Buying property in the Algarve as a foreigner from the UK. Your 2024 guide

Buying a property in the Algarve seems like a daunting task when you're in the UK, but with this guide, we'll simplify all the things you need to know to make the whole process much smoother.

We'll make sure you have all the info you need to make a smart purchase in this beautiful part of Portugal.

What's the property market in Algarve?

In 2024, the Portugal National Institute of Statistics reported that the Algarve has some of the highest average house prices among the top municipalities in Portugal, including Lisbon and Porto.

According to the Idealista price index, in May 2024, the average price for residential properties in the Algarve, which equals to Faro district, was €3,355 per m². This is 0.6% higher than the previous month and 7.7% more than May 2023.

What's the average cost of living in Algarve?

The Algarve, as a whole, is less expensive than many major cities in the UK.

However, some cities and municipalities are more expensive than the rest of the Algarve.

Loule, Albufeira, Lagos, Faro, Vilamoura, and Castro Marim are some of the most expensive places in the whole country. 

You would need around £2,975 (€3,533) in Lagos to maintain the same standard of life that you can have with £6,200 in London (assuming you rent in both cities).

Here is a handy table comparing two cities in the Algarve and three in the UK.

Best place to buy property in Algarve

You can choose from 16 cities, towns, and municipalities in the Algarve and even more charming villages.

While some are almost overrun by tourists in the summer, others are more secluded and offer peace year long.

Three of the best places worth mentioning:

Lagos

Best for: beautiful long beaches, lively atmosphere, and expat community

Average price per m²: €3,832

Types of properties you can find: everything from charming townhouses and apartments to sprawling villas

The city is located in the western part of the Algarve, close to the region's only raceway and zoo.

Faro

Best for: city life, quick getaways to Spain and the rest of Europe and the world

Average price per m²: €2,887

Types of properties you can find: big apartments, charming houses close to beaches

Faro has the only international airport in the region that offers daily flights to the UK, USA, and the EU.

Vilamoura

Best for: resort life, including golfing, marina, casino, and sprawling beaches

Average price per m²: €4,356

Types of properties you can find: villas and resort houses on the golf course

Vilamoura is a resort known for its large marina, golf courses, casino, and sandy Vilamoura Beach. Portuguese crème de la crème frequent there during the summer.

On the other hand, according to the Portugal National Institute of Statistics, Monchique, a picturesque village in the Monchique mountains, and Sao Bras de Alportel are some of the cheapest places to buy property in the Algarve. 

Can you maximize your investment potential in Portugal with a mortgage?

You can boost your investment potential in Portugal with a mortgage. By borrowing money, you can buy a more expensive property than you could with just cash, and low interest rates make this more affordable.

Mortgage options

Mortgages in Portugal for UK residents are more accessible than you might think.

Novobanco, Santander, UCI, and Bankinter are some of the most popular banks in Portugal. They are readily available to provide you with a mortgage if you have all the documents needed and satisfy their eligibility criteria.

Eligibility criteria

• A maximum debt-to-income level of 35%
• LTV ratio of 75%-80%
• 20-50% deposit

Documentation

As in any country, you need to provide extensive documentation to get a mortgage in Portugal from the UK. This means a passport or photo ID card and a Portuguese Tax Number (NIF). 

You'll also need to provide proof of income and liabilities, including a P60 form, a credit report, and the most recent tax return. 

For property documents, you'll need a copy of the Promissory Contract and the deed or land registration document for the property to be purchased.

Of course, the bank will give you an extensive list of all the documents you need to gather, but from my own experience of securing a mortgage in the Algarve as a non-resident, I can assure you they won't ask for anything out of the ordinary or unexpected (in most cases).

How Homevest can help you secure the best deal for your property in Algarve

Embarking on the property-buying process in a foreign country can be complex and sometimes discouraging. Luckily, a solution like Homevest can help you navigate these challenges.

Homevest is a digital platform that simplifies the mortgage application process directly from abroad.

Functioning like a project management tool, it assists applicants in sourcing the necessary documents for bank review. All required paperwork is easily accessible in one centralized location for the broker and the banks.

Homevest is partnering with Reorganiza to give customers access to more banks and expert advice from top mortgage and insurance brokers. This partnership helps customers get better interest rates and faster service.

What are the pitfalls of buying property in Portugal from the UK?

Buying property in Portugal from the UK can be a rewarding investment, but there are several pitfalls to be aware of:

• The property buying process is very bureaucratic. You'll need endless permits and paperwork, and delays and complications are common
• You need to understand property laws, zoning regulations, and local taxes to avoid legal issues
• Currency exchange rates between the pound and the euro can result in higher costs than you perhaps initially anticipated
• Securing a mortgage in Portugal is, at times, more complex and potentially more expensive than in the UK
• Lack of local market knowledge means you might be overpaying for a property or choosing a location that won't offer the best return on investment

Frequently asked questions

1. Is buying property in the Algarve a good investment?

Buying property in the Algarve can be a good investment due to its popularity as a tourist destination, resulting in strong rental income potential and property value appreciation.

2. How long can I stay in Portugal if I own a property?

You are allowed to stay in Portugal for up to 90 days without obtaining residency. For longer stays, you need to acquire a residence permit.

3. Can I get a Golden Visa if I buy a property in Portugal?

Unfortunately, as of October 2023, acquiring real estate to obtain a Golden Visa is no longer possible. This change was enacted by the Portuguese government's Mais Habitação (More Housing) bill, designed to tackle housing affordability issues in Portugal.

After reading this guide, you should have a clearer understanding of buying property in the Algarve, the current property market, your available options, and how to maximize your investment potential.

Remember, Homevest can help UK buyers go through the process of purchasing property in the Algarve, ensuring a smooth and informed investment.

Sources used and checked in June 2024:

1. Idealista Price Index
2. Goldcrest Real Estate
3. Cost of Living Lagos vs London
4. Cost of Living Faro vs Manchester
5. Cost of Living Glasgow

We recommend obtaining professional or specialist advice before taking or refraining from any action based on the content in this article. The information in this article does not constitute legal, tax, or other professional advice from Homevest Limited. Prior results do not guarantee a similar outcome. We make no representations, warranties, or guarantees, whether express or implied, that the content in this article is accurate, complete, or up to date.