Renting a house - pay upfront ?

[Teabag]

Hi All

we're gonna live in Bandung and we're looking for a house to rent. There are many offers at rumah.com, some are from owners, some are agents and some are agents who copy from another add.

What concerns me a bit is the fact, that a lot of add's want to have the rent for 2 years paid upfront. This can be easy 150 million IDR, which I personally don't want to pay, because of missing trust.

What happens, if the landlord sells the house and then you're kicked out? Or the owner and his pals start to nagging on you, terrorising till you leave?


How did you WNA's handle the renting of a house?



Thanks for Input

 

[ChrisTex]

Not sure how much of this will apply to you, but hopefully it helps some.

So in terms of paying a year or 2 upfront, from what my wife and others have told me, it is cheaper than paying monthly. I have seen apartments in Jakarta have 2 year rental agreements.

I was in an apartment and the owners were looking to sell so the agents informed us they might show the apartment. We said no problem, just give us a heads up so we will be at home. Nothing ever happened, but my guess is there is something in the contract about if the property was sold.

 

[Vanuatu]

@Teabag, it is a normal in your area to request 1-2 years upfront. 15-20 years ago the norm was 3-5 years upfront as many expats were working for large corporations and the company was paying for their housing. In the 2010's 2 years became more of the norm as companies were no longer willing to pay 3-5 years upfront and now many owners will settle for 1 year upfront, although some are stubborn and will let their house sit empty for years if they can't get the whole 2 year payment upfront. If you have a legal rental contract, the owner can't kick you out of the house during the rental term. As to this point: "Or the owner and his pals start to nagging on you, terrorising till you leave?" I haven't seen that happen, not to say it couldn't and it would be illegal, but I suppose it could happen. I did know of one owner that needed the clients to vacate early and set up a meeting with them and he returned their pro-rated portion of the prepaid rent as well as compensated them for moving expenses, but again that is rare as well.

I would make sure your contract is in Indonesian, to be legal, and specifies things like repairs. A standard clause is for the renter to cover any repairs under a specific $ amount, usually 1 -2 million IDR and the owner to cover any repairs over that amount. I would also look at the condition of the house. A house that is in disrepair could be a sign that the owner doesn't take care of his properties and may be harder to get to fix things in the future, while a well kept house is a good indicator that the owner realizes the home is his asset and even if he has a tenant in place, it makes sense to pay for repairs to keep the home in good condition.

I have dealt with 100's of long term leases over the years (with my former property business in Jakarta) and I would say that 90% of the time there were no issues with the owners, repairs etc... There are always bad apples and some homeowners have only that one asset and as soon as they collect the rent for 1 or 2 years the money is gone and they don't have the ability to pay for any repairs. It is hard to weed out those ones, but you can get a better sense of the owner by the quality and upkeep of the proposed rental unit as well as asking him questions about other houses he may own, what he does for a living etc...

Also as ChrisTex mentioned, the longer term that you prepay the more you can nego the price down.

 

[fastpitch17]

I have always rented 2 years at a time. I prefer it. What one always needs to remember is to make sure all concerns about maintanence, selling, and what happens in case of emergency for renter to vacate property early. If I were younger I would probably try for a longer term.

We don't live in the Jakarta area. Close by across the straight but rent is 1/3 of what those areas demand. We have people here that rent or own property but work in Jakarta including foreign embassy personnel who fly back here weekends after staying in a kos while working. Better air, smell, traffic conditions, and friendly people.

 

[centurion]

It would be prudent to have the contract notarized and should mention that in case of the sale of the property or the death of the owner, the contract supersedes these events and lasts till its end-this is a standard clause in Indonesian rental agreements.

It should be mentioned what and whose obligations are in terms of maintenance and repairs, and if it is not mentioned, the Indonesian Civil Code applies.

 

[Hawk256]

As the other have said, that's normal for here and just the way it is. If you just don't want to pay upfront, you can rent some apartments month to month from the owner but the prices are crazy high compared. Hotels or home stays may offer monthly rates as well but for a house you will pay a minimum of 1 year up front.

 

[gemima]

I always arrange 1-year contracts in Jakarta. 2 years would probably end up being cheaper in the long run as there are fewer opportunities for the owner/agent to jack up the price. I usually try to rent direct from the owner to avoid the gauging agents - but good agents can be great at finding places/ negotiating with owners to get a place renter ready.
I found it weird when I moved here but that's just the way things are.

I have never had any major issues - in my previous place the maintenance crews wouldn't do any repairs without the consent of the owner which was really annoying (once I broke the key in my front door so was left unable to lock it and they refused to do anything about it - so I just called out a private handyman and did it myself on the sly). In my new place there are none of these issues and the owner has a very responsive PA who I deal with directly. So just make sure whoever you rent from you have clear communication lines.

Regarding worries about the owner selling the place, it's not something I have ever worried about. Most of the people I rent from are really rich and aren't in the habit of selling their homes/ apartments - they just hoard them and rent some of them out!

 

[jstar]

Yeah it’s completely normal. We look at it from the ‘other side’ and would perhaps accept a 6 month period if the deposit is high enough and the dwelling is empty for some time. But we’re not crazy about it and from the owner‘s perspective that’s also considered a risk.

