Construction companies Portugal

When considering building your home in Portugal, you can choose either to build a new house or renovate an existing structure. Finding the right construction companies in Portugal can already be a big challenge in your home country. 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 local and national construction companies in Portugal and have helped many clients to realize successfully their projects.  

If you need support or further advice, please do not hesitate to contact us. We help you to find a trusted partner for your renovation or construction project!

WHEN DO RENOVATIONS OR A NEW CONSTRUCTION MAKE SENSE – AND WHEN NOT?

Building a home in Portugal is a very appealing project. Property listings are abundant, spanning from old ruins to charming manors or modern houses that require basic renovations. Portuguese architecture has a long and rich history, influenced by different and ancient cultures that occupied its territory throughout the ages, such as the Romans and the Arabs. From the Islamic culture, we learned the art of the “azulejos” (tiles) that is now part of our identity and distinguishes our façades and interiors. The influence of gothic and renaissance European architectonic and artistic styles has greatly contributed to the development of a unique know-how in crafts like marble, limestone, and granite working and also, being a nation of sailors, woodworking.

To this day, Portugal is a country where you can find valuable talent in these crafts and apply them to enrich your own, unique house project. The potential for house projects is as big as your imagination. But you must be aware of all the necessary procedures to decide whether a new build or a renovation is the right choice for you. 

Basically, it can be said that renovations make sense if you want to buy cheaper and add your own touch to the property. New construction makes sense if you have your own idea of the property, want to build very modernly, or want to live in a very specific (rural) place.

BUILDING A NEW HOUSE with construction companies in Portugal

Advantages:
  • Building the house of your dreams – individual customization

When building a house from scratch through construction companies in Portugal, you will have the chance to personalize it in order to suit your liking, needs, and aspirations, resulting in a custom-made, comfortable space to live in. The choice of design, materials, and finishing is entirely yours.

  • Valorization potential

New construction adds value to a plot or land. The cost of construction added to the value of a well-located plot of land is predominantly lower than the cost of a built property in that same location. You can grab the opportunity of living in a good location at a lower cost.

  • Contemporary design and natural light

A new build makes use of contemporary materials and design, allowing for open-concept areas, larger windows, and letting in more natural light. These factors will increase its appeal to younger buyers in the future.

•       Environmental certifications and energy efficiency

A newly constructed house has to comply with the current legislation directives resulting in a more energy-efficient building, meaning that the heating and cooling will be optimized, reducing its costs.

  • Budget control and medium-term savings

Building new gives you complete control over the materials you want to use, meaning that you can invest in the areas you value the most, such as the living room or the kitchen, saving money on other spaces. Since your house will be newly built, if well accomplished, it will save you from many unexpected repairs in the medium term.

Disadvantages:

  • Project duration and bureaucracy

Besides the construction procedure itself, building a new house in Portugal implies a huge amount of bureaucracy and legal obligations. It can be a long process especially if you would like to build in rural areas where new fire protection rules exist.

  • Localization

Building a new house in Portugal generally implies choosing a location further from the city centers, which for the most part are historical, hence subjected to architectural and heritage preservation laws. But there is a wide choice of locations in residential areas not far from towns and services and with the advantage of being situated in beautiful, natural locations, by the shore or in the countryside.

RENOVATING AN EXISTING PROPERTY

Advantages:

  • Price

Buying a used house might allow you to save money on the purchase cost, although there are locations that are very expensive and some houses’ renovation costs can be quite high, depending on their condition and your final goals. The costs to renovate the house shouldn’t exceed its original purchasing value unless your total investment results in an added value that makes up for that. You should check the current market value per square meter of the aspect of saving money is key to your investment.

  • Location

If you aim for a home in a city or village center, building a new house might not even be a possible option. Renovating a used building is, in this situation, your key to owning a house right in the heart of a historic village or town, with all its charm and livelihood.

In certain rural areas, new buildings are only allowed if previous constructions already exist in that location, making the option of renovating the only possible one.

  • Simplified bureaucracy

Portugal has seen, in recent years, an increasing investment in urban rehabilitation, supported by government measures and municipal plans. This has resulted in less bureaucracy for someone who wants to renovate a house or apartment only internally without touching the overall structure of the build. The first step is a simple prior notice to the municipality with a statement of responsibility and the monitoring of an architect. 

