How to handle tenants breaking their contract.

A successful rental property is on that ticks over nicely. Where a tenant pays their rent in a timely fashion, looks after the property and ideally remains there for a long period of time. This will help boast the rental yield and generate a healthy income.

Tenancy lengths in Thailand are typically for 12 months. Rarely there is an option for a tenant to vacate early unless a specified clause has been added to the agreement such as if the tenant is relocated due to their job; a clause that can be requested by companies for their expatriate employees. If there isn’t a clause within the agreement but the tenant wants to vacate earlier and thus break the contract, what are your options as the landlord?

The most common solution is to allow your tenant to leave provided that they find a suitable replacement tenant who will continue the existing tenancy. If however there is only two months left on the term you may want to consider signing up the new tenant for longer to save having to look for another tenant in two months’ time, which will then be your responsibility. This will give you security knowing you have a new tenant in place for another set period of time and will minimize any void periods. Sound out the prospective new tenant to ascertain what the best course of action is.

The majority of tenants will be willing to source a replacement through word of mouth or by advertising on active forums particularly Facebook. Bangkok has a very transient population with some people looking for accommodation for a couple of months due to a short secondment that fill this gap nicely. Usually the incoming tenant will pay the outgoing tenant their deposit, but with any change of tenant it is a must that any amendments like this are resolved between all parties and are put in writing for the sake of clarity. This will also avoid any disputes related to the deposit later down the line.

Depending on your relationship with the tenant or even your urgency to find a new tenant, as a landlord you can advertise for a new tenant too. Should you use a real estate then you will be subject to their fees. If this is the case, then discuss this with your current tenant to see if they are willing to cover this cost. For example, if a tenant wants to leave nine months into a twelve-month tenancy, you can request that they pay the agents fee to find a new tenant for the remaining three months of their term. An astute tenant should be open to this cost since it will be lower than having to pay their three remaining months rent. Plus, you can then return their deposit and start afresh with a new tenant meaning they will not need to liaise with the new tenant.

In the unlikely event that a tenant vacates and ceases to pay rent, the deposit can be used to cover any shortfall in rent as per the relevant clauses in their contract. Getting the property back on the market as soon as possible will work best in your interest to find a new tenant. Remember to seek legal advice in such situations to ensure that you are following the correct procedures.