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How to Negotiate an Advantageous Leasing Agreement

In Thailand, being able to lease real estate is one of the practical ways that an expat like yourself could get your hands on a piece of real estate. Under Thai law, foreigners are disallowed from purchasing real estate under their name unless they start a corporation in Thailand, or unless they are seeking ownership of a condominium.

With the latter being too expensive, what individual expats settle on is negotiating a long-term lease for a real estate property. This is the norm for acquiring land, and for condominiums if the project has consumed its allowed percentage for foreign ownership.

Leasing negotiations have been a “fun” experience both for lessees and lessors alike, and perhaps some agents in between. Each party has his or her own set of interests that they want represented in the contract but, in the end, they settle for some middle ground after some back-and-forth compromises.

So, expecting a lot of back-and-forth between yourself and the owner of the property, how can you prepare yourself for negotiating a lease agreements that’s advantageous to you as much as possible?

Know What Your Requirements Are

As they say, an army cannot go to war without knowing who or what they are up against. Business negotiations are like that. If you don’t know what you’re seeking, you won’t know how you can negotiate the best lease agreement for you.

Here are some questions that help you along the way:

  • How big a property am I looking for?
  • What is my budget for the proposed arrangement?
  • Do I plan to sublease the property?
  • How long do I plan to lease the property?

These questions, of course, are just examples. You may have some of your own.

Always Try to Reduce the Base Rate

Base rent is the landlord’s or property owner’s first offer for rent or lease. This is, however, the most negotiable part of the agreement. It’s a best case scenario for the property owner in terms of monthly payments, so feel free to try and negotiate as low a rate as possible.

Lease Long… Always

Leases are actually more advantageous for both parties if it is done for the long term. The lessor gets to earn guaranteed income for a long time, while you don’t have to go through negotiations that often. Having said that, it is our opinion that at least five years on the lease agreement is a good term to start negotiations on.

Seek Out the Experts

Of course, even the most sophisticated armies on Earth have experts on their payroll to advise and strategize with. Thai law is actually an alien landscape for most expats, so it’s important to consult a legal adviser who understands both English and Thai.

Legal advisors are the best people to look over your proposed contracts and see if they are advantageous for you, and if it is not in possible violation of the law. You would want to err on the side of caution for that matter, as brushes with the law are very expensive.

Negotiations are considered an art form. The end goal is to come to an agreement that addresses your concerns as much as possible, while also considering the rights and the goals of the property owners.

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