Prices, pitfalls and what you can hire yourself
What does building work cost in the Algarve
Home › Renovation costs
Quotes for the same work here can easily differ by a factor of two. That is rarely because one firm is better than the other; usually it comes down to what is and is not included in the price, and the VAT rate. Below are the rates that are usual in Portugal, the rule that makes the most difference to what you pay, and what groundwork costs. We do the digging ourselves, so you do not need to find a separate firm for it.
- Tradesperson per day
- €150 – €400Labour only. Materials add 30 to 60 percent on top.
- Complete bathroom
- €3,000 – €8,000Labour, excluding sanitaryware and tiles.
- Groundwork
- We dig ourselvesMachine and operator, including a 1-tonne digger for fine work between walls and planting.
What a tradesperson costs
day rates, labourIn Portuguese construction, work is more often charged by the day than by the hour. That works in your favour on a job that takes a week and against you on two hours of work, so for small jobs ask explicitly for a fixed price instead of a day rate.
| Work | Price | Unit |
|---|---|---|
| Builder or bricklayer | €150 – €400 | per day |
| Small repairs, odd jobs | €150 – €280 | per day |
| Repairing a wall or fence | €200 – €600 | per job |
| Laying tiles | €25 – €60 | per m² |
| Masonry, new wall | €20 – €45 | per m² |
| Interior demolition | €15 – €35 | per m² |
| Complete bathroom renovation | €3,000 – €8,000 | per bathroom |
| Renovating a house | €300 – €800 | per m² |
Two things shift these amounts. Materials usually add 30 to 60 percent on top, so a quote of €4,000 in labour easily becomes €6,000 in total. And Lisbon and Porto are 20 to 35 percent higher than the rest of the country; the Algarve is normally below that, but in high season rates go up because everyone has work at the same time.
The VAT trap
23% or 6%This is the part that costs most people money, and where foreign homeowners are caught out time and again. The standard VAT (IVA) rate in construction is 23 percent. There is a reduced rate of 6 percent, but it does not apply just like that.
When 6 percent applies — and when it definitely does not
The reduced rate has to be listed explicitly in Lista I of the Portuguese VAT code. For a private owner there are three routes:
- Renovation, repair or maintenance of a lived-in home (verba 2.27). The property must be used as a home both before and after the work; a second home used part of the year counts. Not: alojamento local, an empty house, a house for sale or rent, a ruin, and extensions or rebuilding. It has to be a job at a price agreed in advance, not work by the day.
- Urban regeneration (verba 2.23). Renovation of a building in a legally designated ARU, with a statement from the municipality. An approved ORU is no longer required since the law of August 2026, but an ARU lapses if no ORU follows within three years: check with the câmara.
- New build of your own permanent home (since 1 July 2026). Here there is no 6 percent on the invoice: you pay 23 percent and claim the difference back from the tax office afterwards. Conditions: permit applied for between 25 September 2025 and 31 December 2029, land plus build (or the tax value, if higher) up to €660,982, a written building contract, moving in within six months and staying at least twelve, and filing the claim within twelve months. Renovation without full demolition is excluded.
The 20 percent rule for materials
For renovation (2.27) the materials decide everything. If materials are 20 percent or less of the whole job, everything is at 6 percent. If they are more, only the labour gets 6 percent and the materials 23 percent, and only if the invoice shows the two separately. If it shows one total price, everything is at 23 percent. The invoice should say "Taxa reduzida ao abrigo da verba 2.27 da Lista I anexa ao CIVA".
Always 23 percent: pools, saunas and tennis courts (even if the job only partly involves them), cleaning work and garden maintenance. Having your bathroom and your pool done needs an invoice that splits the two; otherwise the whole lot is at 23 percent.
And our own work? Digging by the hour or the day is not a fixed-price job, and land clearing counts as cleaning. That is why our rates are shown with 23 percent. If we agree a fixed price for repairs to a lived-in home, such as drainage against damp, we look at 2.27 together. Whoever applies the rate, the contractor, must be able to justify it.
Why this matters more than negotiating
The difference between 23 and 6 percent is 17 percentage points. On a €20,000 job that is well over €3,400. No discount you can negotiate comes anywhere near that.
So always ask whether the amount quoted includes or excludes IVA, and which rate has been applied and why. A builder who cannot explain that clearly has either not looked into it, or is counting on you not knowing.
Sources: AT, Ofício-Circulado 30135 (verba 2.27 and the 20% rule), rulings 28005 (second home), 17985 (alojamento local), 27481 (ARU), Lei 48/2026 (ARU without ORU), Decreto-Lei 97/2026, OC 25116 and OC 25118 (new build). Last checked: 25 September 2026. General explanation, not tax advice.
