Charting a couple's move from London to Portugal, tales, adventures and moving advice

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Portugal Cost of Living Update

Posted on May 29, 2012 by Ben Algarve

Back in 2010, I produced a Portugal cost of living post, which has turned out to be one of the most widely read posts on the blog.

While much of the article is still relevant, some costs have changed. As cost of living questions are still very popular amongst newcomers to the expat forums, I have decided to revisit this topic – both to dispel some myths and to help those considering a move to this wonderful country.

Cost of living is about far more than the simple cost of individual items and services. One mistake many new immigrants make is to focus too much on comparing “like for like.” If you plan to move to Portugal only to eat English food, drink English drink and watch English TV, then things will get far more expensive than they need to.

Living like the locals enriches the experience of moving abroad, so you will notice that I have added some tips on where savings can be made.

ACCOMODATION COSTS IN PORTUGAL

An excess of empty property has pushed down accommodation costs in Portugal. As before, I won’t try to provide sample costs of property for purchase, as estate agent’s websites will give you a far better idea than I ever could.

Despite some bargain prices, unless you have a hefty deposit, the economic climate may preclude you from getting a mortgage. This isn’t necessarily a bad thing right now.

Continuing instability in the Eurozone and the chance that prices may get lower still means that renting for a while can be a good plan. For new expats, this should always be the strategy anyway – why not give yourself a chance to check that Portugal is definitely right for you before committing, and get a feel for the exact area you wish to live in?

Portugal Rental Property can be Very Affordable

Portugal Rental Property can be Very Affordable

Rents have come down a little since I produced my cost of living in Portugal article back in 2010. In our area of the East Algarve, a good two-bedroom apartment with shared pool can be found for around 400 euros per month. In more rural / less touristy Portugal, you will find options for less than this, while more urban areas will be more expensive.

1000 euros per month still puts you into “villa with a private pool” territory. Given that you can pay more than this for a poky flat in a nasty area of London, this is one of the areas where Portugal can still be considered cheap.

TIP: You REALLY need to be in Portugal to find the full selection of available rental options. In our area, almost everyone you meet knows someone who is renting apartments, and few of these ever find their way onto English language websites.

UTILITY COSTS IN PORTUGAL

While rental property has gone down a little, our utilities are up.

Obviously, I can only guide you based on our experiences – everyone’s utility usage differs. Our costs are based on two people, year round, in an apartment with 2 bedrooms and 2 bathrooms. We work from home so are in all day, and we don’t hold back in terms of using air-conditioning or heating. We run various computers, a fridge freezer, cooker, washing machine and dishwasher. Our gas is purely for water heating and the hob. For around eight weeks of the year, there are four or more people here due to guests staying.

Utility bills in Portugal can be high

Utility bills in Portugal can be high

Our costs currently average out at:

Electricity – 80 euros per month (includes TV license).
Gas – 35 euros per month.
Water – 35 euros per month.

TAXATION IN PORTUGAL

As part of Portugal’s austerity measures, taxes are up significantly since I last discussed the cost of living in Portugal.

In our own experience, with earnings that are mid-range for the UK but very high for Portugal, we pay significantly more income tax than we would in the UK. Across our entire income, we pay around 36%.

It’s impossible to go into much detail on taxation, as everyone’s situation is different. Some professions can take advantage of the non-habitual resident scheme and pay a flat rate of 20%. Married couples with only one worker can combine their allowances and perhaps end up better off than in their former country. The only thing I will say is that everyone needs good accountancy advice. It took us a long time to find an accountant we could rely on – so contact me if you need the details.

Social security should be mentioned here too. If you are self-employed and working on green receipts (reciebos verdes), the minimum monthly social security payment in most circumstances is around 185 euros. The size of this bill shocks some people – it doesn’t, however, kick in until you have been self-employed here for around 13 months.

MOTORING COSTS IN PORTUGAL

It shocks our friends when we tell them that petrol in Portugal is as expensive, if not more so, than it is in the UK.

Driving in general is expensive here. Road tolls are widespread and the free roads that can be used as an alternative are no fun at all. To give you an idea of toll costs, a one-way journey from the Algarve to Lisbon costs around 19 euros in tolls, and a trip from one end of the Algarve to the other on the A22 is around 9 euros.

All this, of course, is if you have a car, and there comes the biggest shock of all.

Cars are Expensive in Portugal

Cars are Expensive in Portugal

Cars are terrifyingly expensive, and this is particularly relevant at the lower end of the market. The kind of cars that go for £500 in the back of the Autotrader will set you back up to 4000 euros here. This is offset a little by the fact that the climate means cars don’t really rust, but the concept of finding a “cheap little runner” doesn’t exist here.

