Buying property in Portugal is more popular than ever. From its stable economy to a favorable tax regime, growing tourism …
Construction or renovation? This can be a big decision when you’re buying in Portugal, since everything’s new and you’re not really familiar with the market. When considering building your home in Portugal, you can choose either to build a new house or renovate an existing property. This guide will provide you with all the vital, up-to-date information you need to make the best possible decision. We work in cooperation with many construction companies in Portugal and have helped many clients to successfully complete their projects!
Choosing the right construction companies in Portugal when renovating or building your home is definitely an important decision. However, the local market can be confusing. Most construction services you find on the Internet are big firms that won’t work on a single property – smaller companies who’ll take on your project are much harder to find. When you work with Pearls of Portugal, we set you up with our trusted construction and architecture partners. Asking locals for recommendations is also a great option.
Considering the above, the ideal solution is to make a market research and ask for budgets – written – from the various builders that you consider most adequate for your needs, before signing a contract. This process may take some time and, therefore, you should plan a period of about 2-3 months for this. To ensure success in the gathering of budgets and minimize possible surprises in the construction process, you should always take into account the following attributes:
Even so, the budget values may vary according to the construction systems and materials in use. In order to better compare the various values presented, it will always be important to check the quality ratio between the materials indicated in the possible budgets under analysis.
Before accepting an offer, we recommend a check by a construction consultant, so that you can confirm that it is a fair contract. You should also check whether the offer (which should include a 19% VAT share) is only an estimate or whether it comprises a fixed value, since the cost may sometimes increase dramatically due to contractual clauses and possible changes during the construction phase.
If you can, you should also get a lawyer to examine the contract, as construction contracts can be very distorted and biased in favor of the construction company, giving few rights to the client.
According to Portuguese law, construction companies are liable for minor defects up to one year after completion and structural defects up to five years. In fact, it is not uncommon for problems to arise during construction, particularly with regard to material defects. If you have problems, you generally have to be very patient and persistent.
A completed building should be checked by a civil engineer for possible defects and a problem report developed afterwards. If there are any deficiencies, the surveyor should determine who is responsible for them, and architects and contractors in Portugal are legally required to take out liability insurance.
Upon completion of the work, the construction company should (where necessary) arrange for a council visit to ensure that the house was built following the plans and building codes. After a satisfactory inspection, the council will issue an habitation license. When this process is complete, a property must be registered with the council, the Tax Office (IRS), and the local land registry (Conservatória de Registo Predial).
Building a house in Portugal is a very appealing project, as the lists of available properties are plentiful and range from old ruins to charming mansions or modern houses that require basic renovations.
Portuguese architecture has a long and rich history, influenced by different and ancient cultures that occupied the territory throughout the ages, such as the Romans and the Arabs. The influence of this large range of architectural and artistic styles contributed greatly to the development of a unique know-how in craftsmanship such as marble, limestone, granite and also woodworking. To this day, Portugal is a country where valuable talents can be found in these crafts, especially in interior regions.
You should be aware of all the necessary procedures to understand whether the right choice is new construction or renovations. Renovations make sense if you want to buy a cheaper property and add your personal touch to it. Designing a new build makes more sense if you have your own idea of the property, if you want to build in a very modern way, or if you want to live in a very specific (rural) location.
By building a home from scratch, you have the opportunity to customize it to meet your tastes, needs, and aspirations, resulting in a space that is entirely tailor-made and comfortable to live in. The choice of design, materials, and finishes is entirely yours.
New construction obviously adds value to a land. The cost of construction added to the value of a well-located plot is predominantly lower than the cost of a property already built on that same site. It can represent the opportunity to live in a good location at a lower cost.
A new construction makes use of contemporary materials and design, allowing for open space areas and larger windows that let in more natural light. These factors will increase the appeal of the construction itself to younger buyers in the future.
A newly built house must meet the directives of current legislation, resulting in a more energy efficient building, meaning that heating and cooling will be optimized, reducing your costs.
Starting new construction gives you full control over the materials you want to use, which means you can invest in the areas you value most – such as the living room or kitchen, saving money elsewhere. Since your home will be newly built, if it is done right, it will save you from many unexpected repairs long term.
Besides the construction process itself, building a new house in Portugal involves a huge amount of bureaucracy and legal obligations. It can be a long process, especially if you want to build in rural areas where there are new fire protection rules.
Building a new house in Portugal usually implies choosing a location further away from the city center, which are mostly historic and therefore subject to certain rules regarding architectural design as well as heritage preservation. However, there is a wide range of locations in residential areas not far from the cities and essential services, and with the advantage of being located in beautiful and natural places, for example by the coast or in the countryside.
Buying a property can allow you to save money on the purchase itself, since the costs of renovating should not exceed the original purchase price – unless your total investment results in an added value that compensates for this. You should check the current market value – per square meter – as saving money will be critical to your investment. It is important to note that while there are places that are very expensive, and renovation costs for rundown houses can be quite high, it will all depend on the state of repair and the ultimate goals of the buyer.
If your dream is a house in the center of a city or village, building a new house may not even be a possible option. Renovating is, in this situation, the key to owning a home right in the heart of a historic village or town, with all their charm and liveability. Furthermore, in certain rural areas, new buildings are only allowed if there are already previous buildings on the site, making renovation the only possible option.
Portugal has seen increasing investment in urban rehabilitation in recent years, supported by government measures and municipal plans. This has resulted in processes with less bureaucracy for those who are interested in renovating a house or apartment and only want to make changes to the interior space, without touching the overall structure of the building. The first step will be a simple notice to the municipality, accompanied by a declaration of responsibility and supervision by an architect.
