Every expat that comes to Indonesia has a different story to tell about how they found their home. In the worst cases, the story details a long exhaustive quest for just the right house for the family. In many stories, unqualified agents take newly arrived expats around to houses that are outside their budget, in unacceptable condition, don’t match the needs of the family or are located far from the neighborhood that the family wants to live in. The complaints made by unhappy newcomers after days spent stuck in traffic looking at unsuitable houses make up the tales of expat nightmares!
These nightmares can be avoided by using a reputable agent/broker to help you with your search. Your choice of housing agents and brokers includes independent brokers, franchised real estate brokers affiliated with multinational real estate firms and corporate housing services/relocation services.
As in so many business dealings with expats in Indonesia, there are a multitude of brokers that would like to help newly arrived expats find a house. Independent brokers are self-employed agents who use word-of-mouth and personal connections to try to locate potential residences for expats. They may or may not actually be the sole representative of the landlord of individual properties, but since their commissions are based on the amount of the rent, they have a vested interest in getting you to pay the highest amount possible to lease the house.
Many newly arrived expats are referred to such brokers by someone in their sponsoring company – from the HR or Formalities departments in a major multinational or by other staff in key positions. These independent brokers sometimes offer the person ‘inside’ the company a percentage of their fee for a successful signing. While this type of arrangement does benefit someone in your sponsoring company and/or their relatives or friends, there is no guarantee that this person has the personal or business resources or the skills to help you find the most suitable house for your family.
Most independent brokers find houses through word of mouth and networking with other brokers. While many brokers specialize in a particular area, they will be willing to help you find a house in other areas as well. For the areas that they do not have many houses/contacts in, they will then contact other brokers that they know have properties in that area and offer to co-broke, they provide the client and the other broker provides the property.
Utilizing this system may work, though the search is much lengthier. You will also undoubtedly see a lot of unsuitable homes in the process, as your broker will not be personally familiar with most of the houses they show to you. The negotiation process will also involve more than one broker, both agents will want a piece of the commission. Now you have 2 agents working towards a higher commission! The biggest challenge to you is that the broker you are dealing with may not be the person who is talking to the potential landlord, which can cause problems in the future as well.
Independent brokers/agents should NOT be charging you anything for their services since they receive their commission from the owner. While the agent is providing assistance to you, remember that it is the owner that is paying the agent’s commission. Don’t assume that they are in fact acting in your best interest at the bargaining table as they are paid by the owner. There may be no advantage to them in trying to find the best deal possible for you as their commission will be bigger if you have to pay more for the house. Current commissions run from 2.5% to 5%, so you can see that when dollar rents are at stake, the commission is significant.
Franchise Real Estate Brokers
In recent years, rising consciousness of the disadvantages of using independent brokers, and a demand from expats and Indonesians alike for more professional real estate services, has led to an increase in professional real estate brokers in Jakarta. Multinational real estate brokerage services have franchised in the local market and trained real estate professionals in international practices. There is no central computerized Multiple Listing Service in Indonesia. Some individual agencies compile and maintain their own database of listed houses.
A disadvantage to using a franchised broker is that they will only show you houses that they have listings for. Be aware that these franchises are purchased by individuals and while training from the franchise company does occur, a varying level of professionalism is seen from broker to broker.
Corporate Housing Services/Relocation Services
Going one step further, corporate Housing Services, such as Colliers International, provide expatriates, and especially their sponsoring companies, with a big advantage. Their goal is to truly represent the needs and concerns of the client company and its expatriate staff. They are committed to finding you the best deal possible. They want the client relationship with the company to be long term. Their success is measured by the continued use of their services by their corporate clients, who are pleased to know that the housing agent will be 100% on their side throughout the search and into negotiations with the prospective landlord.
In lease negotiations these firms are committed to representing you and your needs. Pre lease inspections are performed to check the entire condition of the house and then the findings of these inspections can be addressed prior to the client moving into the home. Since the housing market in Indonesia requires that the entire rent be paid up front, it leaves the client with little or no bargaining power once in the house, if problems are discovered after move-in. It is imperative that all requests and upgrades be made prior to the family moving into the home. Since these companies don’t represent the landlord, they are not under any pressure to lease you one house over another. Their goal is simply to fully meet the expectations of the expat family.
These firms often also provide comprehensive relocation services to expats relocating to Jakarta. In addition to home search services, they offer orientation programs, lease negotiation/re-negotiation services and executive housing management and repatriation services. Many firms have found that corporate housing services save their companies a lot of money ands stress for the company and the employee. The HR department of the sponsoring company can simply call the corporate housing professional and know that their incoming expats will be taken care of in a professional manner, and that will truly understand the goal of the employer that their expat employees be housed in accommodations that meet their standards.
In the event that the contract of the expat has to be terminated prematurely, leaving the sponsoring company with a house that is paid for but is unoccupied, these firms’ extensive contacts can help the employing company find subleases for the remainder of the lease period. This can help the company to recover some of the rent money invested in the house..
Housing Assessment Survey
According to Colliers International, one way you will be able to determine the professionalism of the agent you use, is by whether or not they use a housing survey to determine the needs of the incoming expatriate families. These surveys help professional agents short list suitable properties saving all parties valuable time when compiling and viewing portfolios.
When completing a “Housing Needs Assessment”, be VERY specific about exactly what you are looking for in a house or apartment. Mention important aspects of your lifestyle, particular interests, the needs of each family member, personal and company entertaining needs and other concerns to ensure that you get the most appropriate matches possible. This will help prevent the agent wasting your time showing you homes that don’t fit your family’s needs. Ask LOTS of questions about each house you see. You will soon determine just how familiar the agent is with the property and its owner and this also helps the agent better understand the type of home that you are looking for.
Housing Costs and Terms
One of the most pertinent questions you should know before you start your housing search is the amount your company allots for your housing allowance. Although there are homes that are available for US$1,000 per month and under, most housing of expat standards start at US$ 2,500 and can range to US$ 7,000 a month for new properties in prime areas close to international schools or with space for company entertaining. There is a wide variety of choices in between these two extremes.
Landlords that were previously asking 1 year in advance payments are now able to request a minimal of 2–3 years in advance. Landlords are seldom willing to negotiate a one year lease on a house, but note that there could be a significant rise in the rental rate at the end of that first year’s contract. Substantial increases in rental prices have also occurred over the last 12 months with at least a 20% increase and in some cases 30% and above.
Apartment buildings that are managed by an international chain are restricted to some extent by global corporate policy and have regulated price increases yearly. Typically these increases are budgeted between 10 -15% and tenants are advised upon signing of the lease to expect yearly inflation. Recently, owners of these apartment buildings have been challenged by numerous factors such as multiple increases in the price of electricity and a significant increase in wages. To approbate these increases owners have not been willing to adhere to the usual 10-15% increases and have asked their apartment management firms to find other ways to cover these increases. Some management companies have given notice that they will be increasing their service charges from 10 to 13.5% in 2014 to try to recover the significant increase in the operating expenses.
If you are being represented by a professional property company, they will negotiate on the client’s behalf to try and obtain the best deal for the tenant and company they are representing. If you are not using a professional agent, bargain vigorously to protect the financial interests of your sponsoring company and to prevent inflationary pressures in the prices of houses rented to expats.
The Jakarta Post Classifieds has many listings for houses and apartments, either offered by brokers or direct from owners and property management firms. Be cautious when calling listings in the newspaper as it’s difficult to determine the background and reliability of the persons representing the houses. Most listings are from independent brokers. Utilizing an independent broker, you have little legal recourse or professional representation in the lease negotiation process, such as you would have through professional corporate housing services or a real estate brokerage service.