Madeira

Buying a flat in Madeira – story & process

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Purchase of flat T2 in Funchal

In this article, I would like to describe in detail everything about buying an apartment in Madeira – information and various tips about real estate agencies, prices, the rest of the purchase process after arriving in the Czech Republic and in the end I will briefly summarize the whole process.

If you are considering buying an apartment abroad, this information and tips can certainly be useful for you, whether you are buying a property in Madeira or elsewhere. E.g. in countries like Spain or Italy, the process is similar (at least according to what I read…).

I have already described the story of how a dream to buy an apartment in Madeira appeared and about chosing the apartment during our February visit (02/2020) – if interested in this story, you can read my article Madeira Island 02/2020 (https://lenkacestounecestou.cz/en/madeira-island-02-2020/).

In general, buying an apartment in Madeira is not a complicated process for the buyer because the real estate agency helps with everything, they go with you everywhere and you do not have to solve anything yourself. It was a little easier for me because I speak Portuguese but even if you don’t speak Portuguese, it’s not a problem, the real estate agents speak English, bankers at the bank sometimes don’t but there is always someone who speaks. So when setting up your bank account, insist that you want someone who speaks English. In fact, sometimes my knowledge of Portugues made it difficult for me because I have no problem speaking, I can always say what I need, but with some people I have trouble to understand and when they saw that I spoke Portuguese, they didn’t try very hard and wanted to speak Portuguese.

If you do not dare to buy yourself, you can use the help of an agency (for Czech republich I found Czech agency / real estate agent, Vít Klíma reality (https://klima.cz) on the Internet, but I did not even think about it, because I did not want to pay an additional fee to the Czech real estate agent.

There is also a described purchase process on their website – (in Czech) https://klima.cz/nemovitosti/jak-spravne-koupit-nemovitost-v-zahranici/sedm-kroku-pri-nakupu-nemovitosti-v-portugalsku/

All I will describe is of course our personal experience, it is not an exhaustive list of all options, there will be always more options for solving the respective matter.

Real estate agencies & real estate servers

If you are considering buying an apartment, I definitely recommend going through real estate agency, in fact, the vast majority of offers are through real estate agency. I recommend checking not only real estate servers, but also real estate agencies website as well.

The flats are marked differently than in our country, according to the number of bedrooms – so T1 has 1 bedroom and a living room, so it corresponds to our 2 + 1 (T2 = 2 bedrooms + linving room, T3 = 3 bedrooms + living room)

 

Real estate servers

We were checking mainly the following two, I noticed that the vast majority of offers are here:

https://www.idealista.pt

https://casa.sapo.pt

I also occasionally glanced at other pages, but I never found anything new here:

https://casa.trovit.pt

https://www.imovirtual.com

https://www.properstar.pt

 

Real estate agencies

There are many of them in Madeira and it often happens that one apartment is offered by several real estate agencies at the same time, now there is one not very nice where a reconstruction will be needed and this one is advertised in about 13 real estates at once…

We have the best experience with Era real estate agency, through which we bought the apartment. In fact, we were checking often Era website before arriving in Madeira, we saw that they had a good offer, often exclusive, i.e. often they had an offer that other realtors did not offer. And it is good to watch their website directly, not all of their offers were on the above-mentioned real estate servers. We learned from our real estate agent that Era is the largest real estate not only in Madeira, but in the whole Portugal. Our real estate agent João Pedro speaks perfect English, the communication with him was very smooth and he is very helpful and has a great approach to clients so I can recommend him for any kind of service within real estate, below you can find a contact for him:  

Era https://www.era.pt/

João Pedro Rodrigues – prodrigues.funchalforum@era.pt

https://www.era.pt/funchalforum

We also had a tour through the following 2 real estate agencies, they also spoke English well. Communication with these was good, I managed to arrange a tour before arriving in Madeira:

Pink real estatehttps://www.pinkrealestate.pt

Prediguíahttp://prediguia.pt/

Other realtors

Here are a few other real estates whose websites I was checking sometimes but of course there are many more…

https://www.7mrealestate.com

https://www.kwportugal.pt/

http://hihome.pt

https://www.remax.pt

In general, the problem was that most of them did not even reply to my e-mail when I wrote to them 1-2 weeks before leaving for Madeira to arrange a tour of a flat we were interested in. Everyone started to make effort only when we were in Madeira in person. But I definitely recommend not to respond only to the offers of real estate servers and real estate agents, it works similarly as in my country – not everything is on their website and in real estate servers, and also not everything is up-to-date on the servers. I kept records and wondered how many flats had been there for several months. But when I asked for a tour of 6 flats before arriving in Madeira, all these flats were already gone or booked (either they didn’t even answered to me and the flat only suddenly disappeared from the real estate server or the word “reservado” (booked) appeared in the photo or they wrote me by email that the apartment is already booked).

During our visit we saw in total 3 apartments and none of them was on offer on the website of real estate agency or real estate servers (one real estate agent said that the owner is getting divorced and still does not want to publish photos – the advertisment appeared on the web after 2 months only, another one was an apartment from a bank that the realtor had actively searched out when she saw that we had arrived in Madeira, and the last one we had bought was not yet on offer because the price was too high and the realtor was trying to persuade the owner to reduce the price and was about to put it on website).

So I definitely recommend trying to send an email to as many realtors as possible with a description of what you are looking for and ask them to put you in their database and contact you when something appears. If you see that there is a real estate agency with which there is a good communication, you can agree with them if they can arrange a tour of the apartment offered by another real estate agency. You can do it this way especially in case other real estate agency will not respond to your request for a tour. Realtors here work together this way, and when a realtor sees another apartment in another real estate that his client might like, he informs this real estate agency that he has a client who might be interested and arranges a tour and they share any commission if the deal is done. Sometimes they write it themselves directly in the advertisement and even one real estate agent told us that she can arrange for us a tour for a flat advertised in another agency. She said that if we see an offer in another real estate agency, we can contact her and she would arrange a tour for us. At that moment, I was planning to take advantage of her offer, when I saw how realtors often do not even answer but I did not expect to find a flat in a few days directly across Era, with which we were also in contact.

Tours

What would I do differently? I would rather not write to realtors, but rather call them so that they see real interest. In fact, even in the Czech Republic, it works this way that the real estate agent sometimes does not even answer the e-mail when he has enough people who called to the agent. I didn’t call because we didn’t take it seriously yet, the original purpose of our February visit was just to take a look at Funchal and talk to the realtors and buy later in about 3 years. But the apartment we chose was so nice and completely renovated (in the financial limit we had the flat was not reconstructed in most cases) and for a decent price, so it was not possible to let go such offer. And especially when I saw the amount of coincidences during our stay, this apartment was probably destiny (if you are interested in more info, then take a look at the article Madeira 02/2020 https://lenkacestounecestou.cz/en/madeira-island-02-2020/)

But of course, it is possible to write just via a response form or by email to arrange a tour. But as I mentionned, I would recommend to call. Do not worry of a language barrier, realtors often speak English, eventually they will connect you to someone who speaks English.

I would say that buying an apartment (summer flat) can be solved in two ways

1. Choose an apartment during your vacation

You can either go for holiday to Madeira and in 1-2 weeks get as many tours as possible and hope that you will be able to choose a flat. It depends on how much you are limited by the location, whether you don´t care about the location or you have chosen a very concrete location like us (I finally chose Funchal – Sao Martinho – Nazaré due to good accessibility and reasonable price, so we were actually limited to a few streets, so the offer was not very big and it was a real coincidence that something had just appeared).

