To Rental Guarantee or not to Rental Guarantee, that is the question.

To Rental Guarantee or not to Rental Guarantee, that is the question.

With recent events, there has been much speculation as to how safe rental guarantees are, specifically with the current situation at hand. If perhaps developers have been too optimistic and not considered that should something of this nature ever happen, then maybe they are at risk of overextending themselves. Rental Guarantees of late has been a hot topic. For those who have already invested in Phuket, some now see this as a cause for concern. Is this the case?

For buyers who like to minimize as much risk wherever possible, a rental guarantee is almost always more attractive, as the peace of mind it provides to buyers is the certainty that a fixed rate of return is attached to the sale of the property and guaranteed for a specified period.

We can all agree that we find ourselves in unchartered waters as things begin to unfold, to which we have minimal previous experience in which we can rely on. We have seen businesses struggle to navigate as to what the next best course of action should be and how to adjust to the unforeseen right now.

Are people really in danger of not receiving their rental guarantees? Let's not assume the worst and try to see things from the developer's perspective. Is it not wise to maybe consider that this is a strategic move by developers, to ensure the future success of the business continues, rather than simply using COVID 19 as an excuse not to pay these right now?

The fact that developers are now invoking force majeure and not paying the rental guarantees to clients is actually a positive sign. How is this a positive sign, you may wonder? Here is why we think it is.

Responsible developers know that any rental guarantee return is directly connected to income generated from holiday rentals. If there are no clients at all in Phuket, how can a project earn any income from rentals and be expected to pay any guaranteed return to the buyers? If developers would pay rental guarantees to clients without earning money from the property rentals, they would certainly get to bankrupt shortly, so we have to look at this actually as a form of protection for investors and buyers during this crisis to hold on until it will finally pass.
One should strongly consider that not paying the return is a form of protection for buyers. In this way, developers are able to maintain their financial integrity for their companies' sake and allow the opportunity for a fresh start in the near future.
This island and country have seen several crises in the past: Tsunami, financial crisis, political instability, SARS virus, and a coup. Yet every time has always managed to start fresh and promptly move towards renewed growth. If in the future, people find themselves uncertain of or not to opt for a Rental Guarantee, we won’t discourage it.

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