Land lease formulas

[jahrider]

Hello!

Сan someone explain to me why Thai landlords are so fond of using the formula 3 + 3 + 3, which according to my information is illegal and does not give any guarantees to the tenant? I am trying to conclude a land contract for 10 years or more and the third landlord refuses to conclude a long-term contract, persuading me to renew the contract every three years. I am ready to pay all the necessary taxes that arise when registering a contract at the land department, I agree to pay all possible expenses, I am ready to increase the rental rate by 10% every three years, but still get a refusal and an offer to renew the contract every three years. Is this a way to hold my balls or is there any reason that is not clear to me? Can someone advise what arguments to use to conclude a long-term contract or is it useless?

[DaRoadrunner]

It would help if we knew what you intended to do with the land and what the potential upside was. Ask yourself, is it worth it? What if I only get 3 years out of it and they refuse to renew.

 

How come there are 3 landlords? One is bad enough! What happens if one of the three refuses to renew?

 

Initial reaction is, if you are not getting close to the deal you want.... walk away. (They may change their minds when they see you walk!)

Edited October 31, 2019 by DaRoadrunner

[kingofthemountain]

I presume the rent is for a commercial space, then after 3 years of lease, if your business is bad and you don't do enough money with it, the landlord is sure you are out and he has his local return.

If your business is good and you do a lot of money, after 3 years the landlord is going to up very significaly the rent, and it's up to you, you can pay the new price or you can leave and then the landlord can have a new tenant (And a new key money also in most of the cases)

Cash, rince and repeat is the best deal for the landlords here.

Edited October 31, 2019 by kingofthemountain

[kingofthemountain]

30 minutes ago, jahrider said:

Сan someone explain to me why Thai landlords are so fond of using the formula 3 + 3 + 3, which according to my information is illegal and does not give any guarantees to the tenant?

The answer is in your question

[jahrider]

So this is just cheating and there are no hidden reasons that are not understandable by me... Sad.

Yes, I want to rent the land for business and I plan to get my investments back in 3 to 4 years, so 3 years contract is impossible. 

[kingofthemountain]

10 minutes ago, jahrider said:

So this is just cheating and there are no hidden reasons that are not understandable by me... Sad.

Yes, I want to rent the land for business and I plan to get my investments back in 3 to 4 years, so 3 years contract is impossible. 

Yes sad

sorry for you

but you can try to find an honest landlord and with the help of a very good

lawyer you could be able to do a fair deal......Or not (An honest landlord and a very

good lawyer are pretty hard to find here)

Anyway the best advice i can give you is to not invest in Thailand more money

than you are ready to lost with no any regrets, you probably know the famous joke

''what is the better way to become millionaire in Thailand? It's to be already a billionaire then coming in Thailand''

Good luck

[baansgr]

A lease attached to the Chanote, the owner will be tied to that contract for 10 years, unlike the 3 3 3...will you be paying the 10 years rental upfront or at least a substantial sum?

[smutcakes]

Any lease over 3 years has to be registered and the lands department, the lease of which goes on the title deed. There are a number of reasons a landlord would prefer not to have this, some genuine and fair, others potentially not so much:

 

1) They don't want to pay the 1.1% registration cost (In this case you have accepted the cost so this is not it)

2) They are concerned that if it is registered then it is easier to see their income and ping them for not reporting income

3) They want the flexibility to remove you at year 3,6 or 9 Perhaps they believe their land is rising in value and want to possibly sell it, change use etc and don't want to commit to 10 years.

4) Tenants and landlords often want flexibility and not to commit to longer lease terms. If you sign a 10 year lease and leave after 3 years, then you are legally on the hook for the remaining 7 years unless the landlord accepts some type of break clause penalty.

5) The 3+3 system works well, and i have heard of few if any cases where responsible tenants are not able to renew. (I think landlords often genuinely do not see the need for registered leases and have an aversion to dealing with authorities when not absolutely necessary)

6) In your lease if it is 3+3 make sure you have the rental increase at renewal determined in the lease. This will save headache of having stupid clauses like 'market rent' on the agreement which in Thailand are notoriously difficult to assess.