2. Extra trip to Madeira for a tour

And if you were not able to choose a flat/house during your vacation, then you can watch the offers and react whenever you see something interesting. But before you go to Madeira for a tour of a flat, I recommend finding out more information remotely because realtors often do not provide complete information in advertisements – e.g. the apartment is often without elevator and the information is not often mentioned in the advertisement. Or when the bathroom or kitchen is ugly, they often don’t put the photo on the website. Bathrooms and kitchens often require a reconstruction, so it’s good to ask for more photos so you don’t go to Madeira just because of a tour and then you find out that the bathroom or kitchen is in terrible condition and renovation will require additional costs. … Sometimes it is not even mentioned in the advertisement that the apartment is the property of the bank, so I definitely recommend checking this, it certainly does not make sense to come for such a tour from another country because before you get there, it will be gone or they will no longer accept offers.

So if you found out a flat while being in your country and you would go to Madeira just because of the tour of flat, I recommend to buy quickly the flight tickets and leave as soon as possible (actually, it will probably be better to buy a last minute trip with a travel agency, I was checking a bit flight ticket prices and if you want to fly in a few days, the tickets are really overpriced, I saw tickets with a change in another city for 555 – 926 EUR (15 000 – 25 000 CZK), so a last minute trip from the travel agency would be definitely cheaper). I also recommend trying to book the apartment – our realtor Joao Pedro said that it is possible to book it and that he definitely recommends it, because if the apartment is for a decent price and in a good condition, then it is definitely not certain whether it will still be available in a week. So it is possible to book the apartment, but a refundable deposit must be made. In Era it is 10% of the purchase price and if one does not decide for this apartment in the end, the reservation deposit will be returned to you.

As I mentioned, kitchens in particular are often ugly and bathrooms as well. What I saw from the photos, I could live with it (I’m not very demanding), but sometimes it really required a reconstruction. Originally we were supposed to take another apartment from Pink real estate, but in the end we have not managed to buy it (this one was for a very low price – 70,000 EUR but kitchen renovation and a partial bathroom renovation were needed and they said they would arrange everything for us. They would made an offer with a budget and we would just decide if we want to go for it with them and then we would not have to arrange anything ourselves … so probably the reconstruction would be possible to arrange somehow by distance….)

Elevator

As for elevators, in neighborhood we chose there were quite a lot of apartments without an elevator. Somewhere they was an elevator, somewhere not, and somewhere a project for their construction was currently underway (each house there had a pre-prepared space with a shaft). I thought that if we bought an apartment in the 3rd or 4th floor, I definitely wanted an apartment with an elevator. But in the end, I’m glad we don’t have these higher floors because I noticed that some houses had an elevator but it broke down and they didn’t fix it, and they just stacked flower pots in front of the elevator to show that it didn’t work. People probably don’t pay it themselves from the repair fund as in our country but the city pays it, so they probably have to wait until it’s their turn, depending on the budget…

Parking

Sometimes an apartment appears in Funchal, where an underground garage is included in the price, of course, the price is often higher. But there is really no need to focus on apartments with a garage, for example in Sao Martinho in particular, parking is really ok and when we parked with our rented car, it was never a problem to park, there was enough parking places available.

 

Prices

During 1 year we were checking the real estate servers (02/2019 – 02/2020), the prices of ordinary T2  flats (2 bedroom flat) in Funchal were between 75,000 – 100,000 EUR. Well now some 75-85 000 EUR is not very realistic, prices have risen and let´s see how the coronavirus will influence the market… At the beginning of 2020 it was possible to get an apartment for 75 000 – 85 000 EUR only if it was, for example, 4th floor without an elavator (these are cheaper) or really bad condition with the necessary reconstruction or an apartment from a bank, where one will „fight“ with other interested people and it will be needed to offer a higher price to get the flat.

But of course luxury new buildings with a sea view are very expensive, they cost even 200-300,000 EUR, sometimes even more, 500,000 EUR.

Our realtor Joao Pedro was very nice and told us a lot about the Madeira real estate market and the purchase process. In fact, we came across him by accident, we had the real estate agency Era not far from our accommodation, so we went there once and we met Joao Pedro there. He said that prices are rising fast enough, especially the cheapest ones up to 100,000 EUR. He explained it following way:

Price up to 100,000 EUR – grows the most (we also wanted to buy in this price level)

100 – 250 000 EUR – here it is still growing

250 – 500 000 EUR – here it is said that the price is quite stagnant

Prices above 500,000 EUR – here the buyer is probably rich and the price is not important for him

He said that with those flats up to 100,000 EUR the client must be very fast if the flat is in good condition and with a lift.

We also asked him what it looked like with flats where owner is bank. It was sometimes mentioned in the offer that it was the bank’s property. In such a case, it is the confiscated property of those who were unable to pay the mortgage. These apartments are often for a good price, but it also may not be the final price. It is not enough to be the first one to say YES but they are supposed to collect offers, which they assess then and choose to whom they will sell it, and it is often necessary to offer a higher amount when there are more people who are interested. He also said that there is actually a disadvantage not to take a mortgage (which we certainly did not want to take in a Portuguese bank), because the ideal candidate for them is the one who takes a mortgage through their bank and therefore overpays on interest, so they earn more than when someone has a cash. Well, we were supposed to buy a bank apartment through Pink real estate first, but they didn’t tell us about it, they presented it by buying an apartment for the offered price of 70,000 EUR. The apartment had only new floors but otherwise a kitchen needed a complete reconstruction and the bathroom would require at least a partial reconstruction. Thanks to that price, we decided to buy it because even with the amount for the reconstruction, it would still be a good price. But in the end it didn’t work out, the next day we went to sign the documents to the bank and open an account in Santander (you have to make an account in the bank that offers a particular apartment and the money is sent directly from your own account in this bank to their account). When we were standing in line to open an account there, they called the realtor that they were not accepting any more offers. Only at this point she told us that they accept more offers and then analyze the offers and assess to whom they will sell it. After this experience, I saw that trying to buy a similar apartment from a bank by distance from the Czech Republic would not really make sense. Before one arrives in Madeira, they might not even accept offers, and even if they did, one would not be sure that they would give the apartment to someone else in the end. And it is interesting that in the end they have not sold this apartment yet, because the flat appeared in about 2 months in another real estate agency on the website and for a significantly higher price, it was originally for 70,000 EUR and now it is on the web for 87,000 EUR. We also had originally arranged a tour of the  T2 apartment in Amparo before our departure to Madeira, also a bank apartment, and the day before the tour the agent canceled the tour because it was already gone.

I wonder how prices will develop now during the coronavirus period, if they will go down. But in any case, we are glad that we managed to buy it in time, because even if the prices went down, the EUR exchange rate is very disadvantageous now, and every tenth of that amount will make quite a lot of money…

 

Commission

Prices on the websites already include a commission, which was a very pleasant surprise for us.

 

Mortgage or savings?

At first I never dreamed that we could buy an apartment abroad, because I thought it would be something terribly expensive and inaccessible to us. Then I found out that the prices are decent, but I thought that it would not be possible to arrange the mortgage, so we originally planned to buy an apartment just before retirement, when we have enough savings…

But then we found out that it can be solved with a mortgage, the so-called American mortgage, which is non-purpose and therefore you don’t even have to prove what you buy with the borrowed money. But it has one catch, in order to take an American mortgage, you need to have another property to pledge in the Czech Republic. Komerční banka lends 70% of the price of the property estimate that you are pledging, for the rest it is needed to have savings. This is the easiest solution if one wants to take out a mortgage.

I don’t know if a standard mortgage could be taken in the Czech Republic, if it would be possible to pledge flat in Madeira but it seemed that this option is not possible and they offered us the option of an American mortgage.

A mortgage with a Portuguese bank would probably theoretically work (we didn’t find out), but we didn’t even think about it. Especially when I saw what was needed to prove just for opening an account, I do not want to see what a foreigner would have to prove in order to obtain a mortgage from a Portuguese bank.

We have a chosen an apartment. What’s next?

 

Price negotiation

We were watching the prices for a year and we saw that sometimes the real estate agency reduced the price. We thought we would at least try to negotiate but we didn’t expect that as foreigners we could manage to negotiate something.

