Is it normal to ask for a year's worth of rent when renting a house?

[NanLaew]

I am quite happy with the 6-month terms from my current landlady. Although it's a nice house with (mostly) nice neighbours, it lends flexibility if it goes all down the toilet or if something sweeter comes along.

[kratiam]

Trust "supply & demand". If it's fantastic place at a low rent the demand will be high & maybe someone would pay a year up front.

In Yangon at the moment there is very little supply and a big demand and people are very happily paying a year in advance.

Never heard about it in Thailand though.

[onni4me]

I have never had any problems with renting. Problem is getting the deposit back but in those two cases I just stayed as long as the deposit would have covered the rent. There is very little the owner can do if you have a legal contract.

In many cases, though, person renting the property is not capable of checking whether the person signing the lease is actually the owner. I would strongly recommend to have a lawyer draft the paperwork if the money involved is a substantial one.

It seems that here are quite a many people very distrusting the Thai rental agreements. I repeat, when done properly never had any problems with them. Quite the opposite if someone is trusting her two-week bar lady to do the arrangements. I have always dealt with rental issues myself accompanied with a solicitor, of course. Less hassle and problems.

[oneday]

Not sure I'd pay more than a year upfront. What happens if it turns out to be a landlord from hell? Doesn't do any maintenance or whatever. Even a year upfront I would never do but each t their own I suppose. Maybe depends how bad you want that property.

Absolutely agree with this. If you pay a year up front and things go wrong you will never see that money again...not in this country. What is customary is two months rent as a deposit and even then many people have to worry about getting back.

My landlord is great and I voluntarily pay 6 months at a time for convenience for both of us. We have a great relationship and he is from the same country as me...not Thai thankfully.

[Farma]

I guess a lot depends on your circumstances and what your plans are and also what the landlord agrees to.

We've paid 2 years up front with no key money or deposit on a commercial premises while waiting for our own building to be completed.

We also rent another 2 commercial properties from landlords being sisters. One has us pay 6 monthly and the other monthly. We've rented these 2 places for over 7 years and only had 1 rent increase.

The landlords have all been Thai and there's been no hiccups

[DLP]

I guess a lot depends on your circumstances and what your plans are and also what the landlord agrees to.

We've paid 2 years up front with no key money or deposit on a commercial premises while waiting for our own building to be completed.

We also rent another 2 commercial properties from landlords being sisters. One has us pay 6 monthly and the other monthly. We've rented these 2 places for over 7 years and only had 1 rent increase.

The landlords have all been Thai and there's been no hiccups

I have heard the term key money mentioned many times. I know this may sound stupid but can anyone explain what key money actully is.

[mrfaroukh]

There are some who do that and they expect a good discount. I know a person who was paying 6500 a month then he paid 50000 for one year up front, so he saved good money. But if you doing so you should have a very good contract and make sure it is mentioned that even if the person sell his house or condo it should not effect your contract.

[Eagleizer]

I would never pay in advance! The same discount you will get from

paying all up front, you can get from a 1 year contract. I got 2000THB

reduction on my rent, and now there is a new owner, and he want to

stay here himself, so I get released form the contract, and I have saved

16.000THB for the 8 months I have been staying here when I move

out in 6 weeks time Perfect, as I wanted to move anyway, and to

move in the low season will give me a better price on the next place

I choose to stay...

Also, if there are some trouble with the house/apartment, you can

hold back on the payment until it`s fixed.

This is in Pattaya, and last year there was about 36.000 houses,

apartments and condos for rent/sale here. So as a the lessee,

you`ve got all the power when bargaining for a good deal

Edited April 25, 2014 by Eagleizer

[BrooklynNY]

Bad idea to pay in advance a year worth of rent. You would never know what would happen if there is a dispute or a sudden death of the property owner or whatever reasons and there would be a new management take over, disregarding of old lease agreement. I do not trust Thai mentality even though I am a Thai. Anything goes unpredictably in Thailand.

Edited April 26, 2014 by BrooklynNY

[KittenKong]

I would never pay in advance! The same discount you will get from

paying all up front, you can get from a 1 year contract.

