Tag Archive for: Visa

Governments housing package ‘mais habitação’ part 3 of 3: measures with most impact on mortgages and a note on key interest rates and mortgage subsidies

Governments housing package ‘mais habitação’ part 1 of 3: measures with most impact on Golden Visa, short-term rental and licensing

  1. Golden Visa will not be granted for real estate investment anymore
  2. Further restrictions on use of residential units as AirBnB and other short-term rental
  3. Simplification of the licensing process
  4. Increase residential space through easing conversion of commercial space
  5. The state will make some of the land it owns, and is not used, available for the development of affordable housing

Governments housing package ‘mais habitação’ part 2 of 3: measures with most impact on the rental market

  1. Rent for new contracts is limited to 2% above the last rent
  2. Change of taxation of rents
  3. State will act as contract party in rental agreement whilst providing the space to low-income individuals
  4. State will rent residential units in the free market to sublease them at lower rent to low-income households
  5. State will subsidise rents for households in need
  6. State reduces or exempts from various tax positions when a unit is let at affordable rent

Governments housing package ‘mais habitação’ part 3 of 3: measures with most impact on mortgages and a note on key interest rates and mortgage subsidies

  1. No capital gains tax when house sale proceedings are used to pay off mortgage
  2. All banks have to offer fixed rates on home mortgages
  3. State will subsidise interest rate payments for households in need
  4. A note on key interest rates and mortgage subsidies
  5. Further reading on the topic in English

Measure: No capital gains tax when house sale proceedings are used to pay off mortgage

What does it entail?

When the sudden and stark increase of interest rates led to a respective increase of mortgage rates (often variable in Portugal) many households faces financial trouble. This measure intends to ease this and support the premature apartment sale for repayment purposes.

This measure applies to the sale of housing that is owner-occupied and the proceedings are used to pay off the subject mortgage or that of descendants. 

What does it mean for you as an investor?

This measure will almost solely affect owner-occupiers and those who use the sales proceedings to pay of descendants’ mortgages. 

From an investors perspective this may lead to occasional sale-and-leaseback opportunities. Someone selling out of financial pressure may be more likely to stay as a tenant. The buyer might benefit through better pricing (since the seller saves capital gains tax) as well as a stable tenant (already home there and financially better equipped thanks to the sale). 

Measure: All banks have to offer fixed rates on home mortgages

What does it entail?

Most of the mortgages taken out in Portugal are fixed-rate mortgages. Hence, the monthly rates depend on the Euribor (usually 12-month) plus individual spread and have risen significantly recently.

What has not posed a problem and usually was cheaper during the periods of low interest rates has now led to many households unable to pay their mortgage rates. With many annual rate adjustments taking place at the year-end this will even be more of a problem soon. 

As opposed to before, when banks could decide whether they offer fixed-rate product in addition to the variable ones, this is now an obligation. 

What does it mean for you as an investor?

For you as investor changes are limited, since fixed-rate mortgages have been around for a while. It can be expected that you might be able to find a better offer or negotiate because overall there are more choices. 

In any case, offers need to be compared. This should not only include the key points of a potential mortgage, but you should also include the fine print. 

On a different, yet related note, it is often worth to check on the small print of mortgages already taken out to see the conditions of early repayments. These can help to switch to more favourable contracts or renegotiate upon a possible termination respectively. 

Measure: State will subsidise interest rate payments for households in need

What does it entail?

This is one more measure, which was designed to ease the burden that arose for many households from the sudden and strong increase of interest rates and, consequently, mortgage rates. 

Applicable to households, who have a social support index (IAS) of 1.5 (equal to ca. 720 Euros) and a mortgage of up to 200.000 Euros, this makes a 50% subsidy on the interest payment possible. 

What does it mean for you as an investor?

This measure will only have impact on those households which meet the above criteria. 

Therefore, there is unlikely to be any impact on investors, except that this will reduce the amount of foreclosure properties coming to the market in the future.

A note on key interest rates and mortgage subsidies

Most private mortgages taken out in Portugal are based on variable rates rather than fixed rates. This means that when the Euribor changes the debtors interest rate will change (usually annual adjustment) by the same percentage. The individual spread which is added to the Euribor rate remains the same. 