The price of the apartment we chose was at the limit of our budget but we knew that we could possibly take it for the offered price. We talked about our situation and budget with our realtor and said that the offer came a little earlier than we expected. We secretly hoped that he would suggest himself that the price can be negotiaged. He then suggested that we could try to make an offer for a lower amount, for example 5,000 EUR lower or even 10,000 EUR lower, and maybe we would meet somewhere in the middle.

We thought they would verify something like this just verbaly with the owners but here the price negotiation probably works a little differently. So my husband and I decided to try to make an offer 10,000 EUR lower than the original price. We did not expect to be able to negotiate this amount but we hoped that we could meet somewhere in the middle and save 5,000 EUR. So, in the evening, we called Joao that we would like to make an offer with an amount 10,000 EUR lower and he said that it is needed to write it down in written. So he invited us to his office and we officially wrote it down and he was supposed to talk to the owners the next day if they would accept this offer. As I expected, they have not reduced by 10,000 EUR but we met in the middle and the price was reduced by 5,000 EUR, which was very pleasant 🙂

So I definitely recommend trying negotiate the price. Also, when it is an apartment that was not advertised, it’s hard to say if they didn’t try to increase the amount themselves and then pretend that they are willing to go down with the price and the buyer will be satisfied that he negotiated something. Hard to say… but recently we saw that the first apartment we visited in Madeira which was offered to us for 90,000 EUR (it was not in the advertisement), appeared in real estate server in about 2 months and it was already for 85,000 EUR, so hard to say if the price was really reduced or if they just tried to sell it to us for 90,000…

 

Joint property of spouses

I understood, that if a person has a property in the mode of joint property of the spouses, then it is necessary that the apartment is bought again by both. My husband didn’t care, and to make it easier, he wanted me to buy the apartment only in my name because he knew he wouldn’t be able to come for „escritura“ to sign a purchase contract, tranfer to the land register office, and paying the rest of money. So we asked if only I could be in the contract and in the land register office as owner, and we were informed that if we have common property by default, we have to buy it together again. They told us that my husband can give me a power of attorney if he cannot come in person. I don’t know if it really needs to be done this way but we didn’t want to complicate it, so we decided to deal with it through a power of attorney from my husband (in the end it was different, due to coronavirus and inability to travel, we gave the power of attorney to the realtor).

 

NIF – Número de Identificacao Fiscal

As a first step, it is necessary to arrange the NIF, a tax number that every Portuguese has and is used to act in the authorities. So without this you cannot really arrange the purchase of an apartment. It is set up at the Finance Office. The realtor will help you with the arranging it. We didn’t arrange NIF with Era because we were originally supposed to take a different apartment, so we went to Finance office with a different real estate agent. At Finance office, it went quickly and without complications. We just needed to provide our passport and ID card (they wanted a document showing the address of permanent residence)

The fee for setting up a NIF was 10 EUR / person. They gave us a paper with our NIF number. We settled the NIF for both me and my husband.

The Finance office can be found here – https://goo.gl/maps/EXgAxwz1x7nnwgEt9

 

Opening bank account

The original apartment we were supposed to buy was the property of Santander Bank, so we had no choice and we had to open an account here. But in the standard case, you can choose the bank you want.

So after visiting Finance office, the realtor took us to the Santander bank in the center of Funchal. There was a fairly large queue, we were waiting for about 30 minutes before it was our turn. While waiting, we learned that the bank was no longer accepting offers from those interested in the apartment, so we already knew at this stage that we will not buy this apartment from Santander. But the realtor said that as we were there, it would be better to open the bank account so that we would be ready for the next apartment when it will show up. She didn´t know that it would take a total of 2 hours… In the end we bought the apartment through another realtor, so we felt a little bad that the realtor spent about 3 hours with us and has not done a deal, but on the other hand, it was not our problem that the apartment was not sold to us… After half an hour it was our turn. Unfortunately, the banker did not speak English at all, so we had to deal with everything in Portuguese. And I didn´t understand well to her, so the realtor practically interpreted for me from Portuguese into Portuguese, I understood the the realtor without any problem. So if you don’t speak Portuguese, insist on setting up an account with someone who speaks English, even if you are accompanied by a real estate agent. You may need to deal with other things with the bank, and the one with whom you open an account is your banker and you communicate with him….

I was surprised how many things they want to prove just for opening an account when you are foreigner. I don’t know if all this is standard in all banks, but Santander wanted the following from us:

Passport / ID card

Confirmation of taxable income – the same we get in Czech republic from a HR / payroll accountant to submit a tax return in Finance office.

The last payslip

Personal confession” :p – then they wanted an statutory declaration from me (verbally and the banker made a written record) to learn where I work, what is my position, what is my gross income (converted to EUR), how much my husband and I have saved and where the savings come from (whether from savings or e.g. inheritance, etc.), whether we have our own apartment and whether there is a mortgage on it, what other assets do we have and what is the approximate value of these assets….

I really do not take a confirmation of taxable income on holiday but fortunately I work as an HR, so I just called my colleague and she sent it to me within five minutes and I forwarded it then by e-mail to the banker.

Fortunately, we already had electronic payslips, so it was sufficient to send the banker an email with the payslip.

Actually when I communicated with this real estate agent, what should we take with us, to be prepared if we will be able to choose an apartment and she told me that only ID card and passport and nothing else is needed. So to be sure, I would recommend taking as many documents as possible, preferably more payslips, maybe even the marriage certificate and employment contract… it’s hard to say if other banks have the same processes…

My husband did not manage to arrange these documents like me by distance while waiting in line, so we decided not to complicate it and I set up an account only for myself, so I could not settle him as a person who can use my account when he did not provide these documents but it will be possible to arrange on the next visit.

Then I had to sign a decent stack of various documents, of which I did not receive a single one, the banker kept everything. Then she gave me only one paper with the account number and IBAN.

It was also necessary to deposit at least 150 EUR into the account.

 

She still wanted to set up internet banking for me but somehow it didn’t work, so she just showed me how to do it and I did it after returning to the Czech Republic because it still didn’t work from my mobile phone either. It was necessary to fill in a few details and then immediately someone from the bank called me to complete the activation. Fortunately, they had someone on the line who spoke English. After all, I feel better with English about these important things.

All this, including half an hour of waiting in line, took 2 hours, uff… and it was just setting up an account. Can you imagine dealing with a mortgage in Portugal?

Even though this apartment didn´t work in the end, we were glad that we already had an account, but otherwise I definitely do not recommend Santander. It is a relatively oldfashioned bank with inflexible processes and later we had to solve several troubles (but I cannot judge whether it would be better in another bank).

In Santander it is needed to pay a fee of 6 EUR/month … Nothing that would ruin me but as I am not accustomed to pay any fee in modern banks in the Czech Republic, I didn´t feel happy about paying any fee. I didn´t ask for  payment card (another fee for the card), I prefer to set up an account in EUR for my account in the Czech Republic, and I will eventually forward the money there so that I can withdraw from an ATM.
Also, unlike our banks, the account is not very secure, when logging in it only requires a username and password, no further verification by phone is not there as I am used from banks in the Czech republic…
https://www.santander.pt

 

If you you have a better experience with other banks in Madeira where there are no fees, they have 2 phase verification when logging in or they have more flexible processes to be able to solve more things online via internet banking or over the phone, write please your tips to comments.

 

Reservation contract

(Contrato de Promessa de Compra e Venda)

In the end, we did not buy the original apartment but in a few days another and much better one appeared 🙂  The day before departure, we signed a reservation contract in real estate agency.

The reservation contract contains the conditions agreed by both parties (property identification, purchase price, method of payment and the name of the seller and buyer, etc.). In the event that the seller decides to withdraw the signed contract, he would have to return not only the advance payment we have already paid, but as a sanction also the amount of the advance payment (so actually double of the advance payment paid). If we eventually withdraw the contract, we would lose the advance payment (10% of the apartment price).