Not necessarily. Paying a year in advance should be an argument for getting a very large discount on the rate paid monthly (I got nearly 50% on my condo). Signing a one-year contract may not get you much discount at all over the monthly rate as there is nothing stopping the tenant from leaving after a few months, and many owners know this. Some tenants in Pattaya do this: arrive in November, sign at a slightly discounted monthly rate for one year and then leave a few months later. They will have saved money over high-season monthly prices and may also have got a nice place that normally would not be available for short term lets.

The downside of paying in advance is that you have the property in the state it is for one year, whether you want it or not. Of course it does all depend on whether the year's rent is a significant outlay for you.

[KittenKong]

Bad idea to pay in advance a year worth of rent. You would never know what would happen if there is a dispute or a sudden death of the property owner or whatever reasons and there would be a new management take over, disregarding of old lease agreement.

Yes, anything could happen once you have paid. You (farang tenant) could get ill and need to return to your home country. You could run out of money and need to leave. The building could burn down. All sorts of things could happen.

The only questions are whether you can stand the loss of the advance rental paid and whether the discount obtained is sufficient incentive. Personally I could easily stand the loss of the advance rental I paid and the discount was more than enough to make it attractive.

If I was living from month to month on a salary or pension cheque, and only had a few hundreds of thousands of Baht in savings then I dont think I would care to risk them on paying a year's rent in advance.

[Dibbler]

From the owners perspective...I have invested a substantial money in my properties and would not allow anyone to rent without a considerable deposit. The risk is just too big. There are things that one can be easily destroyed or sold to someone worth hundreds of thousands of baht.

What comes to renting, I would not do it if it wouldn't be short-term or very affordable. Or making money out of it as a business.

Depending what you two agree but lease is valid only maximum 2 years without validating it in the court/land office.

That's an interesting perspective and reflects the fact that good property management in Thailand is difficult to find or non-existent, as is landlord's insurance, and tenant agreement's can't be enforced by the law, so a property owner in this country must look after his/her properties and run the risk of a tenant damaging your property, or running out with your furnishings, or reneging on paying rent etc. So it's not a passive form of income as you've got to actively manage the property yourself. Adds to the long list of reasons why I would never invest in rental property here. Market heavily favors the renter.

[rotary]

Would help if you told us exactly what you are talking about.

A house in a residential area, or a commercial property.

If for a house, no its unheard of to pay a years rent in advance.

For commercial space does the payment include key money upfront, with a monthly rent being paid?

Maybe you have never heard of it but it's common where there's low rental properties and lots of people looking to rent. Who would you decide on if 2 prospective tenants, both good people, wanted your property and 1 offered a years rent upfront?

If I wanted to rent and was confronted with that scenario, I would walk. But that might just be me. What would you do? Keeping in mind there are thousands of properties out there.

jb1

I would run, in fact i would win an Olympic medal for running in this event

[tingtongfarang]

I once rented a house in bkk where i paid 1 year in advance with a reduction from 7500 to 5000 pm, the only problems i had were concerning the moo baan management,

As the house had been empty since built 4 years previous they sent me a bill every month requesting the charges to be paid for that time, no matter how many times i went to the office to explain i would not be paying the 4 years i had,nt lived there they still sent the same bill every month in hope i would cave in in some way,

At some point there was a movement by all other residents not to pay as the manager had decided to increase the charges by 40%, it all got too complicated for me so i moved out 2 days before the next yearly payment was due then called the owner to inform her i would be moving out,

She pleaded with me to stay and in a round about way saying we could come to a better agreement, i said no thanks i have thought it over and my mind is made up,

the next day i got a message saying that unless i paid the moo baan charges owed the security would,nt allow me to take my belongings out but of course she did,nt know i was already gone,

Its now a failed moo baan.

Edited April 26, 2014 by tingtongfarang

[BwindiBoy]

Never pay anything in advance. Too many things can happen during the time period.

Indeed. The person you rent from could have a mortgage on the property and they default. You'd be kicked out and have no recourse other than to pursue the landlord, who may be long gone.