Also, bear in mind that Portugal’s real estate market is in an earlier stage of development than that of most western countries. This usually translates into high a high share of owner-occupation, which also means that for many it may be easier to sell and buy an apartment than finding a rental. 

In addition, the rental market is less regulated, which means that for many renters there would be a higher risk of being unable to afford their rents as they age. Owning the house you live in is seen as a protection against unaffordable rents and securing your own retirement. 

The private rental market (PRS) or Buy-to-let segment has taken off in Portugal rather recently and developed mostly in high-density urban areas, such as Lisbon. With the increasing professionalisation of the market this can be expected to continue to change. 

As a reader coming from a country with more orientation towards free market economy, the states support of mortgages may appear surprising. Buying houses is often seen as the preferred option for middle- or higher-income households whereas at the lower end renting is the obvious choice. Due to the above-mentioned factors, in Portugal, the regulation and subsidisation of mortgages to safeguard housing is just as relevant as the measures in the rental market. 

Read more on the housing package in the other two parts of this post: 

Governments housing package ‘mais habitação’ part 1 of 3: measures with most impact on Golden Visa, short-term rental and licensing

  1. Golden Visa will not be granted for real estate investment anymore
  2. Further restrictions on use of residential units as AirBnB and other short-term rental
  3. Simplification of the licensing process
  4. Increase residential space through easing conversion of commercial space
  5. The state will make some of the land it owns, and is not used, available for the development of affordable housing

Governments housing package ‘mais habitação’ part 2 of 3: measures with most impact on the rental market

  1. Rent for new contracts is limited to 2% above the last rent
  2. Change of taxation of rents
  3. State will act as contract party in rental agreement whilst providing the space to low-income individuals
  4. State will rent residential units in the free market to sublease them at lower rent to low-income households
  5. State will subsidise rents for households in need
  6. State reduces or exempts from various tax positions when a unit is let at affordable rent

Further reading on the topic in English

This post (parts 1 to 3) is vaguely based on various Portuguese and English articles by Idelista.pt. Idealista provides information about a wide range of real estate topics. 

Good reads on the topic are: 

Link: Idealista

Link: The Guardian

Link: CNN

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Governments housing package ‘mais habitação’ part 2 of 3: measures with most impact on the rental market

Governments housing package ‘mais habitação’ part 1 of 3: measures with most impact on Golden Visa, short-term rental and licensing

  • Golden Visa will not be granted for real estate investment anymore
  • Further restrictions on use of residential units as AirBnB and other short-term rental
  • Simplification of the licensing process
  • Increase residential space through easing conversion of commercial space
  • The state will make some of the land it owns, and is not used, available for the development of affordable housing

Governments housing package ‘mais habitação’ part 2 of 3: measures with most impact on the rental market

  • Rent for new contracts is limited to 2% above the last rent
  • Change of taxation of rents
  • State will act as contract party in rental agreement whilst providing the space to low-income individuals
  • State will rent residential units in the free market to sublease them at lower rent to low-income households
  • State will subsidise rents for households in need
  • State reduces or exempts from various tax positions when a unit is let at affordable rent

Governments housing package ‘mais habitação’ part 3 of 3: measures with most impact on mortgages and a note on key interest rates and mortgage subsidies

  • No capital gains tax when house sale proceedings are used to pay off mortgage
  • All banks have to offer fixed rates on home mortgages
  • State will subsidise interest rate payments for households in need
  • A note on key interest rates and mortgage subsidies
  • Further reading on the topic in English

Measure: Rent for new contracts is limited to 2% above the last rent

What does it entail?

Residential units which have been subject to a rental agreement within the past 10 years can not have a new rent more than 2% above the last one or the rent increase that could have been exercised during the last lease term. If there were rent update coefficients unapplied over up to three years, these can be added.

What does it mean for you as an investor?

Whereas property investments are usually a good protection against inflation, this is now a bit less so. In addition, there is an increased likelihood that this measure will be applied more often or even permanently in the future. 