We received the Portuguese-English version of the contract, and the realtor (assistant) María began to read the whole contract in front of everyone. After reading it, we discussed a few more details and then proceeded to signatures. Except for the last page, each of them needed to be signed on each side of the contract up in the corner. Based on the reservation contract, we had to pay 10% of the purchase price directly to the account of the apartment owners (this surprised us, in the Czech republic it is done in a different way, we didn´t like it but as we didn´t want to complicate it, we agreed with it but I would recommend to others to do it another way… if something went wrong and if the seller would withdraw the contract but in the meantime spent our money how we would force him to pay it back to us including the penalty stated in the contract? We took the risk and everything went ok in our case but this is not a way I would recommend to others). Compared to our contracts, the contract was not so detailed, for example, it was not specified at all when we should send the money. After signing the reservation contract, we were relieved that now it should work and nothing should spoil the purchase. It was stated in the contract that it was necessary to complete the purchase process (escritura), i.e. signing the contract, record in land register office and handing over the remaining 90% of the price by cheque within 3 months. It is quite strange that the flow of money does not go through custody with a notary / lawyer as in the Czech republic. So this is another thing I would recommend to do in a different way than us, because the cheques became then a problem when we were not able to come in person for „escritura“ due to coronavirus and inability to travel. So a notary custody would be much better option.

We put to the reservation contract 3 months as deadline of the purchase process, even though we already knew that we had the money already available and we could make the purchase as soon as the owners had resolved connection to their apartment, which they were going to buy (we got information that they have already found a flat to buy). Good that we put there 3 months – because of the coronavirus, the purchase process lasted almost entire 3 months (without 3 days).

What we had to arrange after returning from Madeira?

When we returned from Madeira, it seemed that the purchase process would be very simple – as the  real estate agency helps with everything, I was just supposed to come to Madeira again and handle the so-called „escritura“ process (record in the land register office, signing the purchase contract and handing over cheques to the owners). And since my husband couldn’t come with me, I just had to get his power of attorney.

So a very simple process – NIF, opening an account, power of attorney, escritura and that´s it – very easy… But shortly after returning from Madeira everywhere began to increase the number of patients infected with coronavirus. At that moment, I never thought that the coronavirus would make everything so complicated… Initially I thought, fine, if they cancel my flight, I have a lot of other options as apart from Prague I can fly  from Vienna, Bratislava, or Katowice would be possible too, and in the worst case I would go to an airport in Germany… It really didn’t occur to me that they would forbid travel completely and all borders would be closed… What to do now? Fortunately, the realtor told us that we could get a power of attorney for her and she would arrange everything for us. The power of attorney has also become quite complicated, more information can be found in the Power of Attorney chapter.

 

Advance payment

According to the reservation contract, we were to pay a 10% advance directly to the owners’ account. It seemed strange to me that it does not go through notarial custody and a relatively large amount directly goes to the owners directly on their account. Well, we didn’t want to be too choosy to not complicate it, so we agreed. Right on Monday after returning from Madeira, I sent this money directly to the seller´s account.

Payment of the remaining amount to the owners

Payment of the remaining amount for the apartment shall be done through cheques. So I was supposed to send the money to my bank in Madeira, then they would issue the cheques and as soon as the “escritura” is done (record to the land register office and signing the purchase contract) the cheque would be handed over to the sellers. It seemed strange to me that it was not done through notarial custody but we agreed. If I had to deal with it again, I would insist on notarial custody because this become much more complicated due to coronavirus…

 

Exchange of CZK to EUR

Furthermore, right after our return, we had to find out how to effectively exchange such a large amount for EUR and send it to my account in Santander. We were trying to figure out how to get the best possible exchange rate.

The options we came up with were the following:

Sending from our bank account in the Czech Republic to Santander’s account – the exchange rate went up, so not a very good solution

Oberbank – after our return they had the best exchange rate of all banks, so we considered setting up an account here and sending money from there

Exchange office – one bank, where we also have an account, advised us that we can withdraw the money from them and go right next to the exchange office to exchange for EUR and then just deposit it into the EUR account… She said that in the exchange office they have a good rate and that they know they have high exchange rate in their bank. Well, we would save a lot here compared to the standard exchange rate at the bank, but even though the exchange office was right next to the bank, we didn’t want to carry such a package “in our pockets”.

Foreign exchange office online – another option was to exchange money in a foreign exchange online office. It works like a regular exchange office, but the exchange takes place online. They also had a very good exchange rate but the whole process takes about a week before they send the exchanged money. But we didn’t have personal experience, so we were afraid of this option when we hadn’t tried it and we didn’t even know anyone who had experience with it. There are more foreign exchange offices, we looked at this one – http://www.devizove-obchody.cz

Individual exchange rate of Komerční banka – we used this option. Although it’s not an interesting reading, below you will find a description of how it all went, maybe someone will find it useful. I don’t know if other banks offer it as well, but for larger amounts, the difference is so big compared to the standard exchange rate that it would be worth it just to open an account with KB if other banks did not offer this option.

In fact, we came across this possibility by accident, when my husband called another bank trying to find out how to send effectively a larger amount of money, so they told him that it is possible to arrange an individual rate for larger amounts. In the end, it was not possible at this bank, because the second time they told us that we had received incorrect information. But based on that, my husband tried to verify it with KB, where we have an account and we got information that it really works (for amounts over about 50 – 70,000 EUR). Our bank adviser gave us a phone number to the dealing department, where I called to find out what exchange rate they could offer me that day. The lady told me an amount, but she said I had to agree with them on the exact amount we would send, so I called my husband to check how much we would send as we wanted to add some amount for the acquisition tax and for the notary fee. And I also needed to check in Santander if I could send there the whole amount at once, because when arranging internet banking I was told that I could only send 25,000 EUR. But the lady on Santander´s chat confirmed to me that I could send any amount to the account, that the restriction only applies if I send money from Santander’s account elsewhere. Before I did this, I called the dealing again to arrange a deal, but the lady told me she couldn’t give me the rate I learned an hour ago unless I had already closed a specific trade for a specific amount because the rate is constantly changing throughout the day.

So I said I want to close the deal now and what exchange rate they can give me now. And the rate was even slightly better. So, compared to the current exchange rate from the KB website, this individual exchange rate was 0.71 CZK lower, which is a very large difference for a larger amount. After I closed the deal in this way over the phone, my bank adviser sent me a so-called confirmation by e-mail, a file that described which deal I closed and how much the individual exchange rate makes. I also received information that it is necessary to send it only the next day, that overnight on the KB website I will see the item Financial Markets, through which a foreign payment with an individual exchange rate is entered.

In the morning, my husband and I wanted to send it together, after all, we don’t send such a large payment every day. The financial markets did appear there (interesting that only I saw it, not my husband, even though he is the account holder together with me), but when I entered the payment, I was asked in the next step if I wanted to enter it as a SEPA payment, for which I meet the conditions. I wasn’t sure, so I wanted to check it out. So I canceled the payment and decided to send it later once I verified it. As soon as I came to work, I logged into my account and I started to panic immediately. I could see the amount to be sent was already deducted but the recipient was not my Santander bank. At that moment, I got scared if I had messed up something in the morning, but I was trying to reassure myself that I had not entered the confirm button and canceled the payment. Then I saw that it was sent to a KB account, so I began to reassure myself that this would probably be some intermediate stage in the transaction. That was it. But when you see in the first moment how the amount to be sent is already deducted and sent to an account I don’t know, it’s a bit of a shock in the first seconds. After I checked the procedure with the relevant KB department once again, I sent the money.

Before leaving Madeira, the exchange rate was very low, I changed the last euro in the exchange office for a 25.4 CZK/1 EUR. And when we got back, we started to deal with the exchange and we saw how it goes a little up every day. For a few hundred EUR, which a person exchanges for a holiday, the few crowns do not matter, but for such a large amount, every penny is important, in total it made a fairly large amount.

