How a foreigner can buy land in Portugal: what should be considered

Buying land in Portugal is not just a step, but an exciting start to new opportunities: a cozy home in a beautiful location or a successful business. But it's important to consider the details, especially if you're not a resident.

Let's break down the process step-by-step: types of land, key aspects, and updates for 2024.

Types of land in Portugal: understanding the opportunities and limitations

Before we talk about buying, it's important to understand what types of land are available in Portugal. This is not just a formality: the designation of the plot determines how it can be used, and in some cases even affects the value and taxes.

Urban land (Terreno Urbano)

If you intend to build a house or a commercial building, the city land is the best option. These plots are already included in the city plan (Plano Diretor Municipal, or PDM), which means roads, water supply, electricity, and sewerage.

Key points:

Residential or commercial property can be built there.

Zoning restrictions apply: building heights, building density, and architectural requirements.

Example: You want to build a house in Cascais. Urban land with access to infrastructure is ideal, but it's worth checking the zoning regulations for a particular neighborhood.

Agricultural land (Terreno Agrícola)

These plots are intended for growing crops, livestock or winemaking. It is only possible to build a dwelling house if it is associated with an agricultural activity, for example as a farmhouse.

Key points:

Suitable for agrarian projects ranging from vegetable farming to organic winemaking.

Municipal approval is required for construction.

Example: You intend to establish an olive plantation in the Alentejo region. Agricultural land is your choice, but a project explaining its intended use will need to be submitted.

Forest land (Terreno Florestal)

This category of land has ecological value. It is intended for forestry, nature conservation and sustainable development.

Key points:

Construction is only possible for projects with an environmental focus (e.g. eco-tourism).

Approval from the Instituto da Conservação da Natureza e das Florestas (ICNF) is required.

Example: If you want to create a recreational park, it is possible to realize such an idea on forest land, but subject to strict environmental standards.

Mixed land (Terreno Misto)

For those willing to combine building a house and using the land for agricultural or forestry purposes, the mixed land is the right choice.

Key points:

Part of the site is designated for construction, the other for agrarian or conservation activities.

Checking zoning and restrictions through PDM is important.

Example: It is possible to build a country house with a vineyard or orchard on mixed land if this is in accordance with the municipal plan.

Preparing to buy: how to choose a plot

Once you have decided on the purpose of using the land, the most important step is the site inspection. Here are the basic steps:

1. The purpose of the land

Request an extract from the Plano Diretor Municipal (PDM) to clarify the permitted use of the site.

What needs to be clarified?

Is it possible to build a residential or commercial facility?

Are there any conservation areas or environmental restrictions?

Is it possible to change the purpose of the land?

2. Checking the legal status

It is important to make sure that the site is legally clean. To do this, you will need:

Certidão de Teor: a document confirming the title.

Caderneta Predial: a cadastral record with tax data.

3. Infrastructure

Check whether the site is connected to water, electricity, and sewerage. If there is no infrastructure, specify how much it costs to connect it.

4. Licenses and permits

If you plan any construction, be sure to obtain a Licença de Construção from the local government. This will confirm the project's compliance with the zoning regulations.

Financial part of the issue: taxes and costs

In addition to the cost of the land, you will have to pay a number of taxes and fees:

Real estate transfer tax (IMT):

Urban land: 5-6.5%.

Agricultural land: about 5%.

Stamp duty (Imposto de Selo): 0.8% of the land value.

Annual property tax (IMI):

For urban land, the rate is 0.3–0.8%.

For agricultural products, it is lower.

Updates from 2024

In 2024, Portugal introduced changes that made it easier for foreigners to purchase land.

1. Faster change of purpose

It is now easier to convert agricultural land to urban land if the changes are consistent with the municipal development plan.

2. Digitalization of processes

Requests for cadastral extracts, permits and environmental documents can be submitted online via Portal das Finanças and GeoPortal.

3. Benefits for environmental projects

Investors implementing projects with an environmental focus may qualify for tax breaks.

Investment prospects: why the land in Portugal is a good investment?

Investing in land in Portugal is a strategic investment in a stable and growing market. Here are a few reasons why it is beneficial:

• The prices for land steadily grow
• In regions with high demand, such as the Algarve, Lisbon and Porto, the land value increases year-on-year.

Algarve: a 500 m² plot close to the coast was priced at €120,000 in 2018. Today its price is about €170,000.

Lisbon: land for construction in prestigious neighborhoods has increased in value from €300,000 in 2020 to €400,000 by 2024.

Porto and northern regions: commercial plots have increased in price by 25-30% over the last 5 years.

Land for long-term projects

Investments in land are suitable for a variety of purposes:

Rental housing: the construction of rental properties brings stable income.