Ironically, this measure bears the potential to affect the provision of housing negatively in the long-term. As it reduces the attraction of buy-to-let investments, it reduces the construction and refurbishment of apartments for this purpose and the overall availability of housing. 

Whereas investors will see their income from lettings increase slower due to this measure, the potential extension of it may increase negative long-term pressure on supply and, hence, support property values (stable or increased demand meeting stable or decreased supply).

Measure: Change of taxation of rents

What does it entail?

Hoping to encourage that owners put houses on the market, which have previously not been for let, the tax on rental income (IRS) was reduced to:

  • 25% for contracts wit a term <5 years
  • 15% for contracts with a term of 5 to 10 years
  • 10% for contracts with a term of 10 to 20 years
  • 5% for contracts with a term of >20 years

What does it mean for you as an investor?

It needs to be seen how much of an incentive this measure will be. 

On one hand the amount of vacant apartments is significant. 

On the other hand, these are not the vacancies that would be eliminated by a small percentage of tax savings.

An investor should go through their real estate portfolio and planned acquisitions to understand the impact of this measure. It will often turn out to be small relevance, but when seen in combination with the entire housing package may impact a decision here and there. 

Also, make sure you always have a good and up to date tax advisor.

Measure: State will act as contract party in rental agreement whilst providing the space to low-income individuals

What does it entail?

A core aim of the housing package is to ease access to housing for households with low or no income and those with a high rent to earnings ratio respectively. 

This measure will allow that the state can act as for the tenant in case the latter defaults and there is a reason that should be mitigated through public funds. If pursued this measure would apply after three months of defaulting and a respective filing of an eviction request. 

What does it mean for you as an investor?

This will only affect a landlord in case of a tenant in default. In the worst case the state does not exercise the right to enter the process, so a landlord would just proceed with the eviction as initiated. In the best case a tenant who has been unable to pay can stay, the eviction (and future costs) become unnecessary and your contract party is the most reliable you can possibly have (the state). 

Measure: State will rent residential units in the free market to sublease them at lower rent to low-income households

What does it entail?

In a similar way in which some municipalities (e.g. Lisbon) already rent apartments in the private market to provide them to families as affordable housing, the state set up a similar scheme. 

Rent will be directly paid from the state to the landlord, so there is no risk of tenant default and the tenants rent burden can be kept below or at 35% of the household income. As of now, the maximum period for this support is limited to 5 years duration.

Further, the measure includes the possibility for the state to purchase housing units for the same purpose and exempts those transactions from capital gains tax (IRS). This is applicable to sales to municipalities as well. 

What does it mean for you as an investor?

This measure may be relevant to you when: 

  • You are going to rent out an apartment which would suit the requirements of the scheme. You would receive a rental party much safer than any individual.
  • You are going to sell and the apartment would fit the requirements. With this measure the state or the municipality become possible buyers and you might be able to safe on capital gains tax (IRS). 

Measure: State will subsidise rents for households in need

What does it entail?

Applicable to households which spend more than 35% of their income in rent for contracts dating 21st December 2022 or before and, at the same time, are in a certain tax bracket, the state will monthly subsidy of up to 200 Euros.

What does it mean for you as an investor?

This will have a rather marginal effect on investors who have tenants who qualify for the above, because it simply eases of facilitates the tenants’ rent payments. 

Measure: State reduces or exempts from various tax positions when a unit is let at affordable rent

What does it entail?

Basically, this measure aims at:

  • Reducing the tax burden for landlords hoping that they lower their asking rents to the extent that they become affordable.
  • Reducing the tax burden for landlords hoping it makes it financially more viable to construct or refurbish for affordable housing

Both of the above will be done through reducing property transfer tax (IMT), income tax (IRS) and municipal property tax (IMI) and value added tax (VAT) for construction and refurbishment works. 

Further, this measure includes that:

  • Municipalities may fund refurbishments of units which are currently marketable and allocate them to affordable housing.
  • Public authorities can force the owner to lease a unit which is proven top be unlet and unoccupied. 

What does it mean for you as an investor?

This will depend on the costs and income structure of the residential units you own or plan to acquire. 

