The guide to spectacular property in and around ... - Quinta Properties

Buying
Procedures
There are two main ways in which one can buy a property in Portugal. The first is
the transfer of the deed from the vendor’s name to the buyer’s, which we refer to as
Private Ownership. The second is the transfer of the shares of a company which owns
the property, known as Corporate Ownership. Both are relatively straightforward.
Private Ownership
When buying a property in Portugal in
one’s own name, the first step is the
Preliminary or Promissory Contract
(Contrato Promessa de Compra e
Venda). This is a legally binding contract
between vendors and buyers
and signed before a notary. Upon this
signature the buyer generally pays a
10% non-refundable deposit. This
contract usually states exactly who the
buyers and the vendors are, a description
of the property, confirmation that
there is clear title, and the terms of
payment and completion. Both parties
should be represented by a local
lawyer.
Upon completion the Escritura
(Final Deed) is signed in front of the
Notary who checks all the documentation
and sees that the IMT (property
purchase tax) has been paid. At this
stage, the full purchase price is also
paid. From time to time and with the
agreement of both parties, a part of
the purchase price may be withheld
from the vendor until certain aspects
of the deal are fulfilled. For example, a
snagging list may need to be dealt with.
In these circumstances, the buyer’s
lawyer generally holds the ‘retention’
until all paperwork and other outstanding
issues are resolved.
Financing
the dream
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Once the deed is done, the buyer’s
lawyer registers the new owner of the
property in the Land Registry (Registo
Predial). Buyers should request a copy
of this registration for their files.
Corporate Ownership
Many properties in Portugal, and especially
in the Algarve, are owned by a
company. Today these companies are
usually domiciled in Malta or
Delaware. The Property itself is an
asset of the company and buyers purchase
the shares of the company. This
transaction takes place in the jurisdiction
where the company is domiciled.
There are benefits in buying and owning
property in this manner and we
have explained these in the section
Corporate Ownership.
Both parties do still require a local
lawyer as the usual searches on the
property here in Portugal must still be
carried out, and most local lawyers are
also familiar with this type of corporate
transaction.
A Share Purchase Agreement is
drawn up, the usual deposit paid and a
completion date set in the usual manner.
The immediate benefits of such a
transaction are indeed its simplicity
and the fact that all documentation
proceeds in the English language.
The Costs Involved
These are usually the lawyers’ and
agents’ fees and taxes. In our pages on
Taxation we have explained these in
detail. The lawyers’ fees vary anywhere
from 1% to 2.5% of the purchase
price, but this depends on the
circumstances and lawyers involved.
The estate agents are paid by the vendors
in Portugal. These rates also
depend on the agent and vary anywhere
from 3% to 7%.
Simon Perks from Banco Santander Totta or simply ‘Totta’
There is no such thing as a
‘typical buyer’ of property
in Quinta do Lago –
although there are some
common factors.
Normally they are well-travelled, with
an international outlook on life. They
probably like golf, certainly enjoy
nature at its best, and appreciate the
delicious choice of wining and dining in
the area.
They may be looking for a mortgage
to top up their available funds, or to
use bank money rather than their own
to buy a property: either way, they
need to have confidence with their
chosen finance provider and the
comfort of people who speak their
language.
Banco Santander Totta (simply
known as ‘Totta’ to its friends) is a
Portuguese commercial bank that can
trace its origins back to 1843. In March
2000 the bank became part of Grupo
Santander, one of the world’s largest
financial groups, who took over Abbey
National in 2004. The London branch,
in the heart of the City, opened in
1973: it is authorised by the Bank of
Portugal and regulated by the FSA for
the conduct of UK business, making it
ideally placed to support those buying
a property in Quinta do Lago –
or anywhere else in Portugal, come
to that!
The mortgage plan offered by
Totta is straightforward, with no hidden
clauses or small print. Geared
specifically for the market in Portugal,
finance is available for the purchase
of freehold land and buildings,
apartments and villas. Stage payments
will also be considered, and these
are particularly useful for those
having their dream villa built, or buying
off-plan.
The bank is happy to lend for
properties being bought privately or
through a company specifically set up
for the purpose. It will require a first
legal mortgage, on a privately-held
property, or a charge over the shares
of a company in a corporate structure
as security, and also ask for an
assignment over an appropriate life
insurance policy.
The bank will normally lend up to
75% of an independent valuation value,
and will not lend more than the total
Simon admits that he has a soft spot for
Quinta do Lago. “Our clients here have all
seen their properties rise in value, which
shows what a good investment they have
made, and we at Totta are always happy
to talk to anyone thinking of buying in
Quinta do Lago.”
purchase price. The minimum loan is
GBP 75,000 or equivalent, and interest
is normally 1.75% over the bank’s base
rate in the relevant currency: lower
rates may be negotiated on a case-bycase
basis. The maximum term is
usually 25 years, and will not normally
extend beyond the 65 th birthday of the
applicant.
Although Totta has an extensive
network of branches throughout
Portugal, mortgage applications are
always handled from London. The man
responsible is Simon Perks, a regular
visitor to the Algarve, who knows the
developers and agents well, and what
the markets are doing, and can talk
from personal experience about
individual resorts.
Banco Santader Totta SA
t: 020 7621 2660
f: 020 7929 4970
e: mortgage@btax.co.uk www.totta.co.uk
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