So thanks to this individual exchange rate, we actually saved over 2350 EUR (60,000 CZK), as the exchange rate was 0.71 CZK cheaper. And thanks to sending it in time approximately about a week after returning from Madeira, we actually saved much more because in the following days the exchange rate was growing more and more. Actually as we saw that it was starting to go up, we thought that it might be the beginning of the coronavirus impact and we did not want to take risks and wait for the exchange rate to go down again. And we did well – if we exchanged money in a few weeks, so we would lose about 10 955 EUR (280,000 CZK) on the exchange rate. Ufff, that would really hurt.

Power of Attorney

Portuguese Embassy

Originally, I was supposed to arrange a power of attorney for my husband so that he wouldn’t have to come with me for „escritura“. I received from realtor a template of power of attorney prepared by a notary. She informed me that it was the best to process the power of attorney directly at the Portuguese embassy so that we could be sure that the notary would accept the power of attorney. So shortly after arriving from Madeira, the realtor sent me a template and I contacted the embassy in Prague to find out more information:

  • The power of attorney needs to be arranged in person, so I set a date for my husband to go there
  • Price – 770 CZK (30 EUR)
  • The power of attorney (Procuracao) was in Portuguese and thanks to processing directly at the embassy, no translation into Czech was needed… Even if my husband does not speak Portuguese, they said that it is enough to tell him the content of the document… Great, I was glad that no translation won´t be needed …
  • ID card or passport needed
  • Web of the Portuguese Embassy in Praguehttps://www.praga.embaixadaportugal.mne.pt/cs/

In the meantime, the situation was getting worse and I was afraid if it will be possible to travel because of coronavirus situation. But it was not clear yet but we still decided to be one step ahead and the realtor confirmed that if not possible to come in person to Madeira, it would be possible for me and my husband to give her a power of attorney and she would arrange everything for us. So, just in case, she sent us a new template with a power of attorney for her, and I decided to go to Prague with my husband to issue 2 powers of attorney – for me from my husband (if I could go to Madeira in person) and a second power of attorney for realtor. Well, in the end we haven’t been able to do that either. We had booked an appointment but in the week when we were supposed to go there, they closed the embassy and they were not able to say when they would start operating normally again. I was still trying to call there but I was told that they only deal with urgent matters such as repatriation to the Czech Republic… And in the meantime they also closed the borders, so it was clear that I would not go to Madeira in person…

 

Power of attorney with the apostille

What to do now when they have closed the embassy? I checked with the realtor what other options we had, and as I hoped, she confirmed that the power of attorney can be arranged through apostille, but that it was a much more difficult process and would require more steps. But there was no other option and it was not clear when they would reopen the embassy, ​​so I started dealing with the apostille and I was happy that there was at least some way to solve it.

Translation to Czech

I called a notary to find out what the process was, and he told me that in order to verify my power of attorney with our signatures, the document needed to be translated into Czech by an certified translation. Well, I did not understand why the certified translation was needed, after all the notary only verifies the signatures and does not check the content… well, so I immediately arranged the certified translation by translation agency Aspena (https://www.aspena.cz), with which I have quite good experience from my work (I don’t recommend Skrivanek, the quality was always really horrible. I didn’t deal with other agencies, I didn’t even compare prices, there was no time, I wanted to save every day, so that it could be done within those 3 months). To save time, I preferred to have a faster translation within 1 working day, which cost 93 EUR (2,371 CZK) (less than 2 A4 pages).

I just sent to Aspena a document to be translated by e-mail and they forwarded it to the translator. I had a translation until the next day.

Aspena – https://www.aspena.cz

Price of fast translation within 24 hours – 93 EUR (2371 CZK)

 

Notary

Then we went to the notary to certify the signatures. We were also afraid that the power of attorney with our type of official certification will not be sufficient, because the realtor wrote met hen that she still verified it with the land register office and that the power of attorney must have a „Termo de autenticacao“. Well, this is a standard official notarial certification but in Portugal it has slightly different requirements – the notary certifies the signatures (same as in our country), verifies the identity (same as in our country) but then there is a Termo de autenticacao (Official certification) section on a separate page which also describes that we have read the document, we are aware of the content and we confirm that the power of attorney expresses our will. So I checked with the notary if this could be done in our country in this way as well, and I received information that no, that only our signature and identity are verified in the Czech republic… Damn it, what if it will not be sufficient for the land register office? And because the Czechs are an inventive nation, I came up with another option. When the notary said that he only certifies the signatures and he doesn’t care what we write there by hand, I decided that I would simply enrich the volume of the translation (i.e. the Portuguese original with a translation into Czech bound into one document) by this sentence which they usually have in Termo do autenticacao – and I just wrote it down there by hand. And in this volume, I had both the signatures on the Portuguese original and on the Czech officially certified translation.

Then I made another option – I asked Aspena to send me the MS Word version of the translation and I wrote down the sentence from Termo de autenticacao on my computer and printed it out (so that I have one option where it is not handwritten). So the notary certified the signatures on this option as well. I had following strategy “the more options and signatures, the better – one of them just has to work

Price – 218 CZK (8 EUR) (3 documents)

The apostille

Then I needed to find out how the apostille needs to be arranged. I found on the internet that the Ministry of Foreign Affairs is doing it – great, they are open even during coronavirus, uff, and my husband doesn’t even have to go there with me so I can take care of it myself. But I called there to check it and my joy passed away because the informed me that they issue an apostille on another type of documents and an apostille on a power of attorney is issued only by the Ministry of Justice.

Well, no great shakes, the Ministry of Justice has closed for personal contact but fortunately they worked at least through the post mail. Well, I read on their website that the legal deadline for processing the apostille is 4 weeks and the standard processing time is about 2 weeks. Well, I tried to call there to find out more if it could be speeded up. The man said that it was not possible to speed it up at all, that they do it immediately once it comes from the registry office to his table. So I asked if I could push the registry office somehow. He said probably not at all but that I could try to write it in the cover letter. So I tried to write politely in the cover letter that I would greatly appreciate if they could handle it faster and I described the reasons. I don’t know if it helped but I had the document within a week, actually the post office was practically a bigger delay, as in the current situation they usually didn’t deliver in the Czech Republic until the next day but within two working days. I sent it to Prague on Thursday, on Monday it was delivered to the Ministry of Justice, and on Friday the document was already in my letterbox. I was very happy about that as the legal 4 weeks were pretty scary. Some time ago, a realtor wrote me that the owners were ready to process the purchase process and that they are just waiting for a power of attorney from me and my husband. I was also afraid that they would close some offices in Madeira in the meantime, so I wanted to speed up the purchase process as much as possible.

Stamps (100 CZK / 1 document) are required for apostille processing and they cannot be purchased on the spot if someone goes there to arrange it in person (outside the coronavirus period). You can buy the stamp at every post office.

Ministry of Justicehttps://www.justice.cz/web/msp/overovani-listin-do-ciziny1

Price – 100 CZK / document (even if there are 2 signatures), we paid in total 300 CZK for 3 stamps

Portuguese translation

I did not expect that the apostille could be arranged so quickly, so I did not check the letterbox twice a day and we found out at 18:00 in the evening that there is a letter from the Ministry. Damn, translation agency Aspena is already closed. Now it was still necessary to translate back into Portuguese again by certified translation not only the power of attorney but also the stamp from the notary and apostille.