[brianlg]

I rent an older 2 level house near NAKHON SAWAN from a [now] relative ["AUNTY" by marriage] and used to pay 1 month/1month BUT then asked about paying yearly. I was immediately offered 2 months for FREE [each year] and have been doing that for past 3 years ... no problems. But "FAMILY" not "Landlord" so maybe different ???

They get their rent [Lump Sum] every JANUARY and I SAVE ... SO everybody happy.

Have recently had offer to buy the property AND am considering it seriously as a large block with main road frontage [but house SET-BACK 30+ metres]. Then my NEW immediate family would own 5 adjoining blocks. Good for the family and good for the village.

[brit1984]

I guess a lot depends on your circumstances and what your plans are and also what the landlord agrees to.

We've paid 2 years up front with no key money or deposit on a commercial premises while waiting for our own building to be completed.

We also rent another 2 commercial properties from landlords being sisters. One has us pay 6 monthly and the other monthly. We've rented these 2 places for over 7 years and only had 1 rent increase.

The landlords have all been Thai and there's been no hiccups

I have heard the term key money mentioned many times. I know this may sound stupid but can anyone explain what key money actully is.

it's an upfront fee (non-refundable) some landlords charge their tenants in addition to the ongoing rent (which theoretically should be below market rate for a comparable property without key money) ... very popular in certain parts of thailand (especially down south) and makes sense where landlords perceive the money they receive today to be more valuable than the extra rent they could charge in the future (after adjusting for time value of money and the risk that the tenant does not pay)

[Eagleizer]

I would never pay in advance! The same discount you will get from

paying all up front, you can get from a 1 year contract.

Not necessarily. Paying a year in advance should be an argument for getting a very large discount on the rate paid monthly (I got nearly 50% on my condo). Signing a one-year contract may not get you much discount at all over the monthly rate as there is nothing stopping the tenant from leaving after a few months, and many owners know this. Some tenants in Pattaya do this: arrive in November, sign at a slightly discounted monthly rate for one year and then leave a few months later. They will have saved money over high-season monthly prices and may also have got a nice place that normally would not be available for short term lets.

The downside of paying in advance is that you have the property in the state it is for one year, whether you want it or not. Of course it does all depend on whether the year's rent is a significant outlay for you.

You are the first I ever heard of getting that much discount. I don`t believe that is normal.

Your example about leaving before the contract runs out does not make sense, as you

will loose your deposit if you break the contract...

The downside is not that the property will be in that state for a year, it`s that it will probably

get worse and you will risk having to pay for fixing aircon, tv, fridge, or whatever breaks,

yourself. But with a 50% discount, that`s another story. I have rented a lot of places, and

without bargaining I have gotten 20% discount for 6-12 months contract. After the contract

have run out, I have also gotten back my deposit even when I have decided to stay longer.

[KittenKong]

You are the first I ever heard of getting that much discount. I don`t believe that is normal.

Well, maybe I negotiate better than you do. Or maybe I'm just lucky. Or maybe the asking price was very high (this latter is probably true). Bear in mind this was for a condo in a very popular tourist area which does have an oversupply of condos, and not for a house in the back of beyond where asking prices are already very low.

Your example about leaving before the contract runs out does not make sense, as you

will loose your deposit if you break the contract...

It does make sense. Let's say that you pick a condo of a type that might cost 30,000B per month on a monthly basis in high season, and you sign for a year at 20,000B/month. Many owners will accept that sort of arrangement here in order to secure a tenant for a year. Some will accept a larger discount (even if the initial asking price to which the discount is applied is largely fantasy outside of the super-peak Christmas/New Year period).

You pay one month deposit. You arrive in November and stay six months till April and leave, without your deposit. You have paid a total of 140,000B for six months in high season instead of the 180,000B you might normally have paid for the same period had you rented a similar place on a monthly basis and got your deposit back in full (which doesn't always happen here). Not to mention that you may not have got that unit at all on a monthly basis, or may have had trouble getting it (or a similar one) for the high season months you wanted.

Some tenants would consider it worth doing this just to secure the unit they want for the high season months they want, even if they dont save money as well. Either way the owner is b-ggered because he has not got the best price for his high-season months and will probably have trouble trying to find a tenant at all in April.

Edited April 29, 2014 by KittenKong