We do the groundwork ourselves
machine and operatorA driveway, a drainage trench, digging out a terrace, a foundation or a hole for a tree: we come with the machine and operate it ourselves. For fine work (between walls, along existing planting, inside a walled garden) we use a 1-tonne digger. It fits through an ordinary gate and does no damage on the way in.
That means the digging is not a separate part of the job for which you have to find another firm. No waiting until a machine is free, no argument afterwards about who hit which pipe. We come and look, tell you what it costs and do the work. All about our groundwork.
Hire it yourself or let us dig
Hiring a machine looks cheaper until you add everything up. On top of the hire price below come transport to your plot, fuel, the deposit that stays blocked, and your own time. And the risk: damage to a water pipe, a retaining wall or a septic tank is rarely covered by the hire insurance.
We charge one amount for machine, operator and transport, and you know it in advance. The table below is there so you can see what the alternative route costs, not because we are sending you that way.
| Hire company | Machine | Total | Of which transport |
|---|---|---|---|
| Hire company in Loulé | 2.7 tonnes | €1,029.00 | €369.00 |
| Hire company in Quarteira | 2.5 tonnes | €1,483.38 | €332.10 |
| Hire company in Quarteira | 5 tonnes | €2,146.35 | €332.10 |
One day of hire with transport already costs well over €500, before fuel and your own time. The full comparison of five hire companies is on the groundwork page.
Seven questions for every quote
Ask all of them, even if the builder is friendly. Especially then.
- 01Does this amount include or exclude IVA, and at which rate?The answer can make a difference of up to 17 percentage points. If the rate is 6 percent, ask further: on what grounds?
- 02Are materials included?Materials are usually 30 to 60 percent of the total. A low quote is often a quote without materials.
- 03Will I get a factura with my NIF on it?Without a factura (the official Portuguese invoice) you have no guarantee, no proof for the tax office and no leg to stand on. A "better price without paperwork" is not a discount but a risk that you carry.
- 04How long will it take, and what happens if it overruns?Put a start date and an end date in writing. Overruns are the rule here, not the exception.
- 05Who arranges the permit with the câmara?For anything that changes the outside or the structure, this is not a formality. Agree in writing who applies for it and who pays if it is refused.
- 06What is the guarantee, and is it in writing?A verbal guarantee does exist legally, but try proving it two years later in another language.
- 07Do you work with subcontractors?Often they do, and that is fine, but then you want to know who will be standing on your roof and who is liable.
Frequently asked questions
Why do quotes vary so much?
Usually for three reasons: one includes materials and the other does not, one applies 6 percent VAT and the other 23, and one has estimated the work properly while the other gives a day rate and only finds out along the way how long it takes. So never compare two amounts; compare two specifications.
Do I need to apply for a permit?
For interior work that changes nothing about the structure or the appearance, usually not. For anything beyond that (an extension, a new window, a swimming pool, a wall along the road) almost always, from the câmara municipal, the town hall. Start early: the processing time is usually longer than the job itself.
What if I don't get a factura?
Then formally you have bought nothing. No guarantee, no liability, and no proof when you later sell the house that the work was carried out legally. Ask about it beforehand, not afterwards: afterwards you are negotiating about something that was done long ago.
Can I hire a digger myself?
You can, and the comparison above shows what that costs. In practice a hire company asks for a valid driving licence and a deposit, not an operator's certificate. Still, it is rarely the cheapest route: on top of the hire price come transport, fuel and your own time, and the damage you can do to a water pipe or a retaining wall with two tonnes of hydraulics is rarely covered by the hire insurance. We come with machine and operator for one amount.
How far ahead do I need to plan?
For a tradesperson in spring and autumn: count on weeks, sometimes months. For machine hire: one to two weeks. The quietest time to get work done is the middle of summer, exactly when you least feel like it yourself.
Where do these prices come from?
From published price lists of Portuguese builders and hire companies, collected in September 2026. They are ranges, not quotes. They are meant to help you judge whether what you are being offered is somewhere near normal.
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About this page
All ranges given come from published price lists of Portuguese builders and hire companies, collected in September 2026, and refer to labour unless stated otherwise. They are not a quote and not a price guarantee. For our own groundwork you get a price in advance based on your situation. The information on VAT rates is general in nature and not tax advice; have your situation assessed by a contabilista (a Portuguese accountant).
Sources: a Portuguese trades platform (tradespeople rates and job prices), Santander Salto (VAT in construction), quotes from mini digger hire companies in the Algarve (September 2026).