Tuesday, July 25, 2017

Signing a lease: What you need to know

The house was perfect.

Artfully revamped, the colonial villa emerged from lilting greenery on the large estate. The rent was high – about US$2500 per month – and the landlord was happy to make a quick deal provided he was paid 12 months’ rent up-front.

Examining the lease with a trusted set of eyes will help protect you from possible scams. Photo: StaffExamining the lease with a trusted set of eyes will help protect you from possible scams. Photo: Staff


“But something was not right with this guy,” said U Robin Saw Naing, managing director of Pronto Services real estate agency. “So I had my legal adviser examine the ownership title, and it was fake. It’s not his property but his friend’s who is not in the country.”

While rental scams like this are rare, middlemen soliciting rental properties are not unheard of, U Robin Saw Naing told The Myanmar Times. He stressed that tenants must ensure they are dealing with the actual landlord during negotiations, as often when landlords live overseas it can be hard to resolve problems.

Yangon expat Eileen Lui learned this lesson the hard way.

“When the rainy season started, the apartment leaked everywhere. Ceiling, walls, windows … It was a nightmare,” Ms Lui said. “I literally had to clean up flooding in the apartment.”

Ms Lui had signed a standard rental contract with her landlords, who lived overseas.

“They kept saying they were not in the country and [could not help]. They passed us over to a contractor who we found out later was just a friend helping the landlord,” she said. “It was very difficult getting anything done.”

Not all agents are necessarily on the side of the tenants, warned U Moe Lwin, senior consultant at Moe & Tun Associates.

“Devious brokers are out to cream you, and landlords who don’t appreciate complaints about dirt, breakages and rats” are just some of the problems foreigners face while renting in Yangon, the lawyer told The Myanmar Times via email.

Choosing a broker you trust is important when “things go south”, U Moe Lwin said. “Look at 10-plus sites before you decide. You will gain experience and start noticing patterns – and beware of [agents or brokers] who don’t speak much English.”

Standard rental agreements are loaded against foreign tenants, U Moe Lwin said.

Under the standard contract the tenant is “fully and absolutely responsible” for all repairs, which must be “an exact replica” of anything broken or damaged, the lawyer said.

“Normally you can buy [a contract] at a local photocopy shop and fill in the blanks and you are good to go. [But] some sorry, poor, street-mouse lawyer probably wrote it up for a cup of tea and now it’s used throughout [the country].”

U Robin Saw Naing agreed the choice of agent and contract could make a sweeping difference in a foreigner’s rental experience.

“It’s very important for a foreigner to choose an agency that is a registered company [for renting an apartment]. My advice is to not choose a broker from the street corner as they will take no responsibility for problems later.”

Given the unsophisticated state of the residential rental market in Yangon and other major cities, there are no official channels for dispute resolution and the matter often falls to the intervention of a diplomatic real estate agent.

“In transactions between local landlords and local renters, the landlords’ care for the apartment is negligible and they don’t always follow the rental agreement. Renters are responsible for [upkeep],” said U Robin Saw Naing.

Despite this custom, landlords are slowly modernising their approach to rental arrangements.

Ample negotiation and discussion of rental terms between a lessor and a lessee can ward off much trivial wrangling over responsibilities down the line, he added.

Foreigners may want to include an early termination-of-lease clause that provides for the transfer of the remaining rental period and/or the refund of rent already paid. “This is particularly important for foreigners, who cannot stay here forever,” said U Robin Saw Naing.

In 2008, renters discovered a

critical and often overlooked rental term. When Cyclone Nargis wreaked havoc on the country, renters found themselves stranded in unlivable properties with landlords unwilling to begin repair work or refund advance rental payments.

“It must be in the contract that in the event of natural disasters, it is the owner’s responsibility to repair immediately – just like with wear and tear,” he said.

Sky Bridge Real Estate’s Ko Thurane Win agreed that as Myanmar continued reforming, logistics for residential renting would continue to streamline, including the process for foreigners registering with the local authorities.

“You need to register as a foreigner, but the landlord as well as the agent themselves would register for you as a duty of real estate policy,” Ko Thurane Win said adding that he expected regulation of foreign visitors’ accommodation in Yangon to be relaxed. “There are not too many disputes between tenants and landlords. The main differences occur when the rent goes up by 10pc or 15pc from one year to the next.”