Even when talking about nearly new, costs differ massively with northern Europe. Our car cost around 11500 euros – and we could probably have found the same for around £7000 in the UK – the exchange rate does NOT cancel that out!

Car tax is dependent on emissions – we only pay about 70 euros per year. However, relatives with a gas guzzling sports car almost have to place an extra zero on the end of that figure!

PUBLIC TRANSPORT IN PORTUGAL

Portugal’s public transport system is cheap and reliable. Just like London, Lisbon is a place where car-free life is possible and arguably easier. Daily travel cards for the Lisbon area only work out at around 4 euros a day – a pleasant surprise to someone used to paying well over £10 in London.

Of course, public transport is only of use in areas it covers. Even here in the Algarve, there are places with only a very infrequent bus service. Some bus routes don’t run at all at the weekend. The Algarve’s single train route is better, but very slow from end-to-end, taking at least double the time of a road journey. In addition, many of the Algarve’s stations are nowhere near the towns they serve, landing foot passengers with a bus or cab journey at the end.

Public Transport is Inexpensive in Portugal

Public Transport is Inexpensive in Portugal

So, while Portugal has good public transport, a car is a necessary evil in many areas – making it doubly important to take notice of the motoring costs.

FOOD AND DRINK COSTS

In terms of food and drink, there have only been small changes since I last discussed the cost of living in Portugal.

It’s still possible to live cheaply, IF you are prepared to eat “Portuguese style.” This means concentrating on pork and chicken, basic fresh salad ingredients and vegetables, in-season fish and lots of beans and rice.

Once you get into imported items, things get more expensive, though perhaps not as much so as a couple of years ago.

Supermarkets seem to be wising up to the items that expats want and things like curry pastes, Mexican ingredients and Heinz baked beans have got a little (if not much) cheaper. Of course, British expats in the Algarve also now have Iceland in Albufeira!

Some Food is Good Value in Portugal

Some Food is Good Value in Portugal

The longer you live in Portugal, the more you learn to spend less on food and drink. First off, many people here have families with land. Once you get to know people, you may find you have more free oranges, apricots and figs than you know what to do with!

You also get a feel for what to buy where. It’s possible for us to spend either 1 euro or 4 euros on the same jar of pesto within 5 miles of our front door, depending on the supermarket we choose.

It’s all about visiting the markets and getting friendly with stallholders. Finding out who to go to for clams and when the ladies come round with the huge, cheap boxes of strawberries. Portugal is a perfect place for those who can visualize that huge box of strawberries as a cake, a sorbet and a few jars of jam.

However, those who want convenience food and UK-style supermarket shopping are likely to pay heavily for the privilege and miss out on what Portugal really has to offer.

Onto drink; yes, wine is still cheap (we are currently working our way through a very drinkable red Capataz that came in a 5 litre box for just 5 euros!) Beer is cheap too, if you stick to local brews, but if you start picking up Corona and Carlsberg, it can be more expensive than in the UK. If you’re struggling to find the GOOD cheap wines, take a look at Food and Wine Portugal’s wine section.

Food and Wine Portugal

Food and Wine Portugal

A final tip: much of Portugal is very close to Spain. It’s worth getting used to the things that are cheaper or better there. We go every couple of months and come back with Mexican ingredients, Iberico ham, asparagus and good cider. International shopping can be fun.

ENTERTAINMENT COSTS IN PORTUGAL

If entertainment means eating out, then Portugal can still be a bargain, with many places still offering bargain 3 course meals and “pratos do dia.”

Of course, in the cities and the touristy parts of the Algarve, the sky’s the limit. We have Michelin-starred restaurants and beachfront bars that aren’t scared to charge €8 for a mojito, but it’s possible to have cheaper fun almost everywhere, if, of course, you have the self-discipline to stick to the cheaper restaurants and bars.

For expats, entertainment often means spending time with friends from back home, either in Portugal or in another country. Here things get expensive.

Flight costs are on the up. When we first moved to Portugal in 2009, it wasn’t unusual for my wife and I to manage to both get to London and back for under £100 off-season. Bargains like this just don’t seem to exist any more. Baggage charges and other fees have started to get daft too.

Even worse can be trips back for work or weddings, when travel dates are non-negotiable – £400 each to London and back is not unheard of.

When friends and family come to Portugal, things get expensive too. Essentially, you have to get used to being with people who are ON HOLIDAY several times per year. Wonderful though this is, people on holiday want to go to beachfront bars, eat in good restaurants and drive to see the sights.

