Building your home in Portugal – A Complete Guide - Madeira Estate

Building your home in Portugal – A Complete Guide

Building in Madeira

Are you considering building your dream home in Madeira or Portugal? Arguably one of the largest and most important projects we can do in life, buying a plot of land and designing your home can be extremely rewarding. Many of us have dreamed about it, and one big factor is understanding the laws and regulations, especially when choosing to build abroad.

At Madeira Estate, we’ve compiled as much information as possible so that you can be well informed and confidently plan your project and relocate to Madeira.

Why build in Madeira?

Madeira is a small piece of paradise in the North Atlantic Ocean, 900km Southwest of Lisbon. Much of the island boasts stunning scenery, ocean views, and excellent amenities and facilities, it’s a desirable destination for retirees, remote workers and families looking to escape crowded and densely populated areas.

Building in Madeira can also be an excellent investment, as the Island is seeing a surge in popularity, with developments and investments made across the region.

Depending on the area, rural land can sell for €30 to €40 per m2 with planning permission. For prime real estate locations, the cost can be significantly higher, ranging from €400 to €900 meters squared.  

How do you find the perfect plot?

When searching for the perfect plot of land or location to build your home, arguably one of the most important steps, it’s important to have a deep understanding and knowledge of the local area. Part of this decision will depend on the vision for your home. Do you want to build in a populated area, or find a remote plot for the ultimate level of privacy?

A quality real estate agent can work with you to find the perfect plot, as well as help you navigate the purchase process and get you the fairest price possible. Our team at Madeira Estate have an intimate knowledge of the island and individual municipalities and can give you advice on the areas best suited to your needs.

What are the requirements for a new building in Madeira?

After the introduction of restrictions in the early 1990s requiring Portugal to comply with European building regulations, several factors need to be considered when acquiring a plot for development.

Before purchasing a plot, you must determine whether the property can be approved for the construction of a new property, or the extension of any existing dwellings. In most cases, this permission is only granted in countryside locations where there is an existing building due to legislation designed to protect agricultural and forest areas.  

Permission is granted by the local authority or Câmara Municipal via a Licença de utilização (Usage License). The application must be led by a certified architect who understands the local legislative and planning requirements.

As well as having an experienced architect on board, the project must also be appraised by Electrical and Mechanical engineers, so that the drainage, thermal and acoustics, gas, water, fire, and electrical systems comply with regional and European standards.

Once the application has been submitted and approved by the local authority, a Habitation Certificate or Building Use permit will be issued, allowing the sale or legal occupancy of the building.

What are the costs involved?

The costs of building a home in Madeira is dependent on many variables. These include the materials involved, the type of property and the location. City centre locations involve higher costs as opposed to rural areas where your money will go further. The first thing you want to do is contact three or four construction companies and ask for an estimate.

Typically, you can expect to pay between €500-€700 per meter squared.

When approaching constriction firms for a written quotation (citaçãos), it’s important to have a comprehensive list of requirements, covering every aspect of the build, from construction down to small aesthetic features, such as light switches and power sockets. With reference to the architect’s plans, list the building materials, the exact location and orientation on the plot and insulation against heat, damp, and humidity.

  • Pay close attention to the building and payment schedule
  • Protect yourself from rising costs by opting for a fixed price agreement, in the vent the builder spends more on materials than what was agreed.
  • Include a penalty clause for late or failed completion
  • Have in place a guarantee against defects and disputes – typically a percentage (5-10%) of the building costs is retained until satisfactory completion and inspection.   

If Architect Fees are contracted separately, Ensure they contain the following:

  • Any applicable landscaping
  • Permit and licenses plus their costs
  • Any land Segregation or Subdivisions
  • The declaration of the new building
  • Horizontal Division for a Community Property –
  • Connection of all utilities (Gas, Electricity and Water)

For a typical project, architect fees range from €5,000 to €15,000. These can be calculated either as a percentage of the cost of the project or at an hourly rate, so check with your Architect in advance so you can form an estimated cost.  

What are the legal steps involved during a project in Madeira?

When you choose a builder, who is legally required to have a valid construction license, they will be responsible for managing and coordinating all the relevant legal and technical documents for the project. The legal process that needs to be observed is as follows:

  • Obtaining the Pedido de Informação Prévia, (previous information request) from the local municipality. This document outlines if it is possible to build on the plot and includes any legal and regulatory conditions that must be followed. If the plot of land has already been designated “Loteamento”, this step isn’t required since the possibility to build on the plot is already authorised in its legal documentation.
  • In conjunction with your architect, your builder will arrange for a topographical survey of the land to be produced. This document is submitted to the Câmara Municipal for approval, along with evidence that a water and electricity supply will be available for the property, both during construction and when the property is ready for habitation.
  • Once approved, they then submit the technical plans, which include water, sewage, thermal, acoustic, gas, communications and electrical plans to the Câmara Municipal.
  • Your builder is also responsible for following the projects’ appreciation phase with the Câmara Municipal. When the permit has been issued by the Câmara, you will be informed by your builder and construction can begin.
  • A legally accredited civil engineer 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.

Construction is complete. What’s next?

Provided there have been no changes to the project during construction, your builder will inform Câmara Municipal and request the residential license. This document will include all the legal documentation and certification for your property.

From the moment of handover, the property becomes your responsibility. At this stage you need to consider the following:

Connection of utilities – When you have received your residential license, you can request the connection of water, light, gas, and other utility services.

Conducting regular maintenance – Once you receive the keys to your home, regular maintenance of equipment (such as boilers, solar panels, pools, etc.) is your responsibility. It is important to be aware of which equipment needs regular maintenance. Failure to conduct regular maintenance can cause problems in the future that are not covered by the property’s construction warranty.

Tax obligations – Once complete, you must register your new property with Serviço de Finanças si=o it can be evaluated for IMI, Imposto Municipal Sobre Imóveis, municipal property tax.

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

Once the project has been completed and handed over, the post-delivery guarantee for construction work beings. Legally defined and protected by the Portuguese Civil Code, the guarantee is valid for five years for any damage or errors resulting from the construction work, or 10 years for non-conformities in the structural construction components.

After becoming aware of a problem, the homeowner has one year to report the issue to the construction company, or risk voiding their guarantee.

How can MC Contabilidade and Madeira Estate help?

Our partners at Madeira Company, Contabilidade, are a team of experts that can work with you during your relocation to Portugal. From visa and tax requirements, and company formation, to connecting you with trusted architects, construction companies, and logistics, we’re here to make your move as effortless as possible.

For a consultation, contact a member of the team today and talk through your personal circumstances.

For help finding you dream plot of land, or exploring real estate opportunities in Madeira and Porto Santo, get in touch with Madeira Estate today and learn how we can help you find your dream home.

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