To benefit from the tax deductions (some of which are applied temporarily) the amount you save in total would have to be less than the difference between the market rent and the affordable rent. Research the respective parameters or consult your real estate consultant and tax advisor to find out whether that would be the case. 

However, forced refurbishment and renting will appear as a threat to many owners. If you own a vacant unit and are not running any efforts to bring it to the market in some way, it is time to act. Otherwise, you run risk that the state takes this decision from you. 

Read more on the housing package in the other two parts of this post: 

Governments housing package ‘mais habitação’ part 1 of 3: measures with most impact on Golden Visa, short-term rental and licensing

  • Golden Visa will not be granted for real estate investment anymore
  • Further restrictions on use of residential units as AirBnB and other short-term rental
  • Simplification of the licensing process
  • Increase residential space through easing conversion of commercial space
  • The state will make some of the land it owns, and is not used, available for the development of affordable housing

Governments housing package ‘mais habitação’ part 3 of 3: measures with most impact on mortgages and a note on key interest rates and mortgage subsidies

  • No capital gains tax when house sale proceedings are used to pay off mortgage
  • All banks have to offer fixed rates on home mortgages
  • State will subsidise interest rate payments for households in need
  • A note on key interest rates and mortgage subsidies
  • Further reading on the topic in English
/by

Governments housing package ‘mais habitação’ part 1 of 3: measures with most impact on Golden Visa, short-term rental and licensing

Various governments of European have begun to tackle the issue of housing availability and affordability in the past years and the Portuguese left is no exception. 

What started as a half-baked draft of measures (known as mais habitação) based on rather limited research to solve a problem has now become reality affecting owner-occupiers, investors and tenants alike. 

Implemented with only the best intentions there remains a risk that the measures only ease the symptoms whilst delaying real solutions and even potentially hindering higher availability of housing. 

Read in three parts what the 14 measures entail and how they affect the market and maybe your investment: 

Governments housing package ‘mais habitação’ part 1 of 3: measures with most impact on Golden Visa, short-term rental and licensing

  1. Golden Visa will not be granted for real estate investment anymore
  2. Further restrictions on use of residential units as AirBnB and other short-term rental
  3. Simplification of the licensing process
  4. Increase residential space through easing conversion of commercial space
  5. The state will make some of the land it owns, and is not used, available for the development of affordable housing

Governments housing package ‘mais habitação’ part 2 of 3: measures with most impact on the rental market

  1. Rent for new contracts is limited to 2% above the last rent
  2. Change of taxation of rents
  3. State will act as contract party in rental agreement whilst providing the space to low-income individuals
  4. State will rent residential units in the free market to sublease them at lower rent to low-income households
  5. State will subsidise rents for households in need
  6. State reduces or exempts from various tax positions when a unit is let at affordable rent

Governments housing package ‘mais habitação’ part 3 of 3: measures with most impact on mortgages and a note on key interest rates and mortgage subsidies

  1. No capital gains tax when house sale proceedings are used to pay off mortgage
  2. All banks have to offer fixed rates on home mortgages
  3. State will subsidise interest rate payments for households in need
  4. A note on key interest rates and mortgage subsidies
  5. Further reading on the topic in English

Measure: Golden Visa will not be granted for real estate investment anymore

What does it entail?

Granting a Visa to non-EU nationals based on the purchase of real estate had already been limited in the past regarding qualifying geographies and has now been entirely terminated.

Of all the measures of this housing package this has probably been the most challenged one as it removes some 600m of annual contribution to the economy. In addition, many market participants, including university researchers, argued that the impact would be rather small and Golden Visa purchases are often made in segments of the market (higher priced or developments tailored to Golden Visa) that would not have catered to domestic buyers anyway.

However, the Portuguese government followed a longstanding recommendation of the EU, since the day that the programme was important for the country’s economic recovery are over. 

What does it mean for you as an investor?

If you are a non-EU national and have not permanent visa yet, this means that you have one less option to obtain one. However, bear in mind that the Golden Visa programme still exists for investments in companies and that Portugal offers other Visa types, including for digital nomads. 