Beach Views Sometimes come at a Price

Beach Views Sometimes come at a Price

Although people invariably pay their way, it’s impossible to avoid the fact that being “on holiday” is expensive, even if you live in the country. All expats should be aware of this.

As before, I’m going to finish off with the costs of a selection of random items:

1 Bottle of Super Bock in a supermarket – 60cents
1 Bottle of Corona in a supermarket – €1.30
Pack of 6 thin (bifana) pork steaks – €1.50
2 x fillet steaks from an English butcher – €15
1 bottle of mouthwash – €6
Paracetomol (16 pack) – €2.50
Cough Syrup – €15
6 fresh sardines from market – €1.50
Bottle of drinkable red wine (Real Lavrador) – €1.50
Bottle of rather good red wine (Monte Velho) – €3.80

Want to find out more about moving to Portugal – buy our book!

Moving to Portugal: How a young couple started a new life in the sun – and how you could do the same

US Readers can find it here

CURRENCY TRANSFERS TO PORTUGAL

If you are moving to (or from!) Portugal, you will be well advised to find an efficient way to transfer money from the UK. Like in Britain, Portuguese banks very in the exchange rates and charges applied to international payments. The difference in rates between different banks and brokers when sending money to Portugal can be up to 4%, which makes a huge difference if you are transferring a large amount across to buy a property for example.

Usually you will be best off using a currency broker for any transactions over a couple of thousand Euros. Not only will this give you access to preferential exchange rates, which can save a small fortune, but you will receive a personal service along with low (or zero) charges for your transfers. If you have a large transaction to undertake, a reputable company will also keep you informed of rate movements and help you decide when to secure your exchange rate.

You should only use UK currency companies if they are classed as “Authorised Payment Institutions” under the FSA, which ensures your funds are held in safeguarded client accounts. One such company is Currency Index, who offer some of the best exchange rates around, and are well versed in the Portuguese banking system as well as that in the UK. You can get in touch for a free consultation and quote on your own transactions, at www.currencyindex.co.uk

If you have any questions about the cost of living in Portugal, please feel free to leave a comment below, and I will get back to you.

If you have enjoyed this post, please share it, or click the Google +1 - Many thanks 🙂

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  1. 18 07 12 01:37

    Moving Abroad - A Step by Step Guide | movingtoportugal

25 to “Portugal Cost of Living Update”

  1. Tracey Hand says:

    Ben, I love the fact that top of your list was beer!

    Great article. Hope you don’t mind me sharing?

  2. Bessa says:

    “Pratos del dia”, should be “Prados DO dia”.”Del” is a spanish word that does not exist in portuguese.

    Apart from that it is a great post, and I was astonished with how much you pay for tap water. 35 euros? OMG, that is as expensive as in Lisbon, and Lisbon gets the best watter in the country.
    I study in Évora, in Northern Alentejo, and I rent a house with 4 more students. We spend on water 2,5 to 3 euros a month (5 to 6 each bill since we only pay each couple months).

  3. admin says:

    Pratos do Dia duly corrected 🙂

    I love Evora, have you been to this place?

    http://www.foodandwineportugal.com/2010/04/20/restaurant-review-botequim-da-mouraria-evora/

  4. admin says:

    Tracy, Of course I don’t mind, in fact thank you for the retweet!

    Best wishes,

    Ben

  5. Very useful, comprehensive summary of the important costs that an expat needs to consider. As you say, visitors can turn out to be quite expensive. But fun!

  6. Bessa says:

    Unfortunatly no. I know quite a few restaurants in Évora, but that is not one of them. Anyway, Évora have one at each house.I think that only churches exist in a larger number…hahaha

  7. Emmy says:

    Hello, Just found your post. Am considering a move to Portugal in the next year or two. I’m curious about internet access! How available, and how much! Thanks!

  8. admin says:

    Hi Emmy,

    Compared to the UK there are fewer potential providers of Internet access due to a lack of competition but it is just as accessible and of a comparable quality in terms of speed and reliability. We have a package with Meo (part of Portugal Telecom) which gives us ADSL, Cable TV and Landline for about 60€ per month. Other companies to look at online are Sapo, Vodafone and Zon. Mobile dongles are widely available too (Vodafone, TMN, Optimus; Kangru)

    Good luck

    Best wishes,

    Ben

  9. Dreamer says:

    Hi Ben, the rental accomodation costs you have quoted seem very reasonable, particularly at 400 Euros per month, one important question though, would it be possible to achieve that on a month by month basis, or would you need to sign up for a long term lease ie 6 – 12 months to get those prices?