I wanted to have translations done for both options:

1. optionThe original power of attorney in Portuguese with an official translation into Czech with an apostille on both the Portuguese original and the Czech translation and in the Czech version enriched with a handwritten sentence corresponding to „termo de autenticacao“ (it was necessary to translate the translation in Czech back into Portuguese and also translate the stamp from the notary and apostille)

2. option – Printed Czech translation of the Portuguese power of attorney with apostille and a sentence corresponding to „termo de autenticacao“ written on computer (it was necessary to translate back into Portuguese and translate the stamp from the notary and apostille)

If you’re starting to get lost in it, don’t be afraid, it’s not due to a lower IQ or the fact that it is Friday and you are tired… I’m already lost myself as well in all these options and papers, even though I was solving it myself :p

I had impression it would be an eternity to wait over the weekend before it will be open on Monday in Aspena, so I came up with another solution. After all, the name of the translator is written on the certified translation. I tried to find her on the internet and I found her official website because she doesn’t just work for Aspena, but she works also as freelance translator. So I tried to call her and she was very helpful and promised to do a translation for me by Monday. In fact, it was not much work, just the translation of the stamp and the apostille (she did not have to translate the power of attorney into Portuguese, because it was enough to just copy the original Portuguese original). But this time it was actually necessary to deliver to her the originals because I needed all documents to be in one volume with the apostille. And because I didn’t want to waste time with our extremly slow post mail, so I first sent only photographed texts for translation on Friday, and on Monday evening my husband and I took a trip outside Brno to give her the originals, and she tied it to one volume. Ufff, it worked, with Aspena and forwarding the post mail I would lose a lot of time and moreover her price was of course significantly cheaper than via Aspena.

So if you need a certified translation from Portuguese (or Spanish and French), I can definitely recommend Barbora.

Price – 900 CZK (33 EUR)

Website of Translator Barbora Vázquesová Drahozalováhttps://barbora-vazquezova.tlumoceni-preklady.cz/kontakt/

UPS – Sending a power of attorney to Madeira

Once we received the translations of the power of attorney, it was necessary to send the originals on Madeira to our realtor.

The Czech Post (Česká pošta) delivers to Portugal in 4-6 days, so to Madeira 6 days, when it’s an island and they said that now at the time of the coronavirus, it will be definitely slower. So I really didn’t want to risk Czech Post…

I looked at other delivery options such as DHL, etc., but the cheapest and the best was for me UPS via the website (https://www.expresniposta.cz), their website came to me easier for orientation than the UPS website. They deliver to Madeira within 3 working days but they said that in the current situation it can also be slightly delayed and also it was Easter time. It was delivered exactly within 4 working days, on Easter Monday (fortunately they didn’t have a public holiday in Madeira).

All you had to do here was fill out a form on the website, and based on that, they sent me a printable label, which I had to print out and give the driver to put it in a special UPS envelope and put the label on it. When I looked at the label properly, I immediately found two errors – the wrong zip code and my phone number was wrong as well. I called their line and it seemed that they did not want to deal with the new label, they said that the driver always rings and does not call and that he enters the address according to the street into the GPS, so the wrong zip code should not matter. So I just fixed it on the label manually. It didn’t calm me down much but I was hoping it would work out. The driver picked up the power of attorney within the time period indicated in the email. I had the shipment number and I could see where the shipment was. It arrived in Portugal very quickly but there it got stuck on Friday, and although it was written on the web that the expected delivery date would be Friday, they wrote on Friday that the shipment would be delayed and it arrived in Madeira on Monday. So a total of 4 working days, which is not bad during the coronavirus period.

Price – 2394 CZK (including insurance, it was about 200 CZK)

UPS – https://www.expresniposta.cz

I secretly hoped that a week after Easter, the „escritura“ would take place finally. But then the realtor wrote me that one more paper from the Instituto de Habitação da Madeira was still missing and that the office had been closed due to quarantine in Madeira. She hadn’t told us this before, she said they were just waiting for our power of attorney. Fortunately, in a few days, the office was finally opened to the public and the document was supposed to be prepared within 2 weeks at the latest. Once it was done, the realtor began to handle cheques.

 

Cheques / paying the remaining amount of the price

The cheques were another problem – I gave our realtor a power of attorney to arrange the cheques and we checked by email with the banker whether the cheques would be processed on the basis of a power of attorney and my banker confirmed that yes. After the last document from  an authority was processed and it was possible to process the last step „escritura“, the realtor called the bank to agree on making out the cheques and this time she received information that it will not be possible to make out the cheques because my account is individual and can only be used by the managing clerk and power of attorney won’t help to authorise somebody to use my bank account… I don’t know why the banker didn’t tell us the information right away when we first asked. I was also surprised that neither the realtor nor the notary who prepared the wording of the power of attorney didn´t know that cheques cannot be arranged through the power of attorney. I don´t know if it is only with this bank or in general it is not possible to issue cheques on the basis of a power of attorney everywhere… So we were informed that they passed it on to the legal department and they are waiting for answer whether they can grant an exception and issue cheques. But it was not clear when she would get the answer.

On Friday morning, we decided to try to call the lady from the counter in the bank, with whom our realtor have spoken regarding the cheques. She told me the same that it was not possible to issue the cheques based on the power of attorney and that she was awaiting the statement of the legal department. She didn’t want to transfer us to the legal department. This lady didn’t speak English, so I had to manage it in Portuguese. Then I tried calling again and I asked to transfer us to the legal department and someone who speaks English but they didn’t transfer us again but at least I could speak to the lady in English. The lady suggested sending the money directly to the real estate agency or waiting for the answer from the legal department.

Even before I called the bank, the realtor suggested 2 possible solutions – that we can either send the money to the account directly to the seller or to the account of the real estate agency Era. Of course, I felt better to send it to Era´s account. Well, contrary to the customs in the Czech Republic, we did not receive any official document, we only had it all by emails and based on that we decided to send the remaining 90% of the price + money for taxes to the real estate agency account. It’s a big real estate agency and we believed that they would not embezzle the money… but it is NOT a way I would recommend but we decided to do it this way…

But even the sending to the account was not so easy, it took 3 days to manage to solve it and send the money. The banker said that the daily limit for sending money is only 25,000 EUR and the limit cannot be increased over the phone or online… we would have to send the amount several times, I really didn’t want to do it this way… The banker said that to sent the whole amount all at once it can only be done via email to the banker but the banker who spoke English said that she doesn’t see the email in my profile and that the email can only be updated in person… Well, if I could go there in person, I don’t have to deal with this… I said I don’t understand why my email isn’t there because I definitely mentioned it when opening my account and, in addition, I sent my payslip to my banker so she could see from it that it was really my email. Fortunately, they agreed to update my email without a personal visit.

Then the banker wrote me a list of about 4 items, which I needed to confirm by email so that she can transfer the entire amount on my behalf. The next day, I received an account number from Era, so I wrote my banker all the details so she could make the transfer for me. The next day, the banker called me that it would not work through the email in a way she described previously as it would be possible to send a maximum of 25,000 EUR again. But she said that there was a way to do it. She explained to me that she would send me a pre-filled transfer request form which I only had to sign and send the scan back to her. Also I had to send a scan of my ID card and reservation contract. She also informed me that I should send the original of the application by post. It was Tuesday and the „escritura“ was scheduled for the next Tuesday, so I thought that maybe we could make it on time, the money should come to the real estate agency on their account by the next day. I sent all the documents and my banker made a money transfer to the Era real estate account. Fortunately, the money were on their account on time and I hoped there wouldn´t be any other problem.

 

Escritura

After the money was finally transferred to Era’s account and Era picked up the cheques, we could finally proceed with the last step – „escritura“ (i.e. record to the land register office, signing the purchase contract and handing over the cheques to the seller). Interestingly, cheques can be picked up only on the day of „escritura“.

The seller, the realtor (I could not arrive in person due to coronavirus, so the realtor represented me on the basis of a power of attorney from me and my husband) and a notary will meet and sign the contract, record to the land register office is done and cheques are handed over to the sellers.

