"Office Lease Deposit, Use a Guarantee Certificate Instead of Cash"

Construction Guarantee Association Launches 'Lease Deposit Replacement Guarantee' Product

The Construction Mutual Aid Association announced on the 15th that it will launch the 'Lease Deposit Replacement Guarantee' on the 19th. The Lease Deposit Replacement Guarantee is a product that replaces the lease deposit paid by a member (tenant) to the landlord when renting an office with a guarantee certificate.

Receiving the deposit in cash has been a long-standing practice in the lease market. When renting an office, tenants deposit a large amount of rent and maintenance fees, sometimes more than a year's worth, as a deposit to the landlord to secure payment of rent and other charges. Even considering regional or contractual variations, a large sum of money remains tied up during the lease period.

Accordingly, the association has launched a product that supplements the credit of its members by replacing the cash deposit with a guarantee certificate.

The Construction Mutual Aid Association expects that "if the deposit is replaced with a guarantee certificate, tenants can reduce their financial burden, and the actual liquidity expansion will also help the management of the members."

It is also positive from the landlord's perspective. If the tenant's lump-sum burden for the deposit decreases, renting out offices becomes easier. A reduction in vacancies will directly lead to increased rental income.

The association's guarantee compensates for losses due to rent or maintenance fee arrears or failure to restore the premises. Restoration can be carried out by the association through contractor selection in addition to monetary compensation.

The guarantee can be issued when a member rents an office under a 'monthly rent contract with a deposit,' and for existing lease contracts, issuance is possible if the landlord agrees and confirms that there are currently no guarantee incidents (such as arrears).

The fee is around 0.8% per year, adjusted by ±30% according to the association's credit rating. The guarantee amount can cover all or part of the lease deposit, and for partial guarantees, fees are discounted by 20-50% depending on the ratio.

The guarantee period lasts from the issuance date until the end of the lease contract, and the guarantee target is offices rented by members, with plans to gradually expand the scope in the future.

An association official stated, "If this product spreads in the lease market, it will also have the effect of improving lease contract practices based on the association's credibility."

This content was produced with the assistance of AI translation services.