What happens in practice, is that the real estate agent creates the rental agreement and also signs as a witness. If there is none, then a notary could make sense but it is practically never requested.

What‘s also normal, and what you already noticed, is that multiple agents offer the same property. But that’s more in selling. Often the owner is not even aware and then the agent starts negotiations directly with owner or with his agent which make him ‘your’ agent. Stay away from the compensation negotiations.

 

[Teabag]

I would make sure your contract is in Indonesian, to be legal, and specifies things like repairs. A standard clause is for the renter to cover any repairs under a specific $ amount, usually 1 -2 million IDR and the owner to cover any repairs over that amount.

Thank you for that hint. I even did not expect the owner to do anything again after payment.

 

[Teabag]

It would be prudent to have the contract notarized and should mention that in case of the sale of the property or the death of the owner, the contract supersedes these events and lasts till its end-this is a standard clause in Indonesian rental agreements.

I think this is the way to go and we'll give it a try.

But we all know, as a WNA you have little chances to get your right in a dispute, even my wife is ex-wni.

let's hope for the best

 

[centurion]

I think this is the way to go and we'll give it a try.

But we all know, as a WNA you have little chances to get your right in a dispute, even my wife is ex-wni.

let's hope for the best

The advantage of a notarized agreement (in form of so-called Akta, made with hardcovers), is that the notary will check and guarantee that the real estate is rented from the original owner, and in that case, your right is quite strong. When I did it a couple of years ago the price was 1 million Rp.

It is often the case that people rent from persons that are not recorded in the land certificate (i.e. relatives of the original owner) and in that case, there could be problems.

 

[Daniel Gomez]

I live in Bandung. I have a friend selling a house fully finished. He just built himself a brand new house and doesn't want the one he is currently in. The neighbors keep to themselves and are pretty friendly. It's not an upscale location, but not bad. He is my very close friend. This just came to mind so I posted.

 

[Samoerai]

Hi All

we're gonna live in Bandung and we're looking for a house to rent. There are many offers at rumah.com, some are from owners, some are agents and some are agents who copy from another add.

What concerns me a bit is the fact, that a lot of add's want to have the rent for 2 years paid upfront. This can be easy 150 million IDR, which I personally don't want to pay, because of missing trust.

What happens, if the landlord sells the house and then you're kicked out? Or the owner and his pals start to nagging on you, terrorising till you leave?


How did you WNA's handle the renting of a house?



Thanks for Input

Yes, it is normal, but you can negotiate the price and offer to pay the rent per half year (while the contract is for 1 year). No problem for some owners.

 

[Jaime C]

We first did one year in Bandung. Then a one year renewal, with a slight increase. Then the real estate agent started playing tricks when it came time to renew again, and said the owner didn’t want to. After wasting weeks looking at places, we finally got ahold of the house owner, who knew nothing about not renewing.

We met with the owner, and her daughter in Jakarta (both doctors), and they offered to sell, but they didn’t want to name a price. I offered what I had seen other houses in the neighborhood sell for, but they weren‘t interested.

Then they wanted a 4 year lease agreement to keep staying. We shot this down. We reluctantly agreed to a 2 year lease.

We bought a house nearby 18 months later, and then spent 5 months doing a top to bottom rebuild, so it all worked out, in the end.

 

[Hawk256]

We first did one year in Bandung. Then a one year renewal, with a slight increase. Then the real estate agent started playing tricks when it came time to renew again, and said the owner didn’t want to. After wasting weeks looking at places, we finally got ahold of the house owner, who knew nothing about not renewing.

We stayed for a while at the house my wife had been renting for 20 years. The price was right especially for the area but the owner didn't do any maintenance all those years. It needed a new roof and leaked continuously plus the walls were starting to break down from all the moisture. We initially agreed to sign up to a 4 year contract if they would put on a new roof and fix the walls. They were not interested. When it came time for us to move they changed their tune and wanted up to stay but at an increased rate. Not slightly increased but a major increase. Needless to say we didn't agree and the house is still disintegrating almost a year later with no tenants in sight. I said all of that to say this, sometimes logic doesn't seem to play into peoples decisions.

 

[Jaime C]

The house we left about 6 years ago, just down the street, has been empty since we left it. No upkeep in the property that I can see. Looks like an overgrown jungle from the street.

 

[Balifrog]

Same mentality in Thailand. Owners preferring to have their property empty than giving a discount.
If they give a discount, they feel they give in and lose face. And that's a big NONO in Asia.
Makes me smile....

 

[jstar]

If they give a discount, they feel they give in and lose face

Or they wouldn’t make enough money anymore … there is something called ROI and RTI, you know. I have never seen it was not possible to negotiate. But there is a line drawn in the sand…

 

[Balifrog]

Or they wouldn’t make enough money anymore … there is something called ROI and RTI, you know. I have never seen it was not possible to negotiate. But there is a line drawn in the sand…

When the place is empty for years the return on ROI is negative.
And BTW, I know a bit about purchasing and negotiation.....

 

[pantaiema]

The house we left about 6 years ago, just down the street, has been empty since we left it. No upkeep in the property that I can see. Looks like an overgrown jungle from the street.

Some people do not seem want to learn to adapt to a new normal. This is the famous Charles Darwin Quotation.