There are always a large volume of rental houses targeted at any one time in Vientiane. The difficulty lies in separating quality homes from those which are clearly substandard. I estimate that only around 25% of rental properties available at any one time are of sufficient standard to house expatriates. Short supply of livable properties creates high and fast-paced competition amongst potential tenants.
Even more it’s important for an Expat to understand the mechanics of the Lao Real Estate market.
First of all let me start with the agents:
Real Estate Agencies:
In Laos there are no Real Estate agents managing properties like those found in Europe, America or Australia. Instead, all property is rented privately and according to the rules of each individual landowner. For this reason real estate agents in Laos cannot act as sole property manager. Instead, they merely are brokers, locating privately rented properties, advertise them and arrange meetings between tenants and landowners.
The agents service is free for tenants, as they take a fee from the landowner.
The Rental Market:
Unfortunately rental prices in Laos are not in proportion to the standard of living. Most rental properties are geared towards the buying power of foreigners, hence prices do not reflect location, size, number of rooms or aesthetic value of property. Instead, landowners demand rent equal to that of their neighbours’ properties or the estimated salary of their tenant. Other times, they simply ask for the amount they need to cover their loan repayments.
In the last years Laos has seen an increasing number of expatriates, reducing the number of available houses. This situation has led to increased rental prices. Whilst only a few years ago a two-storey, three bedroom house may have been $500 per month, it now fetches over $1000.
In reaction to the new demand, many landlords have begun building houses that are bigger and more expensive, often above the $1500 mark, leaving the market with a shortage of houses in the middle price segment ($800 to $1500)
The below price brackets give an indication of the segments that make up the housing market (in USD).
500 – 800: Usually substandard, older houses in poor condition, with hardly any garden.
800 – 1000: Basic standard housing, somewhat maintained, rather smaller & older houses.
1000 – 2000: Better quality housing, with 3-4 bedrooms and some garden.
2000+: Highest quality housing, modern, well decorated, well furnished
During the last 2-3 years many new apartment complexes were finished, offering studio, 1 and 2 bedroom for rent. With the increased competition rental prices for apartments already decreased and are expected to decrease even further during next year when more major developments come onto the market.
200 – 300: Usually substandard, older apartments.
400 – 600: Basic standard, rather smaller & older apartments.
700 – 1000: New, modern apartments, spacious.
Pricing & Visiting Properties:
As mentioned before, agents in Laos are not able to exclusively manage property, therefore they cannot control price fluctuation or landowner behaviour. Therefore, please be aware of the following:
-actual prices may differ to advertised prices
-landlords may not honour appointments, may be late or bring the wrong keys
-houses are not always tidy during visits
-family members or existing tenants may be present
-properties are suddenly unavailable!
When you make an offer on a property and agree to formally apply for the tenancy, you will be asked to provide a holding deposit worth a one month rent. If everything proceeds as normal, the holding deposit will normally be set against the first months rent.
However, please be aware that the holding deposit is non-refundable in the event that you pull out of the deal. Further with several agents competing to let the same property, there is a risk that although you put down your deposit, someone else will put down a deposit for a different value through another agent, or even through the same one if they are particularly dodgy.
The landlord will almost always take the tenant offering the higher rental value even if they came in after the first party had put down holding deposit. You may think that this makes the holding deposit essentially meaningless, since it really offers no legal guarantee of your right to take up the tenancy on a property – you’re right it does. The only comfort is to know that in such a case the landlord will refund your deposit.
Unlike in western countries, most landowners in Laos do not expect bond money (a security deposit). Most leases for houses are paid a year in advance and in cash, a few landlords may accept six months in advance. Most apartments accept monthly payments, some however take a security deposit. The longer the rent is paid in advance, the better the chances are to reduce the total rent price or to negotiate for additional furniture or fittings.
Here’s my advise: everything is negotiable as long as it remains reasonable for both sides
It’s up to the agent to draw up a contract between the tenant and the landlord. In addition, the tenant or the landlord may have the contract stamped by the local government authorities to legalise it.
I would like to mention that although contracts are legally binding, situations may arise in which a landlord does not honour it. As court cases in Laos are slow and lengthy and little is done to make sure all parties attend, it’s recommend in such cases to complete your lease and simply move to another property.
Sometimes the landlord will ask you to sign a second, token contract in which the rental price is lower. The landlord submits this to the tax department in order to pay less tax. It is entirely up to you whether or not you agree to this, however it does not negatively affect you as a tenant.
In rare cases a landlord may wish to terminate the contract early. Under Lao law, a tenant is fully protected and may remain in the premises until the end of the contract. The tenant may choose to accept a compensation payment from the landlord.
Some landlords might enter your property from time to time and without warning. This behaviour is fairly commonplace and the landlord merely wishes to inspect his/her property to make sure it is being taken care of. If you are concerned about privacy, a friendly chat with the landlord about phoning before entering the property should solve the problem.
Naturally, should you need extra assistance, as part of the agent’s ‘after-sales service” he should help interpret for you, I guess latest by then you found out if you have chosen the right agent 🙂
It’s quite common in Laos that landlords do not insure their own buildings. I strongly recommend that either the landlord shows you the original insurance document or that at least it’s mentioned in the contract that it’s the landlord’s obligation to insure the property.
In any case your own content is not covered under the landlord’s policy. If this is worrisome, you can take out insurance on your leased property and your content.
Landowner attitudes toward maintenance differ from house to house. In general, landlords are quick to repair larger structural problems while they expect you to undertake minor repairs. Often some patience is required until such repairs are carried out.
If your landlord is neglecting house maintenance, ask your agent to support your demands with the landlord or to arrange plumbers, electricians or other maintenance workers to come to your house.
Furnishings and Fixtures:
Most rental properties in Laos come partially furnished. The usual items supplied are television, refrigerator, gas stove, beds, a lounge and dining furniture. Depending on your rental price, you may also find a washing machine, water tank & pump, iron, closets or outdoor furniture. These items are negotiable and some may be swapped for others.
Should you purchase your own furniture, you may easily sell this to the next tenant or to the landlord themselves upon your departure.
It is the tenant’s responsibility to pay for electricity, water, gas bottles, garbage disposal, drinking water, cable TV and internet. Sometimes it can be difficult to arrange this on your own, so ask your agent to provide assistance with arranging these services.
Copyright and Disclaimer
This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. No member of the J&C Services organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.
Copyright © 2016 J&C Services Co, Ltd.
J&C Services, an independent insurance broker and a Top Gold agent of Toko Assurance in Laos, is offering customer-specific solutions to our clients, while providing at the same time the most competitive premiums.
Try us and be surprised how much we differ if compared to other providers !
www.jclao.com / firstname.lastname@example.org / 020 77 100 200