Buying Guide Details
Buying Property on Madeira/Porto Santo
Where to buy property on Madeira/Porto Santo
A beautiful climate all year round is just one of the qualities that have drawn property buyers to Madeira over the years. Located about 500 kilometres from the coast of Africa, Madeira and its neighbour Porto Santo are in fact the two inhabited islands of a small archipelago. The British have featured heavily in the history of Madeira for over three hundred years, and it is a well-established holiday destination where English is widely spoken.
Most of the development is on the south coast of the island. The capital is Funchal, location of the international airport and where the city climbs into the mountains from its harbour, a popular stop for transatlantic ocean liners. With such a well-developed tourist market there is little room for new schemes, though some do exist, but resorts such as Calheta and Ponta da Sol are popular coastal destinations. Some development has taken place on the wilder northern coast, for example at Porto Muniz.
There are two golf courses on the island – the climate makes it a pleasure to play a round whatever the time of year, and the PGA Tour includes an annual visit to the Santo de Serra club for the Madeira Island Open. Known as the ‘Pearl of the Atlantic’, Madeira is a lush place, rich in flora and fauna, most of which is environmentally protected, where property prices are high by Portuguese standards, though perhaps not as high as some parts of the Algarve.
Porto Santo is a relative newcomer to the property scene. Situated just a 15-minute flight from Madeira, its greatest asset is its nine-kilometre long sandy beach, though two Seve Ballesteros-designed golf courses, along with several property developments, look like providing it with a bright future for the more intrepid overseas property buyer.
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The Process of Buying Property on Madeira/Porto Santo
- The first step is usually a verbal agreement between the property buyer and seller, after which the property buyer’s lawyer should carry out all necessary checks – title, building licence, etc
- A preliminary contract is then signed, which lays out the terms of the sale, including the completion date. At this point a deposit is paid, usually of 10%. This deposit is forfeited if the property buyer backs out, and if the seller withdraws he/she must pay the property buyer double the value of the deposit, i.e. 20%
- On completion both parties sign the deeds (escritura) in front of a notary and ownership is transferred. The balance of the purchase price plus all fees and taxes must be paid before the escritura can be signed
- As soon as possible after signing the deeds, the transfer of title should be lodged in both the land registry and the local tax office
- If buying property on Madeira/Porto Santo off-plan, a smaller deposit is usually required, followed by stage payments. This depends entirely on the developer
- When buying property on Madeira/Porto Santo that is resale, make sure a survey is carried out in addition to usual checks.
Homes Overseas Property Club
Homes Overseas has joined forces with a collection of IFA specialists to form the Homes Overseas Property Club (HOPC), designed for existing and prospective overseas property homeowners.
The Club – which has access to international lawyers in no fewer than 43 different countries - has been set up in order to guide people through some of the various issues relating to buying and maintaining a property overseas. It offers advice on a range of topics, including financial, legal, insurance, taxation, property management and foreign currency matters.
For further information please telephone 0845 838 7142 or email info@homesoverseaspropertyclub.com
Fees & Taxes
- Transfer tax can be anything up to 8% depending on the value of the property on Madeira/Porto Santo. This must be paid before the final documents are signed
- Legal fees tend to be around 2%
- Agents’ fees can be anywhere between 1% and 10%, although the average is around 3%
- Allow around 2.5% for notary and land registry fees and up to 0.8% for annual local taxes
- Fees and taxes can vary greatly depending on the municipality, so be sure to get your lawyer to check out the relevant legislation thoroughly
- VAT at the current rate of 19% may apply. Get your lawyer to find out what fees this affects.
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