Owning real estate in Algarve and running costs:
Congratulations! If you’ve made it to this page, you have bought a nice villa in the Algarve or are close to!
Owning real estate is generally seen as a safe middle and long term investment and people buy property for different reasons. To buy a holiday home in the sunny South of Europe for personal family use, as investment to rent out the property during a few months a year and enjoy the remaining months, as a ‘tester’ to try out, for pre-retirement by working a few hours less and enjoying more time in the Algarve, or, what has become popular in the last years, is for the NHR (Non Habitual Residency) program which allows you to ‘optimize’ the reduction taxes paid on pensions and live half a year in Portugal each calendar year.
All these different reasons will have a variation of reasons are why you have, or will become a proud property owner of a real estate in the Algarve. With owning properties, there are obviously costs involved. Below is a quick overview of the general running costs you should be expecting to have when owning a home in the Algarve, taking into account that it is intended as a guideline. Costs will of course vary accordingly to location, size of the property, type of maintenance required, age of property, size of the garden and swimming pool, etc.
Let’s start with the yearly property taxes. There are the IMI and AIMI taxes which are due each year. The tax table and information can be found here.
To give you a general ideal, we will use an example of a property which reflects the type of villa much sold throughout the Algarve, such as a 4 bedroom villa on 1250m2 plot and outside of a resort.
As a rule of thumb, you can expect the following costs:
Pool (8 x 4 mts)
Euro 70-90,- per month including chemicals.
Garden
Really depends on the type of the landscape, but it can be in the region of euro 150 for a low maintenance garden, and up to 350 for a higher maintenance garden.
Property tax
Depends again on size, location, age of the property, etc, but generally somewhere in the euro 800-2500 per year (excl. AIMI tax)
Generally within resorts like Vilamoura, Vale do Lobo, Quinta do Lago, etc., your running costs, property taxes and resort fees will be higher.
Property insurance
+/- Euro 750-1000 per year (without contents)
Alarm
Different packages available from about euro 35-70,- a month.
Electricity and Water
These expenses depend on how the property is used, the family size, garden irrigation frequency, etc. And if the property is used for rentals, they tend to have higher consumption costs. But we will base the costs below on an average home:
Water - Euro 40-60 / month for family use (4 people).
The garden, during winter time approx. euro 50-100 a month, and through the summer months, approx. 300-750 a month. Low maintenance gardens with reduced lawn size can cut back on water costs substantially.
Electricity – Euro 150-300 / month but properties with pool heating and/or underfloor heating can easily increase their monthly electricity bill to much higher values.
TV/internet/phone
Various packages available from local providers like Vodafone, NOS, MEO,etc, starting around euro 35 to 70 per month.
Resort fees
There is a big variation which can start around euro 2000 per year up to about euro 5000 per year for normal resort fees, excluding golf and other (club) memberships.
Generally a 4 bed villa will have an average running costs of around euro 1000 / per month all in, excluding resort fees, with ‘normal use’.
Larger properties, such as 5 and 6 bedroom villas in golf resorts like Vale do Lobo and Quinta do Lago can have running costs in the order of euro 20-50.000 per year.