I also find it interesting that one is not acquainted with the contract in advance. Some time ago, I asked the real estate agent if the purchase contract was ready and if she could send it to me to check it. She wrote to me that the contract has clearly defined requirements which are always the same and that the contract is not presented in advance to either party, and both the seller and the buyer are acquainted with the contract only at the moment of „escritura“.

Taxes & fees

As part of the „escritura“, 2 more taxes and a notary fee are settled, this was also paid in the form of cheques. Our costs were as follows:

IMT (Transfer tax): 950,00 EUR

Imposto de Selo (Stamp tax): 760.00 EUR

Escritura e registo: 375.00 EUR (notary fee)

IMT (Transfer tax)

  • It is calculated from the price of the property and it is 0-6% of the price
  • The amount of this tax is different for a local or foreigner who does not have a permanent residence here
  • The amount of tax also depends on the price of the apartment, so for example for cheaper apartments a foreigner pays only 1% of the price, but for example for expensive property (approx. 359,000 EUR – 688,000 EUR) 8% of the purchase price is paid.

Imposto de Selo (Stamp tax)

  • The amount is 0.8% of the purchase price

You can find more detailed information in English for example here –https://www.pinkrealestate.pt/buying/taxes-and-fees.html

I was impatient to see if there would be any more complications, especially with our power of attorney, and I was impatiently waiting for an email from the realtor confirming that „escritura“ has been already done. She wrote to me right after the „escritura“ took place and sent me all the documents they signed. It was really a huge relief.

Uffff J We got finally to the end of the process. The whole process at a time of coronavirus, when various offices were closed, took 3 months (without 3 days). Probably the standard length for buying an apartment but I must say that it seemed to me as an eternity. It was a time when we would rather cancel all weekends, Easter and holidays because those were the days when we knew nothing was happening :p

At the time of coronavirus, it was much more complicated, but if a person could come there in person, the process would not be complicated at all.

The realtor had also a power of attorney to transfer water, electricity and gas on my name.

Good luck / coincidence / lucky chance – destiny?

I have to say that the whole purchase process from the selection to the signing of the purchase contract was a total lucky chance, a series of incredible coincidences and a great luck that it all worked out.

  1. Choosing an apartment on the first visit – what is the chance that an interesting offer will appear in the week when a person is in Madeira? For all 6 offers we asked to make a tour of flat, we found out that they were no longer available. Then 3 flats appeared outside standard offer on the real estate servers, we took the third one.
  2. I have chosen exactly our apartment – while exploring Nazaré, I have selected this particular apartment – when I saw the terrace, I said that I like this apartment and I would like to buy this one. 3 days later we went to this apartment for a tour (it was not in the advertisement) and we decided to buy it. What is the probability that we will choose one apartment from all Funchal and this one will really appear in the offer and we will take it? An incredible coincidence. Probably destiny….  🙂
  3. The day before the tour of our apartment, my husband did not manage to park at the Forum Madeira and we walked from our accomodation. Thanks to that we met our real estate agent Joao and thanks to that we managed to arrange a tour of the apartment for the next morning. If we hadn’t met him, we probably wouldn’t have had time to solve it all until we left.
  4. The most beautiful apartment we saw – we watched the apartments from a distance for a year. Offer was not very good, often ugly kitchen, bathroom or original flooring. Ours was by far the most beautiful of all the apartments we saw on the Internet in our price range. What a coincidence that such an apartment appeared during our February visit….
  5. The original bank apartment did not work out and in the end we were glad for it. That evening ours appeared, much nicer and with a large terrace, and thanks to the apartment that did not work out, we already had the NIF and the account number settled. A big advantage, because we were dealing with our apartment at the end of our stay, so we would not have time to arrange it all otherwise.
  6. Discount 5000 EUR – we were pleased that we managed to negotiate 5,000 EUR discount
  7. Exchange rate – due to coronavirus, the exchange rate of the euro went up every day after our return. We managed to exchange the money in time and, thanks to an individual exchange rate at KB, we saved over 60,000 CZK (approx. 2350 EUR). And theoretically even much more, because if we didn’t hurry to exchange money, a few weeks later we would have lost up to 280,000 CZK (10 955 EUR) on the exchange rate.

Complications due to coronavirus – due to closed borders, all got complicated and arranging everything remotely was much more difficult, but in the end there was always a solution and it worked. Hurray 🙂 

Purchase process (remotely) – summary in points

(based on our experience, „escritura“ done remotely on the basis of a power of attorney):

Choosing an apartment

NIF – arranging of tax identification number at the Tax Office (passport, citizen) – 10 EUR / person

Opening an account number – passport, ID card, payslip, confirmation of taxable income, initial deposit 150 EUR

Reservation contract – payment of 10% of the price

Exchange of CZK to EUR and sending to my Portuguese account – it is best to arrange an individual exchange rate at the bank (at least in the Czech republic…)

Power of Attorney

  1. if you are buying an apartment in the joint property regime of the spouses and your spouse cannot be present at the signing of the purchase contract (escritura)
  2. in case you are unable to participate in the signing of the purchase contract in person (our case due to coronavirus and inability to travel – power of attorney settled for real estate agent)

a) Power of attorney through the Portuguese Embassy – the easiest would be through the Portuguese Embassy (due to the closure of the embassy, ​​unfortunately we could not use)

b) Power of attorney with the apostille

  • Significantly more complicated and at the same time more expensive option
  • Power of attorney prepared by a Portuguese notary
  • Certified translation into Czech
  • Certification of signatures by a notary
  • Settlement of the apostille at the Ministry of Justice
  • Certified translation of powers of attorney, stamps from notary and apostille into Portuguese

UPS – Sending a power of attorney to Madeira

Cheques / paying the remaining amount of the price

  • Cheques could not be processed on the basis of a power of attorney, so we sent the money to the real estate account and she then picked up the cheques in the bank.
  • I would rather recomend to pay everything via notary custody.

Escritura

  • Signing the purchase contract
  • Record to the land register office
  • Handing over the cheque to the seller
  • Payment of taxes and notary fee

Costs – purchase process

Real estate commission – 0 CZK (paid by the seller)

NIF – 10 EUR/person

Power of Attorney

Notary public – 218 CZK

Translation from agency Aspena – 2371 CZK (fast translation)

Translation by Barbora Vázquesová Drahozalová – 900 CZK (fast translation)

Apostille300 CZK (100 CZK / 1 collection = 1 list)

UPS2394 CZK

Taxes 2085 EUR (53,376 CZK)

Gas transfer our name/ gas revision – 40 EUR (1022 CZK)

 

Future rental for your vacation

The purchase came a little earlier (02/2020) than we expected, so we still need to save some money to buy furniture, but in about a year, we would like to offer our apartment for rent to tourists. For the time being, we will only go to Madeira on holiday and it would certainly be a pity for the apartment to be empty for the rest of the year.

The apartment will be suitable for up to 6 people – so ideal for families with children or a group of friends.

Formalities after purchase of the flat

What we had to arrange right after buying the flat in Madeira?

Transfer of utilities (electricity, water, gas) to my name

Just after the „escritura“, the realtor arranged also the transfer of utilities to my name. She had the power of attorney on this as well. But even if I was able to come in person for escritura, she promissed to help with this as well and go with me to the respective autorithies to arrange this (I really appreciated this approach, in the Czech republic the realtor would not care to help with this even if the buyer would be a foreigner who might need this kind of help).

For both water and electricity, I arranged the direct debit from my bank account so that they could deduct themselves the respective amount on monthly basis based on the electronic invoice sent to my email.