Agricultural projects: the cultivation of olives, grapes or organic products is in demand both domestically and for export.

Commercial real estate: warehouses, offices and hotels are in demand in all major cities.

For example, a €50,000 plot in Alentejo could be used to create a winery that exports to Europe.

Golden Visa Program

The purchase of land can contribute to obtaining a Portuguese residence permit if the purchase meets the requirements of the Golden Visa programme. For example, investments from €500,000 in urban land or from €400,000 in a low population density region.

Features of working with local agents and lawyers

Without professional assistance, buying land in another country can be a real challenge. Legal aspects, language barrier and a lack of knowledge of local regulations are the main difficulties for foreign buyers.

The role of professionals

Lawyers:

Check the fairness of the deal.

Draft and certify contracts.

Interact with government agencies to register property.

Real estate agents:

Know the market and will help you to choose a site that suits your goals.

Have access to offers that are not publicly available.

Translators:

Translate documents and assist in liaising with the administration.

Tips for choosing specialists

Check for licenses and experience in dealing with foreigners.

Read reviews and study customer case studies.

Make sure the experts are available to provide clarification on all stages of the transaction.

Solid Sorte provides comprehensive transaction support for foreigners: from selecting a plot to its full registration. We work with a variety of property types including land for agriculture, construction and commercial projects.

Risks and how to avoid them before buying land

Buying land always involves risks, but these can easily be minimized with the right approach.

1. Changing the purpose of the land

Agricultural land may not receive permission to be classified as urban.

How to avoid this?

Check the zoning of the site through the Plano Diretor Municipal (PDM).

Consult with lawyers and architectural firms before buying.

2. Nature conservation areas

Some sites fall under state protection, and construction on them is prohibited.

How to proceed?

Use GeoPortal to check the ecological status of the site.

Make sure that the planned project meets the requirements of the municipality.

3. Boundaries and access rights

Disputes may arise on rural lands about the right to use roads, fences, or reservoirs.

How to avoid problems?

Before buying, check the boundaries of the site and access rights with a notary public.

Check if they are listed in the cadastral record.

Regional features and popular locations

Lisbon and Greater Lisbon

Suitable for luxury housing and commercial projects.

Plots for the construction of villas cost from €250,000 per 600 m2.

Algarve

It is a popular destination for tourist attractions such as hotels and resort villas.

Land near the coast ranges from €150,000 for 500m².

North and Porto

A great option for commercial warehouses or industrial facilities.

Plots can be found for €100,000–150,000.

Central region and Alentejo

An excellent choice for agriculture and eco-tourism.

Land for winemaking or organic production costs from €40,000 per hectare.

The process of registering land ownership

Registration of the property includes several stages:

Preliminary agreement (Contrato de Promessa de Compra e Venda):

The terms of the transaction are being set.

The buyer makes an advance payment.

Final agreement:

Then it is signed by a notary public.

Registration is held at the Conservatória do Registo Predial.

Updating the cadastre:

Information about the new owner is transferred to the tax office and the land registry.

Our experts offer you full support at all stages, including liaising with municipalities and checking documentation.

Green Investment Programme in the context of 2024

Initiatives for sustainable development are being actively developed in Portugal, which offers additional benefits for land owners:

Exemption from IMI: Plots used for solar energy can be exempted from annual tax.

Grants: The government provides subsidies for the development of bio farms and environmental projects.

Example: the installation of solar panels on a site in Alentejo provided the owner with an exemption from IMI and the opportunity to participate in a subsidy program.

Conclusions

Portugal, with its stable market, developing economy and affordable conditions for investors, is the ideal place to realize your ideas and achieve long–term goals. By following all the steps and tips, you can not only avoid mistakes, but also make the most effective use of your investments.

Qualified assistance can help make the process comfortable and safe. Solid Sorte provides a full range of services: from advice on choosing the right plot and legal due diligence to registration of a title.

Here are some useful links to help understand the process of buying land in Portugal:

• Portal das Finanças - https://www.portaldasfinancas.gov.pt
  Requests for cadastral information and tax documents.
• Instituto da Conservação da Natureza e das Florestas (ICNF) - https://www.icnf.pt
  Verification of the ecological status of lands and permits for environmental projects.
• GeoPortal - https://geoportal.ine.pt
  Verification of the zoning and acceptable use of the land.
• Instituto dos Registos e Notariado (IRN) - https://www.irn.mj.pt
  Registration of property and work with notaries.
• Plano Diretor Municipal (PDM)
  Access through the websites of municipalities - https://www.cm-lisboa.pt
  It is useful for foreign investors, including the purchase of land.
• Direção-Geral do Território (DGT) - https://www.dgterritorio.pt
  Management of geographical and cadastral data.