Rental landlords look to recoup losses

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With the introduction into Thai law of the new Rental Act nn May 1 (Thai and English versions are available to download on the right of this page), several trusted industry contacts have informed me how affected Thai rental landlords are looking to recoup some of the money they could stand to lose from Thailand property rentals.

For landlords with five rental residential properties or more, they will only be able to request one month as a security deposit and one month of advance rental – two months in total and not three ,as happens now.

For some, that could be a considerable amount especially if, as I’ve heard many times, the intention is to make it as hard as possible for the tenant to receive his or her payment at the end of the rental period.

What I am hearing from independent sources is the possibility of rental landlords charging “application fees” and “end of lease cleaning charges”, the former as much as THB 500 and the latter as much as ten times that amount.

Fees prior to starting rentals are common in other parts of the world, but not currently in Thailand.

It’s been suggested by at least two trust real estate contacts that criminal and financial checks may not be out of the question for prospective rentals.

I don’t think that would go down well with Thailand’s property rental community.

One of the main questions – how a tenant will know if their landlord is the owner of five or more residential rental properties – has not been answered despite many calls to the governing authority.

In my personal opinion I do not think they will be able to cope with the number of possible complaints that could be heading their way post May 2018.

The other major change, which I spoke about last month at industry seminars, is how real estate agencies that deal with rentals will be forced to change their business models.

No affected landlord will want to pay one month in commission to any real estate agent with absolutely no guarantee their tenant will stay longer than one month – even if they sign a longer agreement.

A fixed fee rental change is they way things must go, whether it’s THB 10,000 or whatever. It’s the ONLY way to go for properties where the landlord owns five or more properties.

Let’s not get started on the role of property management companies who are employed to sign on behalf of landlords. Owners must, and should. sign and all agreements themselves.

As always, we welcome your comments.

3 Comments

  1. Being scammed – in our case, by a Swiss national then living, possibly still living, in the Pattaya area – does, for better or worse, somewhat colour one’s view of residential property rental practitioners.

  2. Dear Ronnakrit,

    Thanks so much for your comments, which are very much appreciated.

    You’re, of course. very correct. There are good landlords in this market who, we believe, are being unfairly treated by both their tenants and the new law – if it applies to you/them.

    I don’t know where there is any such thing as a ‘Landlords Association’ in Thailand, but if so they should have been consulted long before this law was formed.

    We believe because application and cleaning fees are common in other rental markets in the world, they will eventually become the norm here. But in the meantime there will be rogue landlords who will try to get away with anything.

    We believe, as we’ve written before, it’s fairness that underlines this new law, so that should apply to tenants just as much as landlords. We don’t see why you couldn’t bring a case against a bad tenant, or use social media in a factual way, to warn others of your experiences. Word soon spreads and no doubt their next rental experience will not be so easy.

    Thanks again for your comments.

  3. We all hear endless complaints from tenants who feel their landlords have not returned or have delayed deposit returns or have deducted considerably high fees for repairs to damages in the unit.

    However, not all landlords are the same.

    As a landlord myself, I have had to face tenants who pack their bags and sneak out at 4am without clearing their rental dues, tenants who have delayed rents up to 2 months (yes, we tried to be lenient with them), and at times damages that are not repairable, such as laminated wood floors, etc.

    If we only have one month deposit, and yet have to pay one month commissions, we will end up losing money, especially if the tenant decides to bargain the rates down saying they will sign two years and ends up leaving after three months.

    Nobody has spoken out yet on behalf of landlords but if the majority end up finding technical clauses to implement additional charges to cover their back, I don’t see anything wrong with that.

    If a tenant wants an assurance of the landlords they should ask for past tenants referrals or their agents who would have some knowledge of the landlords.

    There has to be a fair and middle line and I feel that referrals should be on both sides to ensure both sides are comfortable with each other.

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