A facility agreement secured by a mortgage is the most common financing and security method for real estate projects in Portugal. There are no specific restrictions on the maturity of a financing agreement, but the maturity date should be determined. Loan to value, interest cover and debt service cover ratio are terms customarily agreed on to set a tighter framework for the credit facility.
The definition of 'property' in Portugal follows that in other continental legal systems based on civil law and the French Civil Code, encompassing freehold and other rights of guarantee and acquisition. Portuguese law applies to the creation, recognition, acquisition or modification of any real estate rights in Portugal. There are no restrictions on the ownership of real estate by non-resident investors.
The 2012 urban lease regime reform reflected a commitment to boost the lease market and increase the supply of lease agreements at affordable prices. It was part of a set of policy measures to speed up urban real estate rehabilitation in a streamlined manner. Three legal instruments were recently published changing the laws applicable to lease agreements.
Private housing rentals have been formally regulated since 2008. The original regime required registration of house rentals and declaration of rental income, among other obligations, but ultimately became too bureaucratic. The regime has now been revised to reflect the increase in demand for private rentals and the new realities of the sector, extending proper legal treatment to this category of housing.
The Portuguese real estate market has shown signs of recovery since 2013, with both domestic and foreign investors now looking to invest in the renovation of properties, particularly those located in the downtown areas of Portugal's major cities. This revival is a result of several regimes introduced to promote property rehabilitation works, which have been identified as the main means of development and regeneration of urban centres.
Based on recent developments in the Portuguese real estate market and their impact on the financial system, the constituent bodies of the Financial Supervisors National Committee have issued a working document regarding the assessment and valuation of real estate assets. The aim of the document is to increase the credibility of real estate asset evaluations and the activities of expert real estate appraisers.
A new certification system for the energy performance of buildings recently entered into force. The new system establishes a clear distinction between the regimes applicable to residential and non-residential buildings (eg, services and commercial buildings), with a view to simplifying and clarifying an issue of significant technical complexity.
Until mid-2007 the execution of a transaction involving the transfer or encumbrance of real estate was generally subject to the execution of a notarized public deed and the subsequent registration of the transfer or encumbrance at the office of the Property Registry. A new regime for urban properties combines the two requirements in a single process.
A recent government order has approved a new technical file model for residential buildings, which aims to strengthen consumers' right to information and protect their interests when acquiring a residential building. Detailed technical information on residential buildings must be collated and made available to prospective buyers before purchase.
As a result of recent reforms, gift and inheritance tax, municipal property tax and property transfer tax have been abolished. Instead, the Portuguese government has introduced municipal real property tax, which is payable on property, and municipal transfer tax, payable on the transfer of property. The reforms aim to reduce rates and prevent tax evasion and avoidance.
A new government policy, supported by changes to legislation, exempts a number of commercial property agreements from the requirement of notarization. Therefore, concluding valid and enforceable agreements will be cheaper and easier.
Including: Forms of Real Estate Partnership; Forms of Real Estate Encumbrance; Registration; Transactions; Commercial Leases; Foreign Investment