Property prices in Portugal rose by more than 10% in 2024 as Brits rushed to secure permanent residences abroad after the Labour government announced a near-£70 billion increase in public spending primarily fuelled by higher taxes.
UK residents whose primary homes are outside the country, often dubbed “non-doms”, can currently avoid paying tax on foreign income – something the chancellor has pledged to scrap from April 2025.
Travel experts have speculated that the closing of such tax loopholes is one of several factors behind the exodus of UK residents abroad. Sunny climes and high standards of living are other reasons behind the relocation trend.
Rebecca Thomson, co-founder and director of Liberty Real Estate, based in the Algarve, said rising house prices in the country have been driven by “a persistent imbalance between supply and demand.” Brits now make up around 70% of the buyer market in the Quinta do Lago and Vale do Lobo regions.
“November and December saw a significant uptick in enquiries, property viewings, offers and agreed deals from British clients compared to previous years,” she told Express.co.uk.
“The surge in activity appeared to reflect pent-up demand, with many buyers delaying purchases in anticipation of Rachel Reeves’ first budget.”
While lifestyle reasons continue to be the most compelling reason behind relocation from the UK to Portugal according to Ms Thomson, it could emerge as a growing trend in the coming months and years.
The National Statistics Institute estimates that Portugal’s house prices have soared by over 60% between 2019 and 2024, and commentators don’t believe the attraction of second homes in sunny southern Europe will decrease soon.
“We are still experiencing strong demand from the UK. We have sold to buyers from 32 different countries over the last two years, and the UK remains our largest market,” Zosie Hawker, managing partner of Fine and Country, also based in the Algarve, told the i.
“The main reasons that wealthy foreigners relocate to Portugal are security, lifestyle and greater weather. There is [also] a new scheme offering lower tax rates to certain categories of skilled professionals, which has made the country quite attractive too.”
In addition to non-doms fleeing the country before April, other UK residents could be motivated to relocate by the government’s income tax freeze and increase in capital gains tax (CGT).
“The income tax rate has increased on those earning over £125,000, and the personal allowance, which reduces the amount of income taxed, has been frozen,” international property investor Asas Khan said.
“This can result in individuals paying more tax than before without an increase in their earnings. Britons in this bracket may find it appealing to move to countries with lower tax rates in Europe for high earners.”
“Capital gains tax is also set to increase, which will make it more expensive for individuals to sell assets like properties or shares,” he added. “Moving to a country with a lower capital gains tax rate could be financially advantageous for those affected.”
A Treasury spokesperson told the i: “Keeping the UK internationally competitive, our main CGT rate is lower than any other G7 European country – including Italy – and lower than Portugal’s, and our new residence-based regime is simpler and more attractive to new arrivals than the non-dom regime it replaces.
“It means our tax system is fair and progressive, keeping the UK an attractive place to live while supporting the public investment needed to drive growth.”