This measure hit many property developers by surprise and the implementation date of it was even set to just before the first announcement. This means that hundreds of apartments in developments tailored to foreign buyers (often more expensive and of higher standard) remained in the market and there are more to come. If your investment strategy entails high quality apartments, you might be able to find good supply at better prices than usual. Keep in mind that asking prices often do not change, but your negotiation margin does. If you are not used to negotiating, consider instructing a real estate expert to get you the best possible deal.

Measure: Further restrictions on use of residential units as AirBnB and other short-term rental

What does it entail?

Increase in licences short-term rentals has helped the real estate market to improve when it was badly performing increase the many years ago. 

Meanwhile, as the downsides of so-called over-tourism become more evident in many European cities including Lisbon, the government seeks to stabilise or reverse this development to release pressure from the housing market.

This measure entails that:

  • New licences will only be granted in rural locations and the countryside. 
  • Tax incentives (zero personal income tax until 2030) will be allowed to those owners who transform short-term rentals to long-term rentals by the end of 2024.
  • An annual special contribution will be collected from owners of short-term rentals.
  • Future reviews of existing licences will take place in 2030 and every 5 years after. This means it will be decided whether the cap on the number of licenses will be kept, increased or reduced.

What does it mean for you as an investor?

If you are already running local accommodation this measure of the housing package will have significant impact as per the above and, indirectly, you should have on your radar:

  • The risk that you may not be able to extend your licence beyond 2030.
  • The risk that taking a tax incentive in exchange for giving up the licence will heavily impact the income from a unit as well as its potential sales price. 
  • The risk that, in case local accommodation will be restricted upon review in the future, you may find yourself selling at the same time as many others or maybe during a market downturn.

Measure: Simplification of the licensing process

What does it entail?

The process of obtaining licenses for construction and larger refurbishments has been perceived as very slow and complicated. This issue is a major cause for concern when timing construction and budget. What is more, the problem appears to be more severe in Lisbon, where prices haven risen the fastest and supply is needed the most.

In the future ease is expected to come from:

  • Firstly, responsibility for the legal viability of a project is shifted from the municipality to the planner (often the architect), which is supposed to speed up the process.
  • Secondly, whereas municipalities would usually not have to fear damages for missing their deadlines to respond, this will now be penalised by applying a late interest payment. 

What does it mean for you as an investor?

It depends. 

On one hand investors who are active in the area of property development of refurbishments might benefit from more reliable schedules and budgets in the future. 

On the other hand this measure has the potential for the real estate market to react faster and better to demand. Whereas for the economy and tenants this is good, a less restricted supply side may lead to weakening sales and rental prices in some submarkets.

However, it needs to be seen how this will be applied in practise. Architects have raised a range of unclarities about the process and liability risks.

Measure: Increase residential space through easing conversion of commercial space

What does it entail?

It means that land and buildings which have a license for commercial use will not require a changed permit from the municipality.

What does it mean for you as an investor?

Generally, this is a good idea as it increases the potential space which can be made available to the residential market through apartment sales or leasing. 

It also provides property investors with more options to react to market demand and, hence, serve the strong demand for residential space.

In practice, it needs to be seen how this pans out, because:

  • Firstly, owners who have planned a construction or refurbishment of a commercial building have usually done so based on the returns offered in the commercial real estate market. Only where it is financially viable or advantageous they will consider to convert to residential use. 
  • Secondly, commercial and residential buildings have very different specifications. Changing the planning entirely may pose a problem to some owners and changed specifications may cause another loop in obtaining licensing regardless of the measure.

Impact on private and small professional investors will be limited. However, there will be more options for conversion of, especially retail or office space, to residential space. Since residential sales and rental prices in prime locations are often higher, it can make sense to look for well-priced commercial units that can be converted to realise the upside potential. 

Measure: The state will make some of the land it owns, and is not used, available for the development of affordable housing

What does it entail?

Public entities ranging from the municipality level up the state level own buildings and land plots in all kinds of locations throughout the country. Sometimes, these serve as space reserve for potential future needs (public schools, offices for administration, military facilities etc.). 

