The Portuguese hot property guide

Iberia's smaller partner is home to a large number of residential Brits. William Raynor offers advice to those wishing to join them

There must be countless places in the European sunbelt to which the standard cry of woe applies, but perhaps few more so than the Algarve: if only one had invested some spare cash in a plot or two 30 years, 20 years , even 10 years ago. If only.

"Until 30 years ago," says David King, of Hamptons International in London , "the Algarve consisted of poor fishing and farming communities with salt marshes between them."

Now, the Algarve is thought to account for up to 90 per cent of all sales to foreigners of property in Portugal; and, within 20 minutes of the airport at Faro, on the southern extremity of the province and the country, Hamptons is selling villas with four-five bedrooms and swimming pools at prices ranging from pounds 400,000 to pounds 1m plus.

For historical reasons - Portugal being England's oldest ally and its fortified wine from the north having thinned generations of British blood and so on - 50-60 per cent of these foreign buyers are estimated to hail from the UK; estimated, somewhat vaguely, because many foreign buyers buy their properties through offshore companies set up not only to avoid "Sisa", the 10 per cent tax they'd otherwise have to pay on top, but to preserve anonymity and simplify questions of death and inheritance.

Although Hamptons sells to buyers of other nationalities, such as the Germans and Dutch who are the next main contenders, most of its clients are British and, says Mr King, "their main priorities are that the properties should be secure, easy to manage, easy to let and easy to get to for a long weekend".

Most of them are in their forties, either running their own businesses or working in the City, and wanting to whack a small white ball in the Algarve's dozen-and-a-half special golf resorts. Two of these - Quinta do Lago, built 25 years ago, and Vale do Lobo, developed in the late Sixties by Costains - form corners of what, with the town of Almansil at its northern point, some estate agents have dubbed the "golden triangle", west of Faro and south of the main road to Albufeira.

"Another type of buyer," says Mr King, "is approaching retirement age, wants a bigger property and may plan to spend most of each year in it for 10 or so active years after retirement before returning to the UK."

For letting during a season which stretches from Easter to October, and with managing agents deducting 10-15 per cent, the average villa can gross pounds 1,500 a week at normal rates and pounds 2,500 a week in July and August - figures which can be doubled for villas which are grander and have better locations and views.

According to James Aitken, whose estate agency, Villas & Vacations , has been operating in the golden triangle since 1988, only about 10 per cent of the 1,000 properties which have been built in Quinta are generally for sale at any one time; and, with the British feeling more confident and even buyers from Hong Kong beginning to take a serious look, it's a vendors' market, which has risen by 10 per cent in the past six months.

"Most people buy here because of the clean air, the space and the lack of high-rise development, " he says. Of the clients whose properties he manages and lets, for a fee of 20 per cent, more than 100 are British.

Up in the hills, prices drop. But even there - according to Bernard Jordan, who runs his estate agency, Quinteca, from an office in Almansil - a two- bedroom house 10 miles inland on a small plot can set you back at least pounds 75,000. There are still a few unrenovated farmhouses available from pounds 40,000, but by the time you've rebuilt, installed a pool and paid fees, you won't have much change out of pounds 100,000, and the rents you can command will be as low as pounds 200-300 a week.

Ten years ago, when they found some ruins in the hills north-east of Albufeira near Boliqueime, Ron and Becky Woltman were able to avoid estate agent's fees of 5-7 per cent and, after a long search, buy for rather less and carry out restoration in phases using local labour. "There was no sanitation, and no running water," says Mrs Woltman, who comes from Nottingham and whose husband is Dutch.

Now, having bought another house nearby to live in, they have three lettable properties - one-, two- and three-bed - and offer "relaxing holidays" to parents, children, and non-golfers. "But," she says, "it was very hard work, and anyone thinking of doing the same really needs to speak the language."

Mindful of a recent case in which a British couple lost their savings, having bought a property whose garden they then found was due to be bisected by a major new road, she also advises anyone purchasing to do everything, at every stage, through lawyers. And they should also be aware that if they fail to complete in the 30-60 days usually stipulated after signing the promissory contract, they stand to lose their 10 per cent deposit.

"Theoretically, " adds Bernard Jordan, "any vendor reneging stands to lose 20 per cent, although this would be difficult to get. It shouldn't happen anyway, if you use a lawyer and a government-registered estate agent, who has to obtain copies of all the relevant paperwork relating to the sale." This includes the property's registration with the local authority, the licence for it to be occupied, its title deeds, and its caderneta predial - a "logbook" document peculiar to Portugal.

There are solicitors in the UK with Portuguese language and qualifications but, he says, he's never heard of them being used or needed. And there are UK surveyors in the Algarve who, he adds, should be used, but all too often aren't.

One of them is Peter Densham, an associate of the RICS, who has been based in Almansil for the past 14 years and who, on a pounds 250,000 house, typically charges pounds 300-400 for a valuation and general "condition" survey. Apart from knowing which types and ages of property are best constructed and most suited to which sort of use or restorative treatment, he warns: "Unless they're specifically asked to carry them out, lawyers here don't do planning searches. So, insist that they do. And don't accept the asking prices you see on agents' windows, because they tend to be vendor-driven and a bit optimistic."

If you think you can find somewhere cheaper in one of the more traditional British hunting grounds further north, on the Estoril or Sintra coasts near Lisbon, or more northerly still, near Oporto or among the vineyards of the Douro Valley, prepare for disappointment. "Compared to the Algarve," according to Collin McDonald of Knight Frank International, which opened an office there last year, "prices in the greater Lisbon area are at least 30 per cent higher. "

And if you think that's a premium worth paying to get away from the golf resorts, too late: no fewer than 13 of them have already been planned.

Contacts: Hamptons International, tel: 0171-824-8822; Villas & Vacations, tel: 0035-189-394807; Quinteca, tel: 0035-189-395542; The Woltmans, tel: 0035-189-322386; Peter Densham ARICS, tel: 0035-189-313492; Knight Frank International, tel: 0035-117- 951906.