want to purchase property in Portugal. To purchase property in Portugal, you will need to first apply for and receive a Tax ID Number (Número de Identificação Fiscal aka Número de Contribuinte) at your local tax office. Plus, if you open a bank account in Portugal, you will get a Personal Fiscal Number automatically.
When looking for property to purchase, it is best to go through an experienced local estate agent. You will definitely be able to find private sale offers — but these can be quite risky, especially if you are not familiar with the market. Real estate agents in Portugal need to be government-registered and have a license number issued by the Association of Real Estate Agents (Associação de Mediadores Imobiliários). To check if the agent you are planning to work with is officially registered, you can contact the Instituto da Construcão e do Imobiliário.
You should also be aware that real estate agents in Portugal work in the interest of the seller — and receive their commission from the seller as well. The good news here is that you won't have to pay a commission when buying a home. However, to make sure someone is looking out for your interests as well, it is best to get independent advice before signing any contracts.
If you do decide to go through a real estate agency, here's a list of the biggest institutions in Portugal:
Whether you decide to buy or rent during your stay in Portugal, it's always advisable to do lots of research before settling on a decision that will affect you in the long term. Purchase and rent conditions will differ depending on the city, neighborhood, property type, and other factors.
We do our best to provide accurate and up to date information. However, if you have noticed any inaccuracies in this article, please let us know in the comments section below.