    Thanks

  10. admin says:

    Hi Dreamer,

    MAYBE you would get that kind of rate on a 3-6 month let between say October and March, but the people who do winter lets are usually those than do short term over summer, so might try to get a bit more from you…

    Month to month—probably not, but you would probably find places on that basis for 5-600 in winter.

    B

  11. Arkenaten says:

    Smashing post. Though I am aware of most of what’s on the post – mentioned before I have family in St. Joae de Madeira, just outside Oporto – it was still a great read.

    I have been meaning to ask, if you don’t mind, that is, what prompted your move to Portugal?

    We are reaching a stage where we are itching to move – not for any major disharmony reason with SA, but just to experience a new country. And as we have family and friends in Portugal – and now you, of course (lol, just kidding.) why not move? I think job security would be the most concerning thing with upping and selling. But then again, if you don’t jump….
    Love your blog, Pip.

  12. Dermot says:

    Hi Ben, really enjoyed your informative blog and would ask for your assistance on a few issues.
    I am a retiree from Ireland planning relocating to Portugal. I wonder if the process of obtaining residency is cumbersome for EU national. I will require the service of an accountant and tax expert and I imagine that your accountant would suit me so would it be possible to obtain her name so that I can make contact from this end before setting off on my “odyssey”.
    I intend to rent initially and have say up to e800 per month of a budget for rent and utilities for one person, should this cover me ?.
    Your assistance with my queries would be very much appreciated.
    Slainte,
    Dermot

  13. Tim says:

    Hi Ben, it was me who asked you to produce the original article and I,m so glad it has proved popular.Keep up the great work with both blogs.

  14. admin says:

    Hi everyone 🙂

    Pip, in answer to your question, I would suggest reading my “So Why Portugal” post here:

    http://www.movingtoportugal.org/2009/05/so-why-portugal/

    Thanks for reading

  15. For those expats who can go manage a modest way of life, a single person with a steady job earning about 1200 Euros per month will be able to attain a decent standard of living.

  16. Luise says:

    Hello!
    I love your blog, so full of useful information!
    After reading this post and about the cost of buying a car, I’m wondering how much it costs to take your existing car and just register it in Portugal? Do you know?
    Keep up the great work!!
    Luise

  17. admin says:

    Hi Luise

    It depends on various things. If you have owned a car in another EU member state for at least a year, you should be able to get it registered at low cost, but you can’t just buy a car elsewhere and bring it in. I suggest a Google search for “car matriculation portugal” if you want to find out more.

    Best wishes,

    Ben

  18. Linda Smart says:

    Great article – well worth the read. You have raised some interesting points, the comments on buying a car particularly so.

    Thanks

    Linda

    [WORDPRESS HASHCASH] The poster sent us ‘0 which is not a hashcash value.

  19. admin says:

    Hi Linda,

    Thanks for reading and glad you found the article useful.

    Best wishes,

    Ben

  20. cassandra says:

    what about medical assistance and pharmaceutical products?
    this is very important.

  21. admin says:

    Hi Cassandra,

    That’s a fairly big topic in itself! We have found that some pharmaceutical products are cheaper here than in the UK, while some are more expensive. There is also a difference between medicines that you can buy over the counter (i.e. without a prescription) here and those that you can buy in the UK.

    There are both state and private medical assistance options. We have used the private service so far, which is quite expensive but very efficient. I have my first appointment with the state-funded medical centre later this month, so perhaps I will follow that with a detailed medical post!

    Best wishes,

    Lou

  22. barbara alves says:

    My husband is from Lisbon brought up in london . weve been going to Portugal for 32 years and will be retiring there in a year or two . We will have a higher standard of living, great weather lovely people food wine beaches etc . We already have an apartment in Estoril we are not ready just yet to leave the UK. I dont know how many more terrible British winters we can stand although still love London so much

  23. Ben Algarve says:

    Hi Barbara,

    London to Portugal is quite a big change, as Ben and I can testify! I am sure the warmth of the sun on your skin will make up for the bits of London that you miss – and if not then it’s just a short plane ride away for visits 🙂

    Best wishes,

    Lou

  24. Leza says:

    Hi

    We are thinking of moving to Portugal we run our own company in the UK a driving school my husband is a driving instructor would there be much need for a English driving instructor in Portugal ? although we are going to learn the language. Any advise would be very much appreciated.

    Thankyou

    Leza

  25. Ben Algarve says:

    Hi Leza,

    Thanks for your comment. I would advise you to join some of the expat forums and Facebook groups in order to ask your question. Certainly I know of a couple of people who would like to learn to drive with an English instructor in the eastern Algarve, but I know that towards the west there are places that already offer tuition in English.

    I hope that helps.

    Best wishes, Lou



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