However, across the country these amount to approx. 100.000 units or buildings, so that it can be assumed that many have just not been dealt in an efficient manner yet and remained unused for no reason whatsoever. 

Some of these will now be allocated to affordable housing through public tenders. This also set an example for some of Portugal’s municipalities who started similar individual schemes. 

What does it mean for you as an investor?Since this will be applied to only a subsection of the market (affordable housing) and the numbers of new units are rather low (in the hundreds so far), the impact on your personal investment strategy is likely neglectable. 

Read more on the housing package in the other two parts of this post: 

Governments housing package ‘mais habitação’ part 2 of 3: measures with most impact on the rental market

  1. Rent for new contracts is limited to 2% above the last rent
  2. Change of taxation of rents
  3. State will act as contract party in rental agreement whilst providing the space to low-income individuals
  4. State will rent residential units in the free market to sublease them at lower rent to low-income households
  5. State will subsidise rents for households in need
  6. State reduces or exempts from various tax positions when a unit is let at affordable rent

Governments housing package ‘mais habitação’ part 3 of 3: measures with most impact on mortgages and a note on key interest rates and mortgage subsidies

  1. No capital gains tax when house sale proceedings are used to pay off mortgage
  2. All banks have to offer fixed rates on home mortgages
  3. State will subsidise interest rate payments for households in need
  4. A note on key interest rates and mortgage subsidies
  5. Further reading on the topic in English
/by

These are the seven main challenges of a digital nomad who wants to invest in real estate in Portugal and tips to overcome them

The Situation

Various locations in Portugal rank amongst the best worldwide for digital nomads whilst providing high quality of living and proving an excellent investment in the past.

Although digital nomads are increasingly integrated in everyday life and not only enjoy, but also contribute to the well-being of urban spaces and local economies they rarely find themselves on the owner’s side of real estate investments. Instead, they are usually renters who often lack ways of making long-term investments to accumulated wealth. 

Despite being well-educated and working, their lifestyle often prevents them from ‘getting on the housing ladder’, which puts them at a disadvantage compared to their more domestic counterparts or previous generations.

Aside from the general challenges that await any buyer or investor in real estate, there are some additional hurdles that are specific to digital nomads and that they should be aware of. Depending on the individual situation those can be easy or hard to overcome. 

Overall, there are five challenges specific to any digital nomad who intends to invest in real estate in Portugal or elsewhere. In addition, you should not lose sight of the two more general issues relevant to any foreigner buying in Portugal, the most important being visa and moving without buying.

Challenge 1: Geographics

Anything real estate is local, whereas the digital nomad, by definition, is anything but local. Ranging from reaching out to a broker in a different time zone, over visiting the potential investment, understanding the micro location, making contracts to refurbishing and meeting potential tenants.

Tips

  • Use your time in the respective location to visit a broad range of apartments. Over time your skills of relating between the real estate listing and what is to expect in reality will improve. An in-person visit will still be very important, but you will be able to screen and pre-select much better based on photos, 360º-walkthroughs and videos.  
  • Also, try to make some connections while you are on the ground. Meeting a consultant, a sales broker or an architect in person and discuss a potential investment will be a good basis for collaboration in times you are not around and need to rely on someone. 

Challenge 2: Language

Whereas in places like Portugal and especially within the real estate sector most people will assist you in fluent English, you may encounter problems nevertheless. The common step of double-checking what a local advisor (who may, at times, act in their own interest rather than in yours) told you becomes tricky.

Also, many steps in the investment process are subject to legal requirements. Your respective consultant, broker or architect will always be able to explain anything you need to know. However, it can become tricky when you want to verify primary sources, search for details online or use the original laws. 

Tips

  • Ask for bilingual contracts where possible. The Portuguese version will still be the legally binding, though.
  • Access original information and primary sources wherever possible. Ask for the precise Portuguese term and spelling of a topic that you are going dive in deeper. You can enter it in your search engine and then understand by using your browsers translation function or an online translator like DeepL.
  • Where information is crucial you might want to make use of translated, a translation service that lets you upload your text and choose between different qualities of translations of any language. 
  • When you have no way of verifying, consider getting a second opinion at least. This will reduce your risk of relying too much on a single person.

