Renting or buying property anywhere in the world comes with its own set of challenges, and renting in Portugal is no different. With Portugal becoming a hotspot for foreign real estate investments, particularly in places like Lisbon, the Algarve, and Porto, there’s also an increased risk of fraud. As a prospective tenant or buyer, it’s crucial to recognize the red flags and avoid potential pitfalls. In this guide, we’ll focus on the common scams and warning signs in Portugal’s real estate market to help you navigate safely through the rental process.
1. Unlicensed Holiday Rentals (Alojamento Local)
Portugal distinguishes between long-term and short-term rentals (holiday rentals). For short-term rentals, landlords are required to have an “Alojamento Local” (AL) license, which legally permits them to rent out their property for holiday purposes. However, some landlords operate illegally without the necessary license, which can lead to legal issues for tenants down the road.
Always verify that the property is listed on the official Portal of Verification of AL to ensure you’re not dealing with an unlicensed rental.
2. Never Pay Without Verifying the License and Contract
Before making any payments, whether for short-term or long-term rentals, always confirm the legitimacy of the property. For AL rentals, check their registration, and for long-term rentals, ensure the contract is registered with the tax authorities. Renting without a proper contract could result in serious complications for both you and the landlord.
Some landlords may offer “under-the-table” agreements to avoid taxes. This is risky because the tenant can later report the unregistered contract, leading to fines for the landlord. Worse, you could face eviction issues if something goes wrong.
For long-term rentals, landlords are required to register the contract with the tax authorities and pay a stamp tax, which is a percentage of the total contract value. This tax is the same whether the contract is for a month or for several years. For example, if you’re renting a house for €1,500 per month, the landlord would need to pay a stamp tax of €150, plus additional fees, regardless of the rental duration.
This is one of the reasons why long-term rentals cannot typically be offered for short-term periods. According to Portuguese law, rental contracts must have a duration of at least 3 months. If the rental period is shorter than 3 months, it must include a specific clause stating that the rental is for holiday or business purposes. Properties not registered as Alojamento Local (AL) cannot legally be rented for short-term stays without this clause.
3. Visit the Property in Person (or Send a Trusted Representative)
Some listings for houses for rent in Portugal may look too good to be true. Often, landlords present properties online with misleading images that don’t reflect the actual condition. This is especially prevalent in high-demand areas like Lisbon, Porto, or Cascais, where renters are more likely to agree without thorough vetting due to the competitive market.
Before committing, always visit the property in person or send someone you trust to inspect it. If the landlord is unwilling to let you view the property, this is a huge red flag.
However, if you’re not able to visit in person—especially if you’re starting the process remotely—Savvy Cat Realty has a network of designated local experts who can assist you with on-site visits. This service is included in our rental packages and ensures that the property is inspected thoroughly before any contracts are signed. Our local experts provide detailed reports, including photos and videos, to give you an accurate sense of the property.
This way, you can start the rental process remotely with peace of mind, knowing you’re getting the full picture of the property before making any commitments.
4. Understanding Property Conditions in Portugal
f you’re used to higher standards in rental properties, such as those in the US or UK, be prepared for a disparity in Portugal. Luxury apartments with modern amenities like air conditioning, high-quality insulation, or updated furnishings tend to cater to the high-end or foreign markets. For locals, properties are often in poorer condition, with older fixtures and minimal renovations.
Managing your expectations is important, especially when comparing rental standards between cities like Lisbon or Porto and more rural regions like the Algarve or Madeira.
5. Beware of Bidding Wars
The high demand for rentals in cities like Lisbon and Porto has created an environment where landlords can pit prospective tenants against one another in “bidding wars.” These landlords pressure tenants to make a deposit by claiming that someone else is interested in the property. While this is not necessarily illegal, it’s a red flag. Never feel pressured to make a payment without first having a contract in place or verifying the property.
6. Do Not Pay Too Much in Advance
In Portugal, it’s standard to pay 1-2 months’ rent upfront along with a security deposit. However, some landlords, particularly in high-demand areas like Lisbon, Porto, or the Algarve, may try to request more than this. Be cautious if you’re asked to pay several months of rent in advance. Ideally, you shouldn’t pay more than 4 months’ worth of rent when signing a contract.
While some tenants, eager to secure the property, may agree to these terms, paying too much in advance carries significant risks. If you decide to leave the property early or if issues arise with the landlord, it can be difficult to recover your money, especially since legal processes in Portugal can be slow and complicated.
7. Illegal Subletting
Another common scam is illegal subletting. Some tenants sublet their rental properties without the owner’s permission, which violates the rental contract. Illegal sublets often lack proper contracts, making it difficult for subtenants to seek legal recourse if disputes arise.
If you suspect a property is being sublet illegally, request to see the official property documentation, such as the Certidão Permanente (a document that proves ownership and legal details of the property).
Conclusion: Protect Yourself from Rental Scams in Portugal
The booming real estate market in Portugal—particularly in Lisbon, Porto, and the Algarve—offers numerous opportunities for expats and investors. However, it also comes with risks, especially for those unfamiliar with the market. To avoid scams and minimize risks, it’s crucial to remain vigilant, verify documentation, and never rush into a deal.
At Savvy Cat Realty, we specialize in helping clients navigate the complexities of the Portuguese real estate market. Our team works closely with legal experts to ensure you’re protected throughout the rental, buying, or investment process.
Our Rental Advisory & Assistance Services
Relocating to Portugal can be overwhelming, especially if you’re unfamiliar with local regulations and market conditions. Our services at Savvy Cat Realty ensure that you don’t fall victim to fraud or waste money on risky deals.
Let us help you settle into your new Portuguese home, worry-free.
We hope this article was helpful, any questions you might have feel free to contact us! We are always available at contact@savvycatrealty.com if you need any assistance 😉
Want to learn more on scams?
Then you can read our next article about Buying : Common Scams & Red flags
