And how did it go with us?

For a year, we have been following the development of real estate prices on some servers. Much to our displeasure, the price went up over time. Then we bought plane tickets and flew to Madeira for two weeks as a family, with the intention of trying to find a house where we could imagine living, where we would find our future home. During our two week visit to Madeira in January 2022, we walked and viewed about 15 houses in total.

We wrote to about 5 real estate agents. 3 of them took us and from the 3 we chose the one that suited us the most after the first tours 🙂 We just "sat down". And that was the owner of the small RK QUALI - Pedro Silva, for whom I am currently working with pleasure.

Pedro toured about 10 properties with us saying that if we didn't choose he would help us on our next scheduled visit. Why, when and how, in short, you can read our story HERE if you are interested. Pedro went through the registration with us at the office for a NIF (tax number) - in Funchal at La Vie OC (they issue them for free), in Calheta €10 - you can't buy anything without a NIF. And he helped us in the bank to open an account (it was our first experience buying a property abroad, so we really appreciated his help).

We liked the last house the most, which we saw before leaving for the Czech Republic. But we haven't decided yet. In short, we let all the impressions "bubble" inside us. After returning to the Czech Republic, we talked, looked back at videos and photos, and considered about 3 different houses. All in the Calheta location.

Calheta is close to our hearts as we spent our honeymoon here in 2009. Another clue for us was Marina Calheta as my husband was planning to buy a boat and take trips along the coast. So we were aiming to buy a house somewhere near the marina. In short, the location gave us more than emotional meaning.

After about 2 weeks, we asked Pedro for a video of the last house that caught our eye. In about 2 days I had it in my email for download. We had many questions. They answered us all one by one. And negotiations began about the price at which we would be interested in buying the house. We were able to negotiate about a 4% discount, which covered almost all of our property tax, which was handy. And about a month after our visit in January, we signed the reservation contract remotely (this is possible if you already have a NIF).

The reservation contract (usually bilingual - EN and PT) states everything essential, such as who, from where, passport or ID numbers, the total price, the price for the reservation, when it must be paid and the purchase contract, the so-called deed, must be signed. The so-called Promissory reservation contract can be slightly modified after reading it (it must have certain requirements to be accepted by a notary). The deposit is usually 10-20% of the purchase price, depending on the value of the property. The cheaper the higher the deposit. We had to pay by transfer from a Czech account, in our case directly to the seller's account (after agreement) within 5 working days. Otherwise the promissory would be invalid and we would start over.

The purchase contract itself at the notary (deed - it's only in the Portuguese language) and you can get it through the real estate agency that represents you a day or two in advance - more precisely, the draft. Nothing fundamental can be changed in it, only corrections in the data if something is wrong.

3 days before the signing, we came to see our future home, whether it is already cleaned and ready for new owners - FOR US :). I have to say that everything was perfect and he was really very clean. I originally thought that the seller's realtor was handling it, but later I found out that the wife of the original owner makes a living as a cleaning lady, so it was actually really professionally cleaned 🙂

On the day of signing the purchase agreement (about 3 months after signing the promissory note), we first went to the bank (before signing the deed!) where we paid the tax, stamp duty and the price of the house. We received two checks (one for the tax payment and one for the house). In Madeira, the transfer is handled "hand to hand", house keys are exchanged for checks. This is a very secure method of transfer. And so it was off to the notary. There, Pedro read and translated the contract for us right before. We noticed a "small hiccup". The contract showed a different address than we had in the promissory note! We pointed this out but were told it was ok that it was happening! 🙂 Ok, so lets go on!

The notary used a projector to project the contract onto the wall, read it, and then we were supposed to sign it. We alerted again to a different address. The notary took a photo of the house and asked us if it was the house we wanted to buy 🙂 yes! Phew, relief. It was explained to us that because of the other (new) houses next to ours that they had built in the meantime, the originally nameless street attached to the larger street got its name 🙂

We signed, handed over the checks, got the keys and HURRREYYY to the new home. One man, one woman, one girl, a dog and a cat 🙂 The first night was very special. Everything echoed, there was a lot of fiddling and we couldn't sleep. We definitely couldn't say that we felt right the first night like at home in the house. We only started to feel at home after a few weeks. And today we love the house with all its flaws! We fulfilled our DREAM.

I definitely recommend sending multiple real estate agents with details of what you are looking for and with what goal and when do you have an idea of realizing your DREAM / need (for housing or investment)? This is important not only because of taxes, but also because of the atmosphere - the neighborhood. Try asking them to get in touch if a property that matches your intent comes up. If the realtor doesn't respond, there's no point in wasting your time with her.

There are plenty of them on the island and they have an incentive to interact with you. Once you have made your choice (based on communication, reactions, personal knowledge, etc.), you can arrange with her/him to tour an apartment, house or plot of land that is also offered by another real estate agent. As I mentioned in the paragraphs above, the real estate agents here work together (most of them), and when the real estate agent sees a property in another real estate agencies that his client might like, she arranges a viewing and the possible commission is split between the two real estate agents.