Challenge 3: Exchange Rates

When making any kind of investment you will always aim for a good relation of risks and returns. That means the more risk you take the more money you should earn. 

However, the equity (your own money) you invest may be in the currency in which your work gets paid, while the investment, any associated costs and your returns (rent, sales proceeds) maybe in another currency. With changing exchange rates these in- and outflows may vary significantly. The effect can be positive or negative and even increased in case of a mortgage.

Tips

  • See past volatilities of the two currencies in question. While past exchange rates cannot project future ones, they will give you an idea of the possible upside potential and downside risks.
  • Plan ahead: What are you going to do when an investment becomes too unattractive over time? Will you keep it and hope for an improved situation in the future or sell to cut your losses? Will you rather realise an unexpected gain by selling ahead of time or sit still and enjoy your growing wealth? Ideally, those decisions are made long-term and with respect to you respective phase of life. 
  • See if your mortgage bank offers protection against exchange rate changes. Some products tailored to foreign investors may protect you from unforeseen costs against small fees. 

Challenge 4: Digital Nomad Glasses 

When you do not spend all-year round in the same location, there is a higher possibility that you live disconnected from locals, their everyday lives and therewith from local dynamics. Places you go will vary less and you will be more likely to surround yourself with like-minded people.

While this might be exactly the setting you selected to invest in, keep in mind that real estate markets are largely impacted by a country’s politics and economy. A small change in those high-level areas (e.g. change of interest rates for mortgages) may easily overwrite a different development on the low-level (e.g. AirBnB rates in central locations) in the setting you are familiar with.

Tips

  • As a digital nomad you will already have developed some routine for connecting when you arrive in a location and disconnecting when you head somewhere else. Try to incorporate checking on local everyday life and the real estate market when arriving or even regularly. This can be through newsletters for foreigners (e.g. Essential Business, The Portugal News) or simply headline screening in Google News (remember to set location and interests). 
  • When you already have invested and you work with a local advisor, ask them to let you know when there are important news in politics or legislation that would affect you investment. This could be a property manager, a local friend or a good accountant.

Challenge 5: Reaction time 

Despite real estate being a long-term investment and an area where things usually do not change by the hour, you may be forced to react quicker than expected. A competitive bidder forces you to decide if you want to bid higher, the painter has a question, an urgent repair has to be made, a potential tenant wants to visit the apartment etc.

Tips

  • Have someone you trust on the ground. This can be an advisor you trust, a professional property manager or even a friend or an engaged neighbour who you trust and could compensate for their time. 
  • Plan ahead: When making your investment or before leaving the city at the latest work with an advisor to work out your personal investment strategy:
    • Are you going to be hands-on on all topics or are you going to save time and trouble chunking off as much as possible to local servicers?
    • What situations are likely to occur over the years when owing an apartment, e.g. tenant change, refurbishment, repairs etc?
    • Are you OK with coordinating different specialists on different topics or will you need a single-point of contact due to time-constraints?

Challenge 6: Visa

The end of the Golden Visa programme for real estate investment in 2023 limits the access ways for non-EU nationals to stay in Portugal permanently. Plans change and while you might not want to seek permanent residency for the time being you might want to be aware of your future options. 

Tips

  • Be clear and stay updated on visa regulations as, for instance, Portugal Digital Nomads Visa or the D7 Visa (‘Retirement Visa’).
  • Research your potential residence alternatives that suit your life and lifestyle, e.g. resident visa, short-term tourist visa, temporary stay visa or even a job-seeker visa. 

Challenge 7: Moving without buying

Surely the possibility of moving into your own apartment or kicking-off your first stay in a new country with a great investment seems intriguing. However, investing with limited knowledge of a location and only brief experience in living there stipulates an avoidable risk.

Tips

  • Consider moving without buying. See your time as a renter as a way to flexibly chose different neighbourhoods, find your preferred living situation and collect experience in the local real estate market. 
  • This will help you to make more informed decision on any future investment and you might even remain a happy and flexible tenant whilst buying and renting out to others in the future. 
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