Many landlords believe that a verbal agreement is the quickest and simplest path. It avoids paperwork and extra bureaucracy, taxes, proof of income, and high security deposits. It seems to offer maximum flexibility to remove the tenant whenever you want, without prior notice or legal penalties. But the reality in practice is very different. Opting for a rental without a contract in Portugal protects the tenant almost exclusively, leaving the homeowner completely vulnerable to heavy fines and courtroom headaches.
What the law says about verbal agreements
According to the Portuguese Civil Code, all leases must be made in writing. However, the law provides a very strong mechanism of protection for tenants. If the tenant can prove that they have paid rent for at least six consecutive months—for example, through bank transfer receipts—the rental without a contract becomes fully legally valid. In these situations, the law automatically assumes that a contract exists with the standard duration of five years.
As a landlord, you lose control over the duration of the lease and get stuck with a tenant for much longer than you imagined, without ever having signed anything. Let's explain why the benefits do not outweigh the risks you will incur.
Fines and problems with the tax office
Failing to declare your rental income to the Tax Authority (Autoridade Tributária) is considered tax evasion. If the tax office discovers the situation through data matching, or if the tenant decides to declare the payments on their Personal Income Tax (IRS) to get tax breaks, the financial consequences for the landlord are severe.
The most common problems include:
Paying all undeclared taxes from previous years, plus added interest
Large fines for failing to register the lease and not issuing electronic receipts
Losing the right to deduct condominium fees, property repairs, and maintenance costs from your taxes.
The difficulty of getting a tenant to leave
If your tenant stops paying rent or damages the property, renting without a contract turns the process of getting your property back into a slow and expensive nightmare.
Without a lease properly registered on the tax portal, you cannot use the fast-track National Tenant and Landlord Desk (Balcão do Arrendatário e do Senhorio) for evictions. You will have to go through the standard civil courts. This process drags on for years, costs thousands of euros in legal fees, and forces you to prove that a verbal agreement actually existed. Knowing how to terminate a rental contract is a clear process when everything is legal, but it becomes a true maze in an informal setup.
How to fix the situation today
If you currently have people living in your property and haven't signed anything, the smartest move is to formalize the situation immediately. Talk to your tenant and explain that you need to put the rules on paper to protect both of your interests. You can use a standard lease agreement in Portugal, sign the document, and submit it on the tax portal. This is the only way to sleep peacefully, knowing your property and your income are protected by law.
FAQ
What evidence can a tenant use to prove they are renting without a contract?
The tenant can use bank transfer receipts mentioning rent, text messages, emails, utility bills registered in their name, or even local witnesses to legally prove that the verbal agreement exists.
Can I register a lease with the tax office if the tenant has already lived there for months?
Yes, it is possible and highly recommended to fix the situation. You can draft a contract now and register it on the tax portal. You will have to pay a fine for the late declaration of past rent payments, but it prevents much worse and more expensive problems down the line.
Can I sell my property if I have a tenant living there with a verbal agreement?
Yes, but selling the property does not cancel the tenant's rights. If they can prove they pay rent, the new owner must respect the five-year lease that the law automatically assumes. Furthermore, the tenant gains the right of first refusal to buy the house.