Water

Map: https://goo.gl/maps/XBsjjaH3wJnoYWcc8

Address:

Câmara Municipal do Funchal
Praça do Município
9004 – 512
Tel: 291211000 | Fax: 291211009
www.cm-funchl.pt

Electricity

Map: https://goo.gl/maps/3jaokFkNaacj9XmA9

Address:

Av. Arriaga – Edifício Arriaga, nº 42 A
Código Postal: 9000-064 Funchal

E-mail – clientes@eem.pt
Tel – (+351) 800 221 187

https://www.eem.pt/pt/inicio/

Other subsidiaries – https://www.eem.pt/pt/conteudo/eem/as-nossas-instala%C3%A7%C3%B5es/lojas-eem/

Gas

In the flat there was a gas cooker and gas water heater. So that the transfer on my name could be done, it was needed to the the inspection of gas (cost – 40 EUR). Unfortunately the realtor informed me that we have not passed through the gas inspection due to 2 issues and that they say that we can either invest some money to remove the problem but that the less costly solution would be to change the gas cooker and gas water heater to electric ones and cancel the gas supply to the flat.

My first question was who will pay this because in the Czech Republic this would be something where a guarrantee on hidden defects would apply and it would be the seller who would still pay the costs for removing the problem. However we were informed by the real estate agency that in Madeira a similar process applies only to new constructions and not to older buildings and that it is already on us to pay the costs to repair this. Actually I have not checked this with the lawyer because I don´t like the gas anyway  because I would be afraid of the risk of possible CO (carbon monoxide) leakage from gas water heater so I wanted to change both the cooker and water heater to the electric ones anyway.

 

Buying electric cooker and electric water heater

Our realtor was very nice and helped with everything to arrange this – going to the shop and sending me offers of electric water heater and electric cooker and then he found as well a plumber to arrange the tubes to the water heater. The first plumber was really expensive (350  EUR + VAT) and the second one 300 EUR. I was quite surprised that it is quite expensive in Madeira, this price just for installing the tubes from kitchen where was previously the gas water heater to the next room (the laundry area) where the electric waterheater was supposed to be installed. I was really satisfied with Joao´s help and that he even made an effort to find a cheaper plumber because as we don´t know the prices on Madeira, he could have just said that it is a standard price as it was not him paying these costs… Actually in the Czech republic any realtor would not help with any of these things, they would just ask us to arrange this ourselves and come to them only once the flat is ready for rent… So I was really grateful to Joao for all his help regarding this, and all regarding the flat purchase and renting our flat went very smoothly as well in regards to his communication and help. I can definitely recomend him whether you are buying a flat or you want to rent your flat or if you are looking for a flat to rent/buy. You can find the contact for our realtor Joao Pedro Rodrigues from real estate agency Era in the chapter Real estate agencies 

 

Flat insurance

Another thing we needed to arrange as soon as possible after the purchase of our flat was the flat insurance. I wanted to contact someone reliable that somebody else has a good experience with so I asked in a Facebook group if someone can recomend. Based on that I have contacted Décio Vieira (see the contact below) and the communication was smooth and we arranged the insurance quite quickly. Fortunately this can be solved by distance without any problem and the signed contract just needs to be sent by scan.

I was just surprised that the insurance is considerably more expensive than in my country. I have chosen the insurance to cover also other risks when we will rent this flat as well and actually I underwood that this level of insurance is needed anyway if the person is going to do short-term rent (AL Liability insurance is required for the Turism Institute). With Zurich Insurance company we pay 238 EUR per year – of course it depends on the level of the coverage and the amount to be insured but actually I would be interested if this is the standard price for flat insurance if the flat is rented short term. So if someone wants to share your own experience, will be happy for any comments under this article.

Of course If you are not renting the flat, then you can get a better price, initially as the insurance broker didn´t know that we will rent the flat short-term (most likely at some point during next year), I got one more offer from another insurance company and this one was lower (Liberty seguros – 137 EUR/year)

This time it was sufficient I arrange it only on my name, so we didn´t have to add my husband in the insurance contract.

Here is the list of items we just need to provide to be able to get offer for the flat insurance:

  • Name
  • NIF
  • Full address of the flat
  • The size of the flat – you can find how many square meters your flat has in Caderneta predial (one of the documents used during „escritura“ so the realtor sent me this document)
  • The year of the construction – you can find the information when your flat in Caderneta predial

Contact:

 

Renting the flat for 1 year

As we want to start with short term rent only in one year time approximately, we decided to rent now the flat longterm for 1 year. Our realtor Joao Pedro helped again to us to to find the tenants and it was really quick, the escritura (signing purchase contract) was on 19.5.2020 and on 26.6.2020 (i.e. in 1 month and 1 week) the tenants has signed the contract and moved in the same day (and this included as well the time of buying new cooker and electric water heater and arranging the plumber to install the tubes from one room to another and installation of water heater. So we could see that without this we would be able to find tenants even faster).

If you also have some experience with buying a property in Madeira, I will definitely be happy if you share your experience in the comments.

And if you would like to ask something else, write in the comments as well, I will be happy to advise if I am able to.

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5 Comments

  • cheryl zanetti

    Hello, your article about buying a Flat in Madeira was very interesting to me. I am from Canada and am planning to go to Madeira in Sept. hopefully. My boyfriend is originally from there, so he told me about it.
    I appears to be a very beautiful, friendly, safe and economical place to live. I have been looking to buy a Flat also, but want to go there first to see the place. I am in the process now of selling a rental property I own in the US, and want to transfer that money into another property.

    My question is regarding the current rental that you have now for a year. It doesn’t seem like it was difficult for your realtor to find someone, is that correct? With the Covid going on, I am surprised at that. How much do you charge if you don’t mind me asking? I am hoping to run an Airb&B when I buy a flat, that is why I am asking. I understand your rental is for a year, long term, but it could still give me an idea of what to expect
    over there.

    Ok, I appreciate you time and look forward to hearing back from you

    kind regards
    Cheryl

    • Lenka

      Hi Cheryl,

      yes, it was very easy to find someone for longterm rent but we have received slightly less than we wanted as we didn´t want to wait to not loose money. Actually if we were not waiting for buying and installing electric water heater and cooker, we would rent it even sooner. Our realtor from Era has not even needed to post an advertisment on any real estate server and it was so quick… For our 2 bedroom flat we wanted initially 450 EUR/month as our realtor told us that in our location (Funchal, Sao Martinho, Nazaré) we can expect 400 – 450 EUR for T2 flat but he was saying that now in coronavirus time the prices are going down and we had offers for 400 EUR so we didn´t want to wait for a offer for 450 EUR to not loose any month… (this is the price without utilities, utilities are paid extra by tenant).

      Depends what size and how luxury flat you buy, our flat is nice and reconstructed but of course not luxury as new flats closer to the beach of Praia formosa where the flat for long term are more expensive 600 – 700 EUR or even more, depends how close to the beach it is, if it has a sea view etc. Of course for such properties the purchase price is much more higher as well…

      For short term rent, I have not studied yet in too detail but then I will write also an article on my blog – it is needed to get a licence from Alojamento Local and it is needed to count with other costs as well. If you need an agency for flat administration (advertisments, communication with clients, check-in/out, laundry, cleaning, tax administration etc.), the full service costs usually around 25% from each rental + fee for Booking.com is 15% I think + other costs such as utilities, flat insurance and taxes are quite high as well (just checking now the tax system)… We are going to rent to tourist in one year time as well, I don´t expect any big business considering all the costs mentioned above but the main purpose for was to buy a summer flat for us as I love Madeira and offer it to rent as it would be pity to leave it empty for most of the year.

      Yes, it is really beautiful place and very safe as well. It is not expensive either, even for us from the Czech republic it is not expensive (prices in supermarket, restaurants etc. – you can find more about prices in restaurants, buses etc. in my other 2 posts – https://lenkacestounecestou.cz/en/category/madeira-en/ ). And flats as well are not very expensive either (well, if you not expect a luxury flat of course…. but for example we bought our 2 bedroom flat for lower price than a studio in my city of Brno in the Czech republic…)

      I recommend you to contact our realtor from Era, he was really very nice, helpful and speaks very well English:

      Era – https://www.era.pt/

      João Pedro Rodrigues – prodrigues.funchalforum@era.pt

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