Building a house in Portugal could be attractive if you consider making it your permanent home. In the current real estate context that Portugal is going through, many experts recommend buying land and building a house instead of buying one made to your specifications. Whether you dream of a cozy cottage in the countryside or a modern villa by the sea, Portugal offers a wide variety of options for building your dream home.
Building a house in Portugal can be an exciting venture. But it requires careful planning and consideration. The process can seem challenging, especially for those not familiar with the local laws, regulations, and customs. However, with guidance and with our tips, building your own home in Portugal can be a rewarding experience.
It’s crucial to understand the state of the real estate market in Portugal in order to find the best area for you. Portugal has everything: from the lush green mountains of the north and center regions to the golden beaches of the Algarve. The type of house you build will depend on your personal preferences, budget, and lifestyle.
Buying land and building in the Algarve may be the best way to own a vacation house with a pool, where you can enjoy the sunny weather and beautiful beaches. On the other hand, if you prefer the tranquility of the countryside, you might consider buying a farm (‘quinta’) in Alentejo or Douro and constructing your dream home there.
While the interior is less populated and has a larger area for building and renovating houses, the coast is more populated. Most construction is in large coastal cities and surrounding areas, where renovating and reusing existing buildings proves to be a more sustainable option than demolishing and building a new one. Therefore, you should analyze the type of house for your lifestyle and whether it makes sense to invest in the large, calmer, and cheaper areas of the interior of the country or build on the coast and enjoy the beaches and active culture.
Before building your dream home in Portugal, you need to find the perfect piece of land in Portugal. When choosing a building plot, there are several factors to consider:
Once you’ve found the perfect piece of land, the next step is to buy it. Buying property in Portugal can be a complex process, especially for foreigners. We can help you navigate the process and ensure everything is done correctly.
You can take out a mortgage in Portugal specifically for building projects if you need a loan to finance the construction of your new home. Discover which bank has the best advantages for your credit and what you need to apply.
Before you can start building your house in Portugal, ensure you have all the necessary documentation, which may include:
Portugal has strict laws and regulations governing the construction of new homes. Different measures are being discussed, including government incentives and support programs for building houses.
You may need to apply for a bank loan to build your house. Instead of a mortgage, there’s the possibility of applying for a construction loan, which has different characteristics from the traditional loan for property acquisition. Once approved, the granted credit is made available in installments as the construction progresses. Afterward, a bank-hired expert will inspect the construction. This is a common procedure that allows instalment loans to be granted over time.
No entity provides 100% financing. Construction loans are similar to mortgage loans. Banks will only lend between 80% to 90% of the land and project appraisal value. Therefore, to start, there’s always the need for you to provide some initial capital. It’s worth mentioning that the house plan needs to be approved by the local municipality before construction can begin. This process may take some time, depending on the city.
Unless you’re a DIY expert, you’ll probably need to hire a construction company to build your house. When choosing a construction company, we can help you make an honorable choice. In addition to hiring a construction company, you’ll also need to hire other professionals, such as an architect and a project manager. The right people will ensure your project is completed on time and within budget.
When hiring a company qualified for the type of work you need, use the database of the Institute of Public Markets, Real Estate, and Construction (IMPIC). This free procedure allows you to find legally authorized companies to operate and hold a license.
When analyzing a contract, you must take into account:
It’s important to note that construction projects in Portugal often take longer than initially estimated. Therefore, it’s wise to plan for potential delays and budget accordingly.
The most common type of construction in Portugal right now is a combination of traditional and modern techniques. Many new homes in Portugal use traditional materials such as xisto (schist), granito (granite), and barro (clay), which vary depending on the region. In the north of Portugal, granite is more common while in the central areas like Beira Baixa, schist predominates.
In addition to these traditional materials, modern features such as insulation, double glazing, and underfloor heating are being incorporated more and more nowadays to combat the cold and the common knowledge that Portuguese homes are very cold in the winter. Including energy-efficient solutions such as solar panels can significantly reduce heating costs and make your home more environmentally friendly.
Modularization and prefabrication are emerging trends that involve constructing elements of a building off-site in a factory. Once ready, these modules are transported and installed on-site, significantly reducing construction time by up to 50%. Besides saving time, this construction method reduces material waste and increases production agility. Additionally, sustainability is a trend that is here to stay, with more emphasis on eco-friendly construction materials and practices.
The cost of building a house in Portugal can vary widely depending on factors such as the size and location of the property, the type of materials used, and the level of finish. The purchase of land implies the existence of fees applicable at the municipal level.
Additionally, there are tax obligations associated with this expense, such as Stamp Duty (Imposto do Selo) and Municipal Property Transfer Tax (IMT – Imposto Municipal sobre as Transmissões Onerosas de Imóveis). In addition to these standard taxes, you will also need to pay urban planning fees and an urban compensation fee.
When it comes to construction prices, as a rough guide, you can expect to pay between €1,000 and €2,000 per square meter for a new build in Portugal. Of course, it all depends on your personal choices.
Once the construction of your house is complete, there are still a few things to take care of before you can move in. Your new home must pass inspections to meet safety and quality standards. You’ll also need to obtain various licenses and permits, such as a habitation license, before moving in (no longer required, but highly recommended). Additionally, you should consider other documents and property taxes, such as the Portuguese property tax Imposto Municipal Sobre Imóveis (IMI), which you must pay annually – either once, twice or three times, depending on your property’s classification.
Energy Certification (Certificado Energético) is also required by law. You may need to obtain a waste management license (Licença de Gestão de Resíduos) if you plan to manage waste on your property. Home insurance is recommended to protect your investments and belongings in case of accidents or unforeseen events. Finally, the funnier part: you’ll need to furnish and decorate your new home to make it feel like your own.
If you’re still unsure whether building a house in Portugal is the right decision for you, we’ve prepared a list of pros and cons to help you make up your mind:
Pros:
Cons
Building a house is a dream project and an ambition for many, but it can be a complex and challenging process. It is also a decision of great responsibility, with many points to consider. At Pearls of Portugal, we’re here to make the process as smooth and effortless as possible and help you with all your house-building questions in Portugal. If you still have doubts, get in touch with us.
This depends heavily on the personal choices you’re making for your property, obviously. But if you’re choosing regular, ‘un-chic’ things, you can expect to pay between €1,000 and €2,000 per square meter. Of course, this depends on construction company and the region you’re in as well.
If you have the knowledge to do so, then yes, you can absolutely build or renovate a house in Portugal by yourself. Still, you must get all necessary permits and abide by all construction laws.
Absolutely. You must get all construction projects approved by your local government (Câmara Municipal) before construction can begin. Be aware that this can take a while in some places.
You need to go by your local ‘Câmara Municipal’ and submit all necessary documentation and building plans in order to get a building permit in Portugal. You cannot begin construction before it is approved.
Yes, prefab houses are common in Portugal and they can be much cheaper. There are a lot of different models from multiple companies, ranging in price.
Absolutely, a lot of banks offer loans to foreigners. You won’t have a problem. Just make sure that you get a NIF and open a Portuguese bank account before applying. You should also explore multiple banks and options before making your decision.
Lisbon is the most populated city in Portugal, so there are many buildings and new construction always going on. As you probably know, having your own house and owning land in a city is difficult, Lisbon is no exception. It would be quite hard to build a house in the city center. Even if you were to find the needle in the hay, it’s hard to get decent surrounding area, for a backyard or garden. Going a little outside the city, though, you can definitely find a lot of plots – Sintra and Ericeira are good options, for example.
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