In effect, you will "make" someone you sit down with, who is comfortable with you, your "court" realtor and he/she will work for you.

Viewings
You can solve the purchase of real estate in several ways:

Choose the house / flat (apartment) or land of your dreams during your vacation
You can make the most of your time on your vacation and schedule as many viewings as possible in 1-2 weeks by yourself or with help with real estate agency (for example with me). It depends on you how focused you are on a specific location (this makes it better to search because you know what's going on, but it narrows the choice - price/performance ratio). If you don't mind the location, you have a clear budget, the possibilities expand, but ....

Extra trips to Madeira for sightseeing
If you don't manage to choose during your vacation, all you have to do is follow the current offers and respond whenever you see something interesting. But it is necessary to take into account that advertising is not always up-to-date. As I mentioned before, real estate agencies often leave advertising on general servers, they don't care about updating or once in a while. Properties appear to be available and in reality you have no chance of getting them. Therefore, before you buy tickets for such a property, either check with your broker the availability of the property of interest or try to contact the advertiser.

Another "threat" is that the property is under offer to the bank before you arrive, will be gone, or will no longer accept offers. It also happens that the property does not have a license, i.e. permission for residential use. A number of inconveniences are associated with this, as well as additional finances for its "legalization". Real estate agency will verify all this for you. I probably wouldn't go into buying a property directly with the owner, but it's up to each of us which path we choose.

Many things can be solved at a distance when you have someone you can trust or know. And this is another option to deal with the purchase of real estate. You can entrust someone to handle everything for you. Give him a certified power of attorney. It needs to be in Portuguese as a court translation (stamped). For example I have a few experiences with some clients, one of them is from the Czech republic (by buying a house in Arco da Calheta). He had the power of attorney translated and verified at the Portuguese embassy in Prague.

Real estate prices

In September 2020, when we started looking at real estate in Madeira, a 4-room house (which we had a goal to find - of course with a view of the ocean :)) could be bought for up to 300,000. EUR in very nice condition without the need for reconstruction. Under 200 thousand EUR with necessary reconstruction.
New houses in Calheta were around 500,000. EUR.

When we were ready and buying at the beginning of 2022, we already had to add 15 %. Some expected a drop in prices after the coronavirus, but as a result of not only the pandemic, but also world events such as inflation, expensive energy, migration and wars, there is still significant interest in the islands from all over the world. So the judgment about the price drop was not correct. And in my opinion, the interest is certainly not going to decrease for now. Thanks to significant climate changes, I am convinced that the opposite is true. Madeira belongs to the subtropical zone, where the climate is mild all year round.

Today, I believe that real estate prices have reached their peak for now (2023), rising by another tens of percent in some locations from 2022. But now another significant rise has stopped. The question is whether there will be a decline. For some properties sure, because the owners are testing what the customer is willing to pay and they know that Madeira is on course and if they are in no rush to sell it is hard to get them to change their mind. It's another thing if he's motivated to sell, such as because he's getting a divorce. So it's a little bit about luck. I always talk about a discount for my customers and look for arguments to negotiate. The worst that can happen to you is being rejected, nothing worse 🙂

As for luxury new buildings with a view of the sea or even directly at the ocean, prices range from 400 thousand for an apartment. + and for the house 700 thousand EUR + (year 2023). If the property is attractive (condition, view, location, price), you need to make a decision quickly, in a matter of days. Often the property doesn't even make it onto the real estate servers, it's gone within 2 weeks.

A mortgage option in Portugal / Madeira?

Yes, it is possible. Its amount is calculated according to age, the mortgage must be repaid by a maximum of 70 years of age. Compared to the Czech Republic, there are very low interest rates, something around 4% max. You need to have at least 30% of the value of the property in cash. Of course, a lot of documentation needs to be supplied. I can help you with that or any other realtor you choose.

Got your property selected and what's next?

Negotiate the price - as I already wrote above, we have been following real estate prices for a year and we have noticed that sometimes the real estate will go down (but at other times it will go up again). That's why we at least tried and based on the advice of Pedro from QUALI, we made an offer 10% lower. The owner did not agree to this, but in the end it was at least 4%.

The house we chose was priced slightly outside of our planned budget. Other costs need to be added to the price, such as real estate acquisition tax, stamp duty, notary. You can try to calculate these expenses yourself: HERE

For my client we prepare everything before making reservation (promissory).

Who can buy the property

Of course, anyone who has the finances or is approved for a mortgage can buy a property. My point is to describe whether spouses can buy separately. Yes they can. They do not have to buy into the joint assets of the spouses. BUT if he/she subsequently wants to sell the property in the future, the other significant other must also agree to the sale 🙂

Of course, it can be dealt with by dividing the property of the spouses. I've already solved it too. For this case, there must be a court translation into Portuguese of the relevant document with an apostille (clause). So you will need someone to professionally translate the documents for you and then give an apostille, i.e. will confirm the authenticity of documents and signatures.

