The Portuguese real estate market continues to be one of the most attractive in Europe, not only for residents, but also for foreigners who see Portugal as an ideal destination for living and investing.
Recently, a new phenomenon has been gaining momentum: young foreigners are using the public guarantee program for housing loans, which was previously designed to help younger people buy homes in Portugal.
What is the public guarantee for mortgage loans?
This mechanism allows young people up to the age of 35 to buy a house with more affordable bank financing, benefiting from a state guarantee on part of the loan. The initial aim was to facilitate access to housing for young Portuguese, especially in a
context of high prices and difficulties in accessing credit.
However, foreigners living in Portugal are also entitled to this benefit, as long as they meet the required criteria. As a result, demand for property from young foreigners has been on the rise, further shaking up the Portuguese housing market.
The impact on the real estate market
Increased demand – Portugal continues to attract foreign residents, and the possibility of obtaining easy financing means that more young people are opting to buy a home rather than rent. According to Eurostat data, almost 40% of foreign residents in the European Union are homeowners, a trend that is also reflected in Portugal.
Pressure on prices – Growing demand from foreigners may contribute to appreciation of real estate, making home buying even more challenging for young Portuguese competing in the same market.
Profile of foreign buyers – According to the National Statistics Institute (INE), foreigners currently account for around 11% of real estate transactions in Portugal. The French, British and Brazilians top the list of international buyers.
Who can benefit from this public guarantee?
The public guarantee scheme is aimed young people up to the age of 35, including foreign residents, provided they meet certain requirements, such as:
- Be a tax resident in Portugal;
- Prove financial capacity to take on the credit;
- Do not own any other properties in the country.
With the new market dynamics, understanding these rules is essential for any young person, Portuguese or foreign, who wants to invest in a property in Portugal.
How can we help?
Accessing finance can be a complex process, especially for foreigners who are unfamiliar with the rules of the Portuguese banking and tax system. At LACA we provide specialized legal advice to help young foreigners and Portuguese understand the legal requirements of buying a house.
If you are considering buying a property in Portugal and need support, please contact us.
