To rent or to buy a house in Portugal? The best decision depends on each particular case, but we can help you by clarifying some of your doubts!
Renting or buying a house will always be one of the most important decisions of your life, so when it comes to choosing, you have to do the math and weigh the pros and cons well, to avoid compromising the family budget. Renting can be an excellent solution for those who don't want a long-term commitment. Buying may be the best option for those who want to build equity. The solution will always depend on the amount you want and can invest in the short-term, but there are other variables that you should take into consideration...
You should choose to rent a house in Portugal when you prefer to pay rent for a property that will never be yours, either because you are at the beginning of your career and have not yet managed to save enough money to buy a house, because your profession requires some mobility, because you don't want to take risks or because you want to maintain some freedom and flexibility, among other reasons which we will talk about later. Thus, the most important thing is to consider if the solution for your personal and professional life (or even for retirement) is to rent a property.
Get to know the main reasons to rent a house in Portugal!
When you want freedom and flexibility
Moving because the family has grown? Because you don't like the neighborhood? Because you discovered a safer neighborhood with better leisure spaces? Because in another area you have better access and other means of transportation? Well, any reason is valid to pack your bags and move to another place if you choose to rent in Portugal! Effectively, this option brings freedom and flexibility and therefore continues to be preferred by many Portuguese and foreigners who decide to live in Portugal.
When you are looking for a short/medium-term solution
Renting is also the best solution for those who are looking for a short or medium-term solution, because they are not sure if they want to live in a certain area for a long time, or simply because they have a lifestyle that goes with moving house on a regular basis.
When you want to minimize costs at an early stage
Of course, renting involves less costs at an early stage than buying a house in Portugal, and this can be the deciding factor for many families, particularly young couples who have not yet been able to put together the money to buy or at least afford the down payment on a house.
When you don't want to bear responsibility
You can also choose to rent in Portugal if you do not want or cannot take responsibility for bank loans (if that is the case) and maintenance of the property, condominium, taxes, mandatory insurance and other responsibilities of the owner.
When your professional life implies mobility
Renting is based on successive and temporary contracts which can be an added value for people who are forced to change their geographical area due to their profession. Currently, rental contracts in Portugal have a minimum term of one year, and on first renewal must be kept for another three years, unless the landlord needs the house for himself or his children.
Do you dream of owning your own home? Between dream and reality, you have to weigh the purchase of a property in Portugal, regardless of whether you want to be the owner of a villa, a farm, an apartment or a plot of land. It is, in any case, a process with some complexity that implies the fulfillment of several legal requirements, but that in the end brings security and stability to your family.
When you want to build equity
Paying a monthly rent to the landlord when the house will never be yours? For many families that is out of the question! And you too may think that renting is a waste of money, and that buying is an investment in assets, which improves stability. After all, you will have a property that is yours and represents a valued investment that can both serve as a roof for your family and as a source of income through renting.
When your financial situation is comfortable enough
It is obvious that to buy a house in Portugal or anywhere else in the world, you need to have money at an early stage, because even if you take out a mortgage, you cannot get the bank to lend you the whole amount (in Portugal, banks lend, at most, up to 90% of the value of the property). If your financial situation is comfortable, it is natural that you prefer to buy, but don't stop doing the math because there are other costs in the initial phase: expenses with registrations and notary processes, taxes, insurance and commissions.
When you intend to invest under the Golden Visa Program
Buying a house in Portugal is also, without a shadow of a doubt, the best option for citizens who intend to benefit from the Golden Visa Program, which offers the possibility to obtain special international residence authorization when making a qualified investment in Portuguese territory. Therefore, by obtaining a Golden Visa, the investor has a Residence Permit for Investment Activity (ARI) and access to a series of benefits of living in the European Union (EU), without having to live permanently in Portugal! Therefore, people who are not citizens of EU or Schengen territory, but who have the economic power to invest, can receive their Golden Visa through real estate investment (in this case, in a minimum amount of 500 thousand Euros).
The value of rents has risen, but we have to say that house prices in Portugal also increased: 12.2% in 2021, according to data from the Residential Price Index of Confidential Real Estate. And prices have risen in all regions of the country, with the Metropolitan Area of Lisbon at the top of the chart (3.346€/m2), followed by the Algarve (2.602€/m2), the Northern Region (1.929€/m2) and the Autonomous Region of Madeira (1.905€/m2). The cheapest regions to buy a house in? The Autonomous Region of the Azores (1.047€/m2), Alentejo (1.109€/m2) and the Central Region (1.187€/m2).
Renting or buying a house in Portugal? After you understand which option is more beneficial, contact Engel & Völkers Portimão! We have a team of experts ready to help you... and a portfolio with a wide range of residential properties to rent or buy!