Allowed/Accepted/Normal rent increase

[BrainLife]

Hi,

Not sure where to post this, so feel free to move if needed.

I am about to start a second rental contract on a rental location I really like, for many reasons.

He, the manager, has to ask the big boss owner of course, but in the past 2+ years it was shown many times that the boss has an up to you mentality towards the manager.

The new contract will be for 6 years, because I want to do some basic changes, paint and such, maybe air, therefore I want a long contract (don't waste money shortterm).

I am currently on a 3 year contract (2 years used), but the idea is to convert to a new 6 year contract in the next 1-2 weeks.

What is a reasonable rent increase in Thailand/Pattaya.

I am currently on 5000baht (just raised from 4500 this month, per contract) and the new contract as proposed will be 3 years 5000baht, then the next 3 years 6000baht, After that we will see again of course.

Please note that it is just an empty lot/space (used to be a roadside double 64-70sqm hairdresser shop) and all current furniture and such are mine.

My question a 1000baht per 3 years raise, is that OK?

PLEASE don't tell me to buy and such, I won't.

Thanks for any info.

Edited April 26, 2016 by BrainLife

[blackcab]

It's not whether the increase is reasonable, it's whether you are getting what you want for a fair price. What are other units going for in the area? There are a lot of empty units in Pattaya.

On the other hand you obviously like where you are, and that counts for a lot.

[BrainLife]

I guess longterm renters, are whom I am looking for to reply. They have had the rent increase one way or another.

Can you people stop with the silly replies, just to reply and give a straight answer.

If that is possible on TV, seeing many topics, most replies are useless anyway.

[trogers]

Reasonable quantum of rent is what the tenant is willing to pay.

Are you willing? If not, look elsewhere as you have lots of time left on the lease.

[KittenKong]

Inflation here (depending on who you care to believe) is between +2% and -1%. So I fail to see why any rental increases outside of this range should be programmed. In fact generally asking rents for empty properties seem to be dropping.

(Of course there is also the fairly common rent gouging effect where a landlord seeing that his tenant is doing well tries to increase the rent massively in order profit from that. To the point that the tenant has to leave.)

Are there other unoccupied units within a few hundred yards of yours? If so, tell the landlord he is lucky to have you and offer a 1% increase per year.

[chowny77]

If you are happy with the increase from 4500 to 5000 for the next 3 years, I would suggest that for the other 3 years agree to no more than another 500 baht increase. If as you stated, are planning to do some re-painting, putting in an A/C unit, you have increased the value of the property, so they should not expect ( but most likely will ) you too pay a 1000 baht hike in rent. As others had said as well it is upto you, give it another 3 years and maybe you will want to move.

[trogers]

Inflation here (depending on who you care to believe) is between +2% and -1%. So I fail to see why any rental increases outside of this range should be programmed. In fact generally asking rents for empty properties seem to be dropping.

(Of course there is also the fairly common rent gouging effect where a landlord seeing that his tenant is doing well tries to increase the rent massively in order profit from that. To the point that the tenant has to leave.)

Are there other unoccupied units within a few hundred yards of yours? If so, tell the landlord he is lucky to have you and offer a 1% increase per year.

He is occupying a commercial space as a residence. Owner and manager are looking at the potential rental value of a commercial space 3 years into the future.

Thus, straight line adjustment of inflation cannot apply to a factor of production for a business.

[KittenKong]

Inflation here (depending on who you care to believe) is between +2% and -1%. So I fail to see why any rental increases outside of this range should be programmed. In fact generally asking rents for empty properties seem to be dropping.

(Of course there is also the fairly common rent gouging effect where a landlord seeing that his tenant is doing well tries to increase the rent massively in order profit from that. To the point that the tenant has to leave.)

Are there other unoccupied units within a few hundred yards of yours? If so, tell the landlord he is lucky to have you and offer a 1% increase per year.

He is occupying a commercial space as a residence. Owner and manager are looking at the potential rental value of a commercial space 3 years into the future.

Thus, straight line adjustment of inflation cannot apply to a factor of production for a business.

You are welcome to your opinion. I disagree.

Above all the important question remains: are people clamouring to rent this property or are there many vacant places nearby?

[smutcakes]

I would be more concerned he does not just kick you out after you make it nicer and rent it for 10k to someone else.

If you are happy there and want to stay there is having to pay 1k more in 3 years time something you need to be concerned about now.

[trogers]

I would be more concerned he does not just kick you out after you make it nicer and rent it for 10k to someone else.

If you are happy there and want to stay there is having to pay 1k more in 3 years time something you need to be concerned about now.

