Jan 21, 2022

Building a House in Portugal — What you need to know

The advantages of building a house from scratch are numerous and well known. From being able to choose materials and personalise finishings, to ensuring that this investment actually becomes a "home". It is also possible to secure a more affordable construction price when you choose to buy a house in a development or project where properties are built in larger numbers, thus allowing significant benefits for homeowners.

Nevertheless, some property buyers, namely international investors, sometimes have concerns regarding the bureaucracy involved in a country where they do not know the language, construction methods or legal system.

The good news is that there are full-service solutions such as the Simple Life Home Buyer pack (provided exclusively by Portugal Realty and Immo Portugal) specifically designed to meet the needs of international real estate buyers! From securing construction licensing to applying for the certifications required for a residential license, as well as dealing with the technical details that are part of building a home in Portugal.

Here's how the process of building a house in Portugal works and what you can expect at each stage.

How long is the average time to build a house in Portugal?

Estimating the time it takes to build a house in Portugal depends on the type of property and the construction method used.

For a house in which the architecture and the licensing project are already settled, as well as the respective builder and technical support team, generally the construction can take between one to two years from start to finish.

In this model, commonly known in Portugal as "key-in-hand" construction, the client can choose between finishings and customise materials.

Variations in the duration of construction also depend on the Portuguese municipality involved, since licensing procedures depend on this public entity and not on contractors.

Opting for a plot and location where construction is pre-approved grants homeowners extra security and avoids any "headaches" that may occur in terms of licensing.

As a homeowner, what is expected from me?

In addition to fulfilling contractual obligations such as providing legal documentation (identification card, tax number, address, etc.) and making the payments required at each milestone defined, homeowners of turnkey properties in Portugal must also make the necessary decisions to ensure that their home is built according to their personal taste, expectations and within the timeline defined.

This can include decisions regarding interior finishings, such as the choice of flooring, carpentry, taps, tiles, or the colour of interior walls. The cost of these materials is previously defined in the project budget, but some builders allow changes that may or may not be included in the sale price.

As a general rule, small alterations in colours, materials or extras do not require changes in the licensing process, which almost always compromise delivery times and increase costs. In all cases, when discussing these changes with your builder, they will be explained to you in detail.

When you buy a turnkey property in Portugal, what’s included?

What’s included in a construction contract in Portugal depends on the builder and conditions agreed upon. It is important to always read the small print in any contract very carefully, because there may be details that you assume are included in the construction, but that in Portugal are usually not.

A classic example of this is lighting equipment. When you buy a turnkey house in Portugal, normally only the pre-installation of the lighting is included (properties are delivered with the electric wire for lighting or, in some cases, a light bulb hanging from the ceiling). However, in other cases, the lighting may already be recessed into the ceiling if this has been specified in the construction contract.

During the construction of my property, how many times do I have to come to Portugal?

A Portuguese builder with experience in working with international clients will want to meet with you at least two or three times to explain the construction process in detail.

At some stages, these meetings may be done remotely for your convenience. However, it is important that there are also face-to-face meetings so that you can see samples of materials in person.

Choosing finished new build home in Portugal — Choosing colours and textures in person is always advisable, to get a real feel for what the final result will be.

During these meetings, it is also essential to have the support of a professional with extensive experience in assisting international clients and an understanding of your cultural habits and personal needs. With this close and personalised support tailored to your expectations, it’s easier to make the right decisions!

Aside from these moments — which are key to having access to all the information and making the decisions necessary for the construction work to proceed — you don't need to be present in Portugal.

To ensure clients greater peace of mind, some builders, such as PRESPROP - Portugal Construction, regularly send photographic progress reports throughout the construction process. Clients also have the added comfort of a dedicated Account Manager who acts as a bridge between the builder and their needs! With no technical jargon in between, or the need to talk to the multiple suppliers involved, the whole process is simple and hassle-free!

What are the legal and technical steps of building a house in Portugal?

The builder, who is legally required to have a valid construction license in Portugal, is entirely responsible for coordinating all legal and technical details, so you will not have to worry about any of these things. Namely, the legal process which includes the following steps:

Obtaining the previous information request (“Pedido de Informação Prévia”) from the City Council where your future home is located. This document indicates whether building on your plot is allowed, as well as the legal and regulatory conditions applicable. In the case of a “loteamento”, this step isn't required since the possibility to build on the plot is already authorised in its legal documentation.
Running a topographical survey of the plot and designing the architectural project. These documents are part of the project that must be submitted to the City Council for approval, along with legal proof that water and electricity will be available for the plot/villa in the future.
After these documents are approved, the next step is submitting the engineering projects, which are also subject to approval by the City Council. These include technical plans for water, sewage, thermal, acoustic, gas, communications and electrical projects, among others, depending on the type of property.
The builder is also responsible for following the projects' appreciation phase in the City Council. When the building permit is issued by the City Council, the builder will inform you and the construction work can begin.
A legally accredited civil engineer in Portugal will be responsible for supervising all construction phases of your property, together with a group of experts responsible for the future certification of the construction works.

The construction of my property in Portugal is complete. What now?

When the construction phase is over, if there were no changes to the initial project, the builder must inform the City Council and request a residential license, providing all the legally required documentation and certifications.

With the handover, the property becomes the homeowner's responsibility, namely regarding:

1) Connection of utilities

After receiving the residential license, you can request the connection of water, light, gas or other utility services needed to enjoy your home. But again, you don't have to do this alone. Property management companies in Portugal, such as SCH Solutions, will take care of everything for you, saving you time and money!

2) Assuring regular maintenance

After you receive the keys to your home, regular maintenance of equipment (such as boilers, solar panels, pools, etc.) is also the homeowner’s responsibility. It is important to be aware of which equipment needs regular maintenance and ensure that you are able to guarantee this.

If you are living abroad, have little time available or simply don't want to do this on your own, we strongly advise you to hire an experienced property management company in Portugal to help you with this task.

Lack of regular maintenance can bring you problems in the future that are not covered by your property’s construction warranty.

3) Tax obligations

The completion of the construction phase also implies tax obligations, such as registering the property with your local Tax Department (Serviço de Finanças) in order for it to be evaluated for Municipal Property Tax (IMI - Imposto Municipal Sobre Imóveis).

In this case, it is also a good idea to have the support of a Portuguese accountant experienced with international clients, such as Portugal Accounting, who will help you understand what property taxes are due in Portugal and fulfil all your tax obligations within legal deadlines.

Real Estate taxes in Portugal: Who pays IMI and when?

The Municipal Property Tax (IMI) is an annual tax that is paid by anyone who owns a property in Portugal. Find out more in this article by Portugal Accounting...

What is covered in the construction guarantee of my property in Portugal?

The post-delivery guarantee for construction work in Portugal is legally defined in the Portuguese Civil Code and begins at the delivery date of the property.

This guarantee is valid for a period of 5 years, regarding damages or errors directly linked to the construction of the property, or 10 years for nonconformities related to structural construction components (as of January 1, 2022).

Should such problems exist, the homeowner must report this to the contractor within one year of becoming aware of the problem, under penalty of forfeiture of the warranty right.

As you can see, building a house may be the dream of a lifetime, but it doesn't have to be an adventure! With the right partners by your side, you will have all the support you need to build the house of your dreams in Portugal... on time and on budget, simply and without complications!

If you're interested in buying a home in Portugal, visit Portugal Realty's website to see property for sale!