Renting a warehouse or factory is common today, especially for medium-to-large businesses that heavily rely on mass production. Renting provides greater flexibility and promptness, especially if the business is growing tremendously and the need for change in the business environment is necessary. However, before you go ahead and sign the rental contract, there are a few important factors to consider, and we will discuss them in this article.
· Read the lease agreement
It is a must to have a factory license for renting a factory in Thailand (ใบ อนุญาต ประกอบ กิจการ โรงงาน คือ, term in Thai). However, the license alone is not enough information. You need to carefully read the lease agreement page by page. According to Thai law, when both parties agree and sign the contract, both parties have a responsibility to act under the terms and conditions of the contract. The typical rental contract in Thailand is three years. If the contract goes beyond three years, you need to register the rental agreement with the Department of Lands. Any figures, such as the monthly rental rate and advance payments, must be explicitly stated in the contract. The lease contract must be in English and Thai.
· Check the taxes and other related expenses
Renting a property has a corresponding tax responsibility. In Thailand, the tax associated with renting a factory or warehouse is 5%. It is the lessee that withholds 5% of the rent for property tax and the exact amount will be calculated from the total rental amount. In the rental agreement, it should clearly indicate who will shoulder the tax fee (the leaser or the lessee). Aside from the tax payment, you also need to consider other related expenses, such as:
- Common fees
- Property insurance
- Utility surcharges
· Check the ownership of the rental property
One of the common mistakes made by lessees is not checking the ownership status of the rental property before signing the rental contract. It is important to check it beforehand to avoid any issues that may arise later on. You have to do the necessary checks before signing the contract and paying the deposit and advance fee. It is sad to note that there have been incidents when people showing up to you are not the actual owner of the property.
If they are not the real owners or don’t have the authority to lease the property, they do not have the legal right to lease the property. If you happen to sign the contract with these people and the real owner eventually finds out, then you will not have any rights to the rented property. It will put your money down the drain, and you surely don’t want it to happen. Therefore, it is of utmost importance to ratify the ownership and you can do this by checking the land title deeds along with other things such as construction permits and subleased agreements.
When renting a property in Thailand, be it for factory or warehouse purposes, make sure you keep in mind the factors mentioned above to avoid any issues that might arise in the future.