I doubt that he would have this problem. Commercial properties are usually refurbished by tenants to fit their kind of businesses. Not much value would be attached to existing deco or equipment.

[trogers]

Inflation here (depending on who you care to believe) is between +2% and -1%. So I fail to see why any rental increases outside of this range should be programmed. In fact generally asking rents for empty properties seem to be dropping.

(Of course there is also the fairly common rent gouging effect where a landlord seeing that his tenant is doing well tries to increase the rent massively in order profit from that. To the point that the tenant has to leave.)

Are there other unoccupied units within a few hundred yards of yours? If so, tell the landlord he is lucky to have you and offer a 1% increase per year.

He is occupying a commercial space as a residence. Owner and manager are looking at the potential rental value of a commercial space 3 years into the future.

Thus, straight line adjustment of inflation cannot apply to a factor of production for a business.

You are welcome to your opinion. I disagree.

Above all the important question remains: are people clamouring to rent this property or are there many vacant places nearby?

That's the difference between residential and commercial space. The latter could see a sudden spike in value when the neighborhood changes and has a large increase in foot traffic.

[smutcakes]

I would be more concerned he does not just kick you out after you make it nicer and rent it for 10k to someone else.

If you are happy there and want to stay there is having to pay 1k more in 3 years time something you need to be concerned about now.

I doubt that he would have this problem. Commercial properties are usually refurbished by tenants to fit their kind of businesses. Not much value would be attached to existing deco or equipment.

I was under perhaps the wrong impression that he was using the commercial space as a residence. Agree if it is commercial space.

[KittenKong]

Above all the important question remains: are people clamouring to rent this property or are there many vacant places nearby?

That's the difference between residential and commercial space. The latter could see a sudden spike in value when the neighborhood changes and has a large increase in foot traffic.

There's no difference for the two sorts of property. Both could increase or decrease in value for a hundred reasons. Supply and demand dictate price but as there is no real way of knowing what demand will be in x years time, either one incorporates in the contract a rent increase based on inflation or one renegotiates the rent every year. To pluck some 10+% figure out of thin air makes no sense to me, unless inflation is around 10% which last I heard it isn't.

[trogers]

Above all the important question remains: are people clamouring to rent this property or are there many vacant places nearby?

That's the difference between residential and commercial space. The latter could see a sudden spike in value when the neighborhood changes and has a large increase in foot traffic.

There's no difference for the two sorts of property. Both could increase or decrease in value for a hundred reasons. Supply and demand dictate price but as there is no real way of knowing what demand will be in x years time, either one incorporates in the contract a rent increase based on inflation or one renegotiates the rent every year. To pluck some 10+% figure out of thin air makes no sense to me, unless inflation is around 10% which last I heard it isn't.

A couple of newly developed apartments or condos within 100m away could change the value of a commercial space.

[dotpoom]

I guess longterm renters, are whom I am looking for to reply. They have had the rent increase one way or another.

Can you people stop with the silly replies, just to reply and give a straight answer.

If that is possible on TV, seeing many topics, most replies are useless anyway.

You can also come across some rather rude people on here too.

[SOTIRIOS]

...nothing improved....

..no tax increase....

...no raise.....

...foreigner....and you want to stay more...you like it.....pay more...

[Monkeyrobot]

3% a year is ok. If you have the money ask if you can pay a year in advance cash with a 5% discount. I did it at my old place but try to talk to the owner direct.

[bazza40]

As a long-term renter, I'd say the rent increase is reasonable. However, you would need to ensure the owner can't kick you out after you make the improvements. You may need a reputable lawyer.

I live in Chiang Mai. The city and environs are full of desperate landlords with empty condos. It's a renter's market. Pattaya may be different.

[Ulic]

Personally I go for the no increase. A steady reliable tenant is gold.

[smutcakes]

If the contract is 6 years you will need to register the agreement at the Lands department. The benefit of that is you will get security of tenure and the landlord will find it difficult to kick you our, the negative is someone will need to pay the registration fee which i believe is 1% of the total lease contract value.

[richard_smith237]

If you are also spending money on the property I wouldn't consider any increase in rent as reasonable.

You are offering the landlord long term security... IF you were to move out 1 or 2 months rent would be lost until a new Tennant is found, this negates the value of any increase in rent.

It may actually be reasonable to request a reduction in rent for a longer term contract. I suspect your 'kind logic' is actually somewhat reversed.

In your situation I would offer THB 5000 per month for the next / upgraded 6 year rental agreement.

[i claudius]

If you are a good tenant and have improved the property,get a discount, if you leave it could be empty a long time