Choosing to renovate an already built house will limit your choice to the existing market offer and other constraints that would not arise when building a new property. For example, you may not be able to adapt the interior spaces to your taste and/or needs and, in the case of certain historic sites, you are required by law to preserve the original facade.
In an already constructed building, the quality of the pre-existing building materials and structure may hide unpleasant surprises, and thus additional costs may arise in this renovation process.
The first step is to determine an overall budget – and eventually obtain a loan. To do this you should make an initial survey of the costs of architectural plans, taxes, licenses, construction companies, land, water sewage system, electrical and gas installations, materials, and the house itself in the case of renovations. In addition, the floor plan should include all elements and items that represent a desire or need, including exteriors such as a pool or patio.
It is essential to seek the help of experts. An architect’s office can be the strongest ally at this stage, drawing up the floor plan of the house with the corresponding estimate. As mentioned earlier, architectural fees are usually calculated according to a percentage of the total construction cost – about 5%, but they can be higher. This should be clearly discussed before contracting the services.
In order to get a detailed and accurate budget, you must take into account the costs of:
Knowing these values can allow you to negotiate prices and further clarify the potential appreciation of the house. Before buying land, you should check with the local municipality to see if it has been approved for building purposes. If the land is located on a building lot in Portugal, it will usually already have basic pre-installed water and electricity supply or sewage system infrastructure – which will save you money.
Deciding what is the actual required building area will be a plus when it comes to finding a suitable lot.
There are many different construction methods and choosing the right one for your wants and needs will warrant a multitude of advantages for you, as well as an understanding of drawbacks to consider, in addition to the associated cost.
These are two elements that have a huge impact on the real estate budget. In Portugal, there is a huge variety of companies that sell construction items to the general public – from local stores to chains such as Leroy Merlin or BricoDêpot – with low shipping fees. This gives you a wide range of options and the opportunity to get the lowest prices on the market. However, if you want higher quality finishes such as custom-made marble kitchen counters and/or luxury wood flooring, you should understand how these options will impact your final budget. It’s essential to be conscious throughout the process and make the necessary adjustments in order to keep the budget realistic and avoid possible surprises.
These are the fundamental phases of a project to build a house in Portugal:
To ensure the intention and ideal of construction, the choice of the right architect is fundamental. The chosen professional should not only plan the house accordingly (considering the best use of areas, interior and exterior environments that are functional), but also ensure that the client’s needs are met. Also a qualified and experienced architect will ensure that the budget and deadline are met, and will be an ally in every phase of your project – from planning to the design of the building itself. The architectural team can also provide the civil engineering service, that is the structural components of the house.
Many, if not most, Portuguese architects speak English, so language barriers will probably be non-existent here. (We do recommend you try to learn basic Portuguese before you kick off this project, though). As for the architects’ fees, these are generally calculated as a percentage associated with the total construction cost – usually around 5%. We warn you that architects are often interested in developing projects with higher construction costs. In order to prevent this from happening, we recommend that the topic be clearly discussed before signing a contract. If necessary, a certain (fixed) fee can be established for the services.
You should be prepared to face all the processes related to bureaucracy. Like everywhere else, there are several legal requirements that must be met (many of them mandatory) in order not to risk having the project suspended or, in the worst case, blocked.
Many requirements can be found in the Municipal Master Plans (PDM), Urbanization Plans (PU), and Detailed Plans (PP). The PDM is of great importance in construction law practice because many municipalities do not have a PU or PP. Thus, the PDM usually indicates the size of the developable land area and can provide some more specific details, such as the number of beds allowed in tourism projects.
Before you even buy the land to build a house, you need to know if it has been approved for construction, and even then, what type of construction is allowed. An initial contact with the town hall is recommended before taking any formal steps. However, some of these fundamental questions can usually be clarified directly with the architect in charge.
If a more concrete answer is desired, a Preliminary Information Plan (PIP) can be sent to the local municipality, where the intentions of a certain construction will be explained. The response to the information request, with a minimum deadline of 20 days, will clarify all the conditions and legal rules for that construction. The PIP is a very significant investment.
You should also be aware that the PIP is related to the possibilities of a certain plot of land, and not the intentions of the person who acquired it. Thus, if a municipality approves a PIP, the owner has the right to carry out construction work on the basis that he or she is indeed the owner. Therefore, investors should always close a contract with the owners before paying the PIP or even buying the property. These are the first steps in a long process that can take some time and should be clarified with an expert before it begins.
When choosing a construction company, some of the most important factors to take into consideration are relevant experience and references, the assigned project leader (responsible civil engineer), the subcontractors, and the commitment (which should be stated in your construction contract) to respect the previously agreed upon budget and schedule. The company’s operating licenses and proof of insurance, as well as its compliance with safety procedures are also extremely important.
You should also take into account the financial position of the company to be hired, and not only its reputation. The construction company should complete the building process and offer a completion guarantee, which determines the responsibility for certain work to be done within a period of up to 5 years.
Building standards in Portugal vary considerably, so the lowest offer most likely won’t have the best value for money.
In the construction phase, it is expected that mishaps will inevitably occur. Nothing beats having an architect and a construction company to help resolve them. Adapting to contingencies requires flexibility, but sticking to a budget and knowing that having a signed, well-written contract will be enough to feel protected in case things go wrong.
We are the leading buyer’s agent in the Portugal real estate market. We work with trusted partners that we can recommend to you so that your project meets all your expectations, avoiding complications.
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