If one is single or divorced, it is simple. To become a property owner in Madeira you need the following:
IT PAYS ITSELF FOR EVERYONE 🙂
NIF, bank account in Madeira (or Portugal), passport and money.

NIF – Número de Identificacao Fiscal

The first step is to arrange a NIF, a tax number, which everyone who lives in Madeira or owns or does business here must have. You need it for meetings at offices, for business - deductions of expenses, for taxes, insurance, in short, everywhere you need to arrange anything. In short, you can't buy anything without a NIF. They will assign it to you at the financial office. For this you need a passport and ID or proof of payment for example electricity, in short something from which they can read your permanent residence (it is not in the passport, so another proof).

A real estate agent can help you with this. In Funchal (at La Vie) there is no setup fee (2023) and it's fast, within 15 min. done. But in Calheta, for example, they wanted a fee of 10 EUR/person. Tax office in Funchal HERE.

Opening a bank account
You can choose the bank yourself. You can, for example, compare monthly fees or what products it offers. Or if you are going to take out a mortgage, then according to the offer, interest rates, and friendliness of the bank. We consulted NOVOBANCO. It is not one of the cheapest banks, but it is said to be friendly to the foreigners. The monthly fees here are 7.90 EUR. Then nothing more is paid for withdrawals and orders - from any ATM. Security seems fine to me - logging in through the web interface with the assigned personal number and PIN, but it is displayed differently each time, so the digits are never in the same place.

Opening an account is simple (so be sure to ask for an English-speaking banker). You need the following documents:

NIF, passport or national ID (they prefer a passport because they need to check your signature), confirmation in English of employment / cooperation if you are an extern, for example, or the last tax return. They wanted nothing more. Because I didn't have the confirmation in English with me, we only had statements from the Czech bank for the last 6 months (as proof of income) and that wasn't enough for them, they prepared an account for us, saying that as soon as I send a confirmation of cooperation by email after returning to the Czech Republic ( that I have income), they will approve and open the account. Which happened the next week after returning. It is necessary to take into account the first deposit, which in NOVOBANCO is EUR 250. On the spot we signed a stack of documents in Portuguese, got our card PINs and an access card with internet banking codes and off we went.

The whole process at the bank took us about an hour, maybe an hour and a half.

How about taxes and fees

It is calculated from the price of the property and is 0-8% of the price. It depends on whether you are buying the property for yourself to live in or as an investment. The amount of tax is further determined according to the price, i.e. for cheaper investment properties you pay only 2% of the price, but for example for expensive properties (approx. EUR 359,000 - EUR 688,000) you pay almost 8% of the purchase price.

The process of buying a property in Madeira - bullet point summary:
(my personal experience and experience from dozens of properties sold for the year 2023):

1. Selection of property: according to budget, location, intention - what do I have in mind with the property (living, investment)

2. NIF - establishment of tax identification number at the Financial Office (passport and other document with address: e.g. citizen card)

3. Establishing an account number - passport, national ID card, confirmation of taxable income or confirmation from your job or the company you work for and an initial deposit of EUR 250

4. Reservation contract (promissory) - payment of 10% - 20% of the price (often to the owner's account, but it can also be arranged to the RK's account) or you have the option to pay a notary deposit. Payment must be made usually within 5 working days, otherwise the booking contract is void and you start over.

5. Dealing with any other matters connected with the signature (if necessary for other reasons - for example, one of my clients sailed across the Atlantic for a month and it was not certain whether, for example, due to the weather, he would be able to arrive on time for the signing of the deed or the signing of the deed - purchase contract at the notary, only one of the spouses can participate) - then it is necessary to ensure: Power of attorney, translations of the necessary documents - such as the divided assets of the spouses, etc.

6. Payments at the bank on D-day - signing the purchase contract: stamp duty, tax + payment for the property minus the deposit paid (have the confirmation of the payment of the deposit with you to sign the deed) - you will receive two checks from the bank (tax paid and the value of the property minus the deposit)

7. Signing the purchase contract (deed)
8. Delivery of checks by the seller and keys of the house / apartment to you
9. Payment of the notary's fee
10. Transcription to the cadastre - it takes 3 weeks (Real estate agency will take out the online registration and send it to you, or request it), physically in our case it took 7 weeks to receive it. In other cases that I dealt with, it took a similar 5-6 weeks (physically, when you also receive the original purchase contract, until then you only have a copy with you).

WHAT are the costs in the buying process?

Realtor's commission - EUR 0 (paid by the seller)
NIF - 0 to 10 EUR
Taxes – 1-8%
Stamp duty about 1.5-2%
Notary - 300 - 1000 EUR (depends on the value and type of property) - Real estate agency will calculate exactly how much for the selected property before you sign anything

Helpful links

Idealista

Green-acres

James-Edition

QUALI real Estate

NOVOBANCO