Since the demand for property in the Algarve has increased during the last years, we are finding that more and more houses for sale have illegal extensions, unauthorised swimming pools or missing documents. Is it dangerous to buy such properties? Many foreigners are reluctant to do so because they are not adequately informed.
The reason that there are still an enormous number of unauthorised buildings, extensions and swimming pools in the Algarve is historically due to the laisser-faire of the homeowners and the municipalities. Looking back, the process for building a swimming pool or converting an existing house was as slow, costly and cumbersome as the process for building a new house. Approval times for projects took (and still take) years not months. As a result, many locals and foreigners have taken the easier and cheaper route and built without permission, only to legalise it afterwards instead of following the correct procedure. As there is still little control over illegal construction (rarely do municipalities send people out to look for violations), there was no incentive to legalise unauthorised construction.
Today, the construction of buildings is subject to certain legal regulations and permits and illegal constructions are penalised. Your lawyer might advise you to watch out and if in doubt, don’t take any chances. Ask your lawyer to analyse the situation carefully so you don’t miss out on a good opportunity. First, it is important to identify the unauthorised parts. As property and building records in Portugal are still very inconsistent, it is not always easy to find out which parts of a property are correctly licensed.
Ask for plans of the property stamped by the municipality. Once you have the stamped plans, compare them with the actual property. Your estate agent should be able to help you with this. However, there are properties that are exempt from residential licensing and for these there are no registered plans. In such case, you should go to the municipality and check all the existing documents.
Imagine, you found the perfect property in the Algarve but it turns out that it is not completely legal, what should you do? Don’t panic, make an objective analysis. In many cases, the unauthorised parts are not of great importance. Just because a property has some illegal parts doesn’t mean it can’t be sold or that you shouldn’t buy it. However, if the alterations or additions cannot be legalised, make sure you are aware of the consequences. Have your estate agent explain this to you.
It is worth noting that some properties (especially those that do not require a residential licence) have unclear documentation. This means that it is often not possible to define exactly what is approved, then you might want to consult an architect.
Don’t underestimate the location of the property you want to buy. If the property is located in one of the protected areas REN or RAN (ecological or agricultural protected area), the future legalisation becomes more complicated, as approval is required from the bodies responsible for these areas. Additional building restrictions are often imposed, such as a reduction of the permitted built-up area or even a land charge that prevents the sale of the property for 10 years.
Building regulations have also become stricter within the last few years. It is likely that planning regulations might have changed since the original building was constructed. If the existing building does not comply with current planning regulations, it may be difficult (and in some cases impossible) to legalise it. The most common problems are that the property is too close to the site boundary, that the built area is larger than permitted or that the house has more storeys than stated in the documents.
It is often said that an illegal house is not eligible for a mortgage. This is not entirely correct. You can buy a property with unauthorised parts and get a mortgage. In most cases, the bank’s appraiser will put a value of zero on the unauthorised parts, which will reduce the amount the bank is willing to lend you. If a regularisation process is underway at the time of the valuation, the appraiser may give two values: one ‘as-is’ and another once regularisation is complete.
Dealing with unauthorised parts of properties in the Algarve is an integral part of buying and selling property. If you are well informed and understand the implications and restrictions that exist, there is no reason why you cannot buy a property with unauthorised parts. It is always recommended to work with a reputable real estate agent or lawyer who can provide guidance and perform due diligence on any property you are interested in purchasing.