Disadvantages:

  • (A more) limited choice

Choosing to renovate an already built house limits your choice to the existing market offer and to other constraints that you wouldn’t have when building a new property. For instance, you may not be able to adapt the interior spaces to your taste or needs and, in historical locations, you are obliged by law to preserve the original façade.

  • Quality of construction

In a preexisting building, the quality of its construction materials and structure might hide unpleasant surprises and, thereby, additional costs of renewal can come up.

ESTABLISHING A BUDGET

This is, for most buyers, the most important factor in a house building project.  Only knowing how much you can spend and the total amount you plan to spend on your property will not only determine the choice of how to build or renovate but also all other aspects to consider. Additionally, establishing a solid home-buying budget helps you to design and follow a construction plan that covers all contingencies, preventing financial slippage. When working with construction companies in Portugal, it makes sense to define a budget upfront and inform the construction company of your choice about your budget limits.

Determining the overall budget

The first step is determining your overall budget (and eventually getting a loan), for which you must do initial research of the costs of architectural projects, taxes, licenses, contractors, land, water sewage system, electric and gas installations, materials, and the house itself, in case of renovations. Furthermore, include in your house plan all the elements and parts you wish to have, including those in the exterior, like a pool or a courtyard.

Seeking help from experts is essential. An architectural office can be your strongest ally at this stage, for it can draw you a house plan with the corresponding budget. Architects’ fees are usually calculated as a percentage of the total cost of construction, normally around 5%, but it can be higher. Talk about the topic clearly before the commissioning and, if necessary, set a limit for compensation.

Putting together a detailed budget 

Then it’s time to get more detailed and precise as you possibly can. For that, you must take into account the costs of:

  • Terrain

The value of the terrain you are aiming at and its surrounding houses is a major factor to consider. Knowing those values might allow you to negotiate the prices and enlighten you on the house valorization potential. Before you buy a land, confirm with the local municipality if it has been approved for construction purposes.  If your terrain is located in a building lot, in Portugal you generally will already have preinstalled basic infrastructures of water and electricity supply or sewage system – an asset that will save you money.

  • The lot and floor areas

Decide what construction area you really need and find an adequate lot for that purpose.

  • Methods of construction

Choose which construction method adapts more to your needs wisely, knowing that it will bring advantages in some aspects, but also drawbacks to consider, besides the associated cost.

  • Materials and finishing

These are two elements that have a huge impact on your building budget. In Portugal, you have a huge variety of builder merchants – from local stores to chains like Leroy Merlin or BricoDêpot, these latter delivering the material at a low transport rate. This provides you with a big choice and the opportunity to source the lowest market prices. But if you idealize luxury finishing like special marble kitchen counters or luxury wooden floors you must consider how those options will impact your budget. Otherwise, it will most probably overrun. Make the necessary adjustments and stick to your initial, realistic budget.

How to work with construction companies in Portugal 

These are the fundamental stages of a house building project in Portugal:

  • Choosing the location and terrain (as explained above in this article).
  • Conception and Design – Hiring an architect

To assure you achieve your building intent and ideal, the choice of the right architect is key. Do invest time in it, ask for recommendations from local friends that you trust and your representatives at the municipality, besides researching an architect’s portfolio. The architect you choose will not only plan the house accordingly considering the best area usage and creating interior and exterior environments that are functional, but it will also ensure that your needs and design intent are met. And, very importantly, a qualified and experienced architect will assure that your budget and time frame are met. The architect will be your ally in each phase of your project, from planning to designing and even through the construction itself. An architect will also provide you with the service of a civil engineer, that attends to the house’s structural components.

Legal issues

Be prepared for bureaucracy (like everywhere). There are several legal requirements you have to fulfill and you are obliged to comply or you’ll face the risk of seeing your project suspended or ultimately blocked. Many requirements can be seen in the planos directores municipais ( in short: PDM), development plans (planos de urbanização; in short: PU) and detailed land use plans (planos de pormenor; in short: PP). The PDM is of great importance in building law practice because many municipalities do not have a PU or PP. The PDM usually indicates the size of the buildable land area and may provide details, such as the number of beds allowed for tourism projects. 

