Renting out a condo: key terms of a lease
Some people buy a condo in Bangkok to live in and then subsequently decide to lease it to a tenant. Others buy with the primary intention of renting the unit and receiving welcome monthly income. After all, rental yields in Bangkok are still relatively attractive—and certainly more attractive than bank deposit rates!
For whatever reason you decide to rent, it’s essential that you have a written rental contract or lease in place setting out the key terms and conditions of your agreement. This applies even if you rent your unit to a friend or acquaintance.
Most owners find tenants through real estate agents and the agent should have a standard lease agreement for you to use. However, be aware that agreements provided by local agents can be very basic and may not be in English. If in real doubt use a lawyer, but the better agents have a workable document.
Key terms? Here are the basics:
▪ monthly rent: which date is it payable (at least one (1) month in advance) and does it include or exclude management fees? Usually rent will include such fees and you as Landlord will need to settle these with the management office;
▪ utility charges such as water, electricity and internet and maybe a TV channel package: for the account of the Tenant, payable by them. However, it’s wise to keep the electricity meter and water meter in your name so you should ask the Tenant to send you receipts once paid;
▪ security deposit: usually two month’s rent is paid as a security deposit to ensure Tenant’s compliance with the lease terms. This is payable at the outset of the lease and refundable to the Tenant at the end of the lease once evidence is provided that all utility and other bills have been settled. If there is any damage or loss (ie missing crockery or broken furniture items, for example) to the condo, the cost of replacing such items can be deducted from the security deposit. As can cleaning the condo at the end of the lease, if his is not done by the Tenant;
▪ length of lease agreement: ideally one (1) year to give you as Landlord some security of income. However, lease periods have generally become shorter in Bangkok over the last few years and you may be asked to grant six (6) months or even less. In such case, and if you agree to a shorter period, you can sometimes ask for a higher monthly rent—say 5% higher for a six month lease, and 10% for a three month lease. You may not get it but can ask!
▪ agent’s fees are typically one (1) month’s rent for a one (1) year lease and 50% of one (1) month’s rent for a six month lease, payable once the Tenant has signed the lease and paid the deposit and first month’s rent
▪ responsibility for major (external) repairs and maintenance: strictly speaking the building management or juristic person should be responsible to arrange major repairs and maintenance items. For example, these may include external repainting of the building, replacement of air-conditioning chillers or improvements to the recreational facilities etc. Such work also includes remedial work in respect of any leakage through the main wall or roof of the building;
▪ responsibility for internal repairs: these will be for the account of the unit owner, unless the defect or repair item has been caused by the tenant’s action, in which case the tenant will need to bear the cost. However, a lease may include a provision that minor repairs, say up to Baht 1-2,000, will be the responsibility of the tenant
▪ insurances: the main building structure and services will (should) be insured by the building management or juristic person, but it’s unlikely this will cover contents. Very few owners take out Content Insurance. Some tenants don’t ask about this but sometimes those who do will take out their own contents’ insurance protection.
▪ furnished or not: most Bangkok condos are rented fully furnished or at least semi-furnished. Renting an empty condo is very unusual. At least the white goods (fridge, microwave, maybe washing machine), plus beds, sofas, TV’s, coffee table, dining set are required. Some owners provide cushions, bed covers, cutlery and crockery some don’t (although it’s best to). Linen and towels are also optional
▪ keeping of pets: most condos do not allow occupiers to keep dogs or cat or other pets, although it’s not uncommon to find frequent breaches of this rule… and often by Committee Members! If a pet is allowed and it causes a nuisance it may have to leave the condo block;
▪ default: if a tenant breaks/terminates his/her lease before the end of the agreement, the owner has the right to keep the security deposit unless there are extenuating circumstances. Some tenants try not to pay the last two month’s rent so that they don’t need to wait for the owner to refund the deposit. This is a breach of the lease agreement.
▪ extension of lease: the provision for extension are not always explicit in a typical condo lease, it just seems to be assumed that the tenant will stay as long as the owner wants him/her to and rent is paid on time!
Any lease agreement neds to be balanced and it’s always better to write in more than less, as then it leaves less room for misunderstandings when you rent out a condo in Bangkok.
Peruse and get familiar with the above key terms and next time we’ll look at some of the key responsibilities of Landlord and Tenant under a typical lease when you rent out a condo in Bangkok.