Frequently Asked Questions - Relocating to Bangkok
Renting a property and relocating to Bangkok
Some FAQs - questions and answers on line

Category - The Lease Agreement - see also Generally:

1. Contracts to use - Lease Agreements, Tenancy Agreements:

Deciding on which type of agreement to use i.e.  a company let or a private let, will your company be signing the lease agreement or will you be signing personally ?

Rental of premises:

It is much less complicated for a private individual to sign the contract from both sides and Thai owners prefer this method of renting a property as it does not involve monthly receipts being issued and keeps the property out of the tax loop  i.e. a private person to private person agreement.  If it has to be a company let, a formal VAT receipt will be required by the company however some private owners are reluctant to issue receipts.  If the property is owned by a company then it is much easier to do a company let agreement both ways as both parties understand the system and implications involved.

Monthly rents also have to be adjusted as a company's accounting department will always deduct up to 5% of the rent as government tax due for payment at the time each monthly payment is made. The contract will have to be written to show this deduction and written up as gross rent.

Thai VAT (Value Added Tax), currently at 7%, is usually not applicable for Lease Agreement contracts, unless the contract has been split into these three above-mentioned parts. In the case of the three-part contract VAT would be applicable on two parts, but not the rent itself. Therefore, in these cases, from your point of view the rent portion should be as high as possible, but on the other hand the owner pays tax on the rent portion only, so he would like this portion to be as low as possible.

2.  Lease Agreements in English or Thai language:

Thai homeowners are quite happy to have a Lease Agreement in English language. They do understand it, but some may require a translation into Thai as well - if you use an agent, this can be arranged to be included as part of their services.

3.  Lawyer's approval of the lease agreement:

You can ask a private or in-house Company lawyer if you wish - any Thai lawyer will oblige, otherwise your own legal people may want to check the documents for accuracy.

Most contracts are completed without the use of a lawyer. There is a standard form of Lease Agreement, which is used by most multinational companies and international organizations. 

In any contract it is very important to include the 'Diplomatic Clause', which entitles you to give notice of 30 to 60 days to become released from the contract and ensures that you can recover your security deposit of two/three months rent without any fuss. However, even in these cases, the Thai homeowners will wait up to 30 more days to check and see if all the bills for utilities come in first before refunding any money.

4.  Signing the contract before occupation:

Just ask.

Equally, the owner may also require some identification from you - a copy of your passport will do.

5.  The Diplomatic Clause as standard:

The Diplomatic clause is good for longer leases of over one year, within a year there can be a clause to break the contract after six month with a one month fine.  However, if you deal directly with a Thai homeowner and are unaware of this clause, he might well conveniently omit this clause. You will still be able to leave beforehand if circumstances permit, but he will keep the security deposit monies of two/three month's rent.

6.  Normal minimum - maximum lease periods:

Thai homeowners require at least a one year lease as a minimum, although the norm is for a two year lease. In a tenants market they will always opt for a one year lease hoping that the market will be better in another year. You have to consider the market in deciding which period to enter into.

It is recommended to enter into a two year lease keeping the option for a Diplomatic Clause in the contract, so that you may leave after 30/60 days if required i.e., being transferred out of Bangkok.

7.  Payment of rent  US$ or Thai Baht:

Usually Thai Baht is the principal method of payment for deposits and monthly rentals but if you cannot get to the bank, a Thai homeowner would accept them initially to be helpful, US$ are not in general circulation in Thailand of course. 

8. Value Added Tax & other rental taxes applicable in Bangkok:

Foreign tenants are not responsible for Community Taxes in Bangkok. VAT is not applicable for renting a house, but it may be applicable if the owner splits the contract into two or three parts in order to reduce his liability to tax. VAT is then due on the rental of the furniture or the maintenance part of the agreement - a company let.

There is also  Government withholding tax of up to 5%, which is normally deducted at the source by a company's accountants department before it pays the owner/lessor. 

Tenants are not responsible for local/house or property taxes and this should be written into the Lease Agreement.

9.  Security deposits:

Either two or three months of the agreed monthly rent. Sometimes an owner may ask for more but this is not customary.

This deposit is usually refundable. The majority of Thai homeowners do return deposits on demand at the end of the contract, but usually wait until all the utility bills have come in; these arrive slowly.

Note: It is possible for an errant bill to come through several weeks after you have vacated the property.

Regarding utility payments, it is possible (if you can speak Thai or someone can assist you) to telephone the appropriate departments and ask how much is outstanding on the computer at any one time.

                                        Any questions re content to:   enquiry@bangkok-homes.com