Before you even buy the plot to construct your house in, you need to know if it has been approved for construction and, even so, for which kind of construction. It is recommended to talk to the city hall first before you take any formal steps. Fundamental questions can usually be clarified directly with the responsible architect. If you would like to get a more concrete answer you can send a prior information plan “Plano de Informação Prévia” (PIP to the local municipality, where you inform and explain what you intend to build. The reply to your inquiry, taking a minimum of 20 days, will clarify all the legal conditions and rules for the construction. The PIP is already a quite significant investment. You should also be aware that the PIP is related to a plot and not to the person that paid for it. If a city hall approves a PIP, the actual owner has the right to execute construction works based on the property. Investors therefore should always close a contract with the owners before paying the PIP or even purchasing the property.

These are the first steps in a long process that can take up a while and should be clarified with an expert before you start the entire process

Find and hire construction companies in Portugal

The building or renovating a house is only possible with access to the crafts and skills of a number of specialized professionals. Taking this colossal task into your own hands is very time-consuming, not to mention complex and prone to complications. You will need to source suppliers, and construction companies in Portugal, formalize contracts… By now you should have reached a sound conclusion: the best way to get your project done is by hiring a general contractor, or in other words, a construction company.

When choosing a construction company, the most important factors you must take into consideration are its relevant experience and references, the assigned project leader (responsible civil engineer) and subcontractors, and its demonstrated record and present commitment (that should be stated on your construction contract) to respect the determined budget and timeline. Of the utmost importance are also the company’s licenses to operate and proof of insurance, as well as their compliance to safety procedures. Last but not least, the construction companies in Portugal must conclude a guarantee of completion (Garantia de Conclusão).

To make sure you are choosing the right construction company, visit other houses that they have built and maybe talk to neighbors, and ask if they had any problems during the construction process and if they are satisfied with the results.

Building standards in Portugal vary considerably, so you should never assume that the lowest offer also has the best price-performance ratio.

Construction companies contract

It would be best if you got written quotes (citações) from several builders before signing a contract – plan about 2-3 months for this. The following points must be included in any contract:

  • A detailed building description (down to the last detail such as light switches and power connections) and a list of materials to be used (in respect of the architect’s plans);
  • The exact location and orientation of the building on the property;
  • The construction and payment plan, which must be done in stages depending on the construction progress;
  • A penalty clause for late completion;
  • How disputes will be settled;
  • All costs – including architectural fees (unless otherwise agreed);
  • The landscaping;
  • Registration of the new building;
  • The connections of utilities (water, electricity, gas, etc.) to the house and not just to the construction site;
  • Insulation (against heat and cold) and protection against moisture.

Before you close a contract with one of the construction companies in Portugal, ask for several budgets from different companies and get the contract checked by a building consultant to evaluate if you’re being proposed a fair deal. Confirm if the offer (which must include a VAT share) is an estimate or a fixed price, as the cost can sometimes rise sharply due to contract clauses and changes during construction.

It is mandatory that you have your contract examined by a lawyer as building contracts are often very distorted in favor of the client and grant the customer few rights.

  • Construction

In the construction phase, expect problems will occur. Count on your architect and general contractor to help you solve them. Adapting to contingencies demands flexibility, but try to stick to your budget and know that having a signed, well-written contract protects you in case things go wrong.

  • Close-Out and Guarantee

When the general contractor finishes the construction, it will be delivered to you for examination. A completed building should be checked by a construction engineer for possible defects and have a problem report drawn up afterward. If there are any deficiencies, the appraiser must determine who is responsible for them. Architects and contractors in Portugal are legally obliged to take out liability insurance.

After completion, the builder must arrange a visit by the council to ensure that the house was built following the plans and building codes. After a satisfactory inspection, the municipal council issues a residence permit (Licença de Habitação). When this is completed, a property must be registered with the local authority, the tax office (Finanças), and the local land registry (Conservatória de Registo Predial).

According to the Portuguese law (“Código Cível”) construction companies in Portugal are responsible for minor defects up to one year after completion and structural defects for up to five years. That means you have a five years guarantee, counting from that date, to complain to the general contractor or construction company for any defects or damages you find in your house related to construction defects and get them fixed. Note that your rights to the guarantee will cease at the term of that 5 years period, regardless of the date you acknowledge and report the construction defects.

How Pearls of Portugal can help you

We are the property market leading buyer’s agent in Portugal. 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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