In the immediate aftermath of the Brexit vote in the UK, uncertainty loomed over the impact it would have on the rights of UK citizens to purchase property and reside in Portugal. With the full effects of Brexit becoming evident at the end of 2020, there has been ample time to assess the implications. If you're contemplating buying property in Portugal but remain unsure about your status post-Brexit, Noble has compiled this informative guide to provide you with the essential information.
To begin, here's a quick summary of the situation: the good news is that things are not as different as many had feared. Portugal's allure remains as strong as ever, and its welcoming approach to foreign investment and immigration from outside the EU has extended to British citizens seeking to invest in property post-Brexit.
Has Brexit Affected My Ability to Purchase a House or Obtain a Mortgage in Portugal?
No, it hasn't. Portugal has no restrictions on foreign nationals investing in property, which means that even though the UK is no longer part of the EU, you can still buy property just as easily as before. Mortgage decisions are primarily based on affordability and your capacity to repay any loans, so Brexit hasn't affected your rights in any way. Additionally, as a UK resident, you can still access visa and residence schemes, making Portugal as accessible as ever.
Now, let's delve deeper into the specifics.
What Are My Rights for Visiting Portugal? Travel and Visas
Brexit marked the end of free movement and unrestricted access to other EU countries for UK nationals. However, this doesn't mean you can't make a permanent move to Portugal. British holiday homeowners can spend up to six months a year at their Portuguese residence without encountering visa issues. The 90/180 day Schengen Area rule applies, allowing you to spend up to 90 days in any six-month period, a practice that many were already following before Brexit.
The difference now is that if you plan to stay longer or make a permanent move, you'll need to apply for a visa. Fortunately, there are numerous options and specialists available to assist you.
D7 Residence Visa for Foreigners
Retirees or early retirees who receive a pension or other income from the UK (or outside Portugal) should find it relatively straightforward to obtain a D7 Visa, often referred to as a Retirement or Passive Income Visa. The D7 visa has been a popular choice for foreign nationals with a stable income source looking to settle in Portugal and obtain residency. It is particularly favored by retirees with a regular pension income considering a move to Portugal, but it can also be utilized by individuals with consistent income from real estate or financial investments.
This visa allows foreign nationals of any age to enter Portugal and establish residency, provided they can demonstrate self-sufficiency and independence from benefits during their stay. D7 visa holders are not permitted to work in Portugal, but it is suitable for digital nomads or entrepreneurs earning income from abroad. The application process typically begins before your arrival in Portugal, requiring you to submit an application at the Portuguese Consulate in the UK. If successful, you can travel to Portugal, and within four months of your arrival, you should apply for a residency permit. After five years, you become eligible for permanent residency status, and your family automatically gains inclusion in your new residence permit, granting access to healthcare, education, and the right to work in Portugal.
Another option, suitable for high-net-worth individuals, especially mobile entrepreneurs who don't plan to spend much time in Portugal, is the Golden Visa program. Portugal's Golden Visa is among the world's most popular immigration schemes. It grants non-EU nationals a five-year residence permit by investing in property worth 500,000€, with the opportunity to apply for permanent residence after meeting certain criteria during their stay.
While obtaining a Golden Visa requires significant capital investment, new eligibility rules were introduced in some regions this year. Nevertheless, it remains a valuable avenue for third-country nationals, including Britons, to obtain EU residency status, which comes with the privileges of Portuguese residency and freedom of movement within the Schengen Area.
Contrary to fears, newly arrived Britons can access healthcare in Portugal with ease after Brexit. British pensioners moving to Portugal can automatically utilize Portugal's national health service, known as Servico Nacional de Saude (SNS), from the moment they arrive. To do so, you need to obtain your S1 form from the Overseas Healthcare Service before departing the UK and register with the local SNS office upon arrival.
The SNS is highly regarded worldwide and operates as a residency-based (universal) health service, allowing all foreign residents to apply for it once they have their formal residence permit and tax identification number. Some services come with nominal fees, such as €5 for a GP visit or €15 for an emergency room visit. Private healthcare is often preferred for specific procedures or to avoid waiting lists.
British individuals applying for a visa (e.g., D7) to move to Portugal need to provide proof of annual private medical insurance during their application. This coverage is essential to address their health needs until they attain formal residency status and become eligible for the SNS. Pensioners can usually rely on their S1 form for this purpose.
Beyond travel, property, and healthcare considerations, relocating to Portugal could substantially reduce your annual tax liability. Portugal offers an appealing Non-Habitual Residence (NHR) regime, open in 2022, designed to attract new foreign residents through low taxation. To qualify, you must meet Portuguese residency requirements and not have been a resident for the five years preceding your application. The benefits are generous, including the exemption of most foreign-sourced income from Portuguese tax for ten consecutive years after your arrival.
Under the NHR, British expats can potentially enjoy tax-free income from UK rental properties, capital gains on real estate, interest, dividends, and non-Portuguese employment income. Even foreign pension income is subject to a mere 10 percent tax rate under NHR, excluding UK Government pensions.
Attractive Mortgage Rates
The economic conditions across Europe make 2022 a favorable time to consider a euro mortgage for property purchase. With the European Central Bank's Euribor remaining in negative territory, Noble Homes Mortgages can currently negotiate mortgage rates with local banks as low as 0.8-0.9 percent for clients. In some cases, rates around 0.5 percent are achievable, and clients can secure loan-to-values of up to 80 percent, necessitating only a 20 percent deposit to acquire their dream Portuguese home.
These deals, coupled with the weakened Pound, make a Portuguese mortgage an appealing option even for Britons contemplating an all-cash purchase. It minimizes exposure to exchange rate fluctuations and offers the flexibility to pay off the mortgage when the Pound strengthens.
More Savings in Your Pocket
Chances are, if you embark on a new life in Portugal, you'll have more disposable income each month. This isn't just due to potential tax savings but also because of lower day-to-day living costs. Portugal has historically been an affordable place to live compared to the UK and other Western European countries. Recent statistics from Numbeo indicate that as of January 2022, Portugal ranks as the 64th most cost-effective country to live in globally, with costs trending downward from from the previous year when it ranked 50th.