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Thailand’s New Residential Tenancy Laws the scoop on if & how the changes will affect you!

Thailand’s New Residential Tenancy Laws  the scoop on if & how the changes will affect you!

The tenant/landlord dynamic in Thailand isn’t always a happy or pain-free one! Odds are you’ll have heard the horror stories from seemingly model tenants of how they were stiffed out of their security deposit by a shady landlord. Or the cold hard reality at some kinds of residential property in the Land of Smiles of grossly hiked up utility rates. But, for better or for worse, change is on the near horizon!

In the spirit of offering better protection to residential tenants, the Thai government has not long passed tough new laws about the small print of a written rental contract. So with D-Day on 1st May (2018) fast approaching, we’ve got the main takeaways of the upcoming legislation for those who rent or let out an apartment, condo, house or any other type of residential property in Thailand:

  •  Wave goodbye to having to fork out two, three or more months’ rent before moving into the property. One month upfront will be the most certain  landlords will be able to ask.
  •  The same goes for the security deposit. And which, incidentally, must be returned to the tenant within seven days of the end of the lease agreement. Mind you, exactly how that’ll play out in practice when both parties have to wait more than a week for the final utility bills, for example, remains to be seen!
  •  No more having to wait to pull out of a long-term rental contract. Provided they’re up-to-date on rent and give reasonable cause, tenants will be able to cancel their lease agreement at any time as long as they give the landlord at least 30 days’ notice in writing and a good reason (who will be the judge of “good reason”?). Still, this might prompt landlords to offer only month-on-month contracts with little in the way of security for either party and since short-stay rates tend to be way higher, tenants stand to be worse off!
  • As well as all rental related fees being set in stone for the length of the contract, never again will tenants pay extra for utilities because landlords will only be able to charge the actual rates for electricity and water. Of course, apartment owners could simply bump up the rent or, like at a condo, impose a common area fee to make up the shortfall; then all of the building’s residents would suffer, not just the ones who like to have the aircon on full blast day and night!
  • It seldom happens anyway, but soon it’ll be adios altogether to having to cough up even a single baht just for the privilege of renewing an existing lease agreement.
  • Again nothing ground-breaking in terms of the average rental contract in Thailand, but a tenant will officially have to be given fair warning of an inspection by the owner or their property manager. A landlord appearing out of nowhere to do a spot check will become a thing of the past!
  •  Default on the rent and landlords will no longer be able to nab the tenant’s worldly possessions or stop them from accessing the property.
  •  No matter what nationality the landlord or tenant, every lease agreement will have to be copied into Thai. But don’t forget, a rental contract written in Thai takes priority over that in any other language in a Thai court of law so you’re gonna need to be able to read and understand Thai script before putting pen to paper! Oh, and an inventory and schedule of condition for the property and its contents must be included too.

Sadly, it’s not all as cut and dried as one would hope. For starters, the new laws only fly when renting from a landlord/business who lets (or subleases) five or more residential units whether they’re in the same building or not. So it’s mostly gonna affect serviced and long-stay apartments. In other words, it’ll be business as usual for many tenants.

Not to mention putting honest-to-goodness landlords at infinitely greater risk (and seriously out of pocket) from, shall we say, the more carefree tenants out there. It’s been made crystal clear that property owners/managers who break the rules chance being banged up for up to a year, slapped with a fine of up to 100,000 baht or both with the unenviable task of enforcing the new laws falling to the Office of the Consumer Protection Board.

Not surprisingly, the new laws have already set tongues a-wagging with questions and concerns aplenty! So what’s your own take on Thailand’s sweeping new rental reforms? Do you welcome the changes as a tenant? How will it impact you as a landlord? No matter if you wanna air your consensus or simply vent your spleen, feel free to weigh in with your two penneth worth in the comments section below!

A translation of the Thai Document Below- (this is not an official translation and is for information purposes only)

Section 35 bis of the Consumer Protection Act B.E. 2522 (1979) grants the Contract Committee of the Consumer Protection Board the power to designate “contract-controlled businesses,” in order to control the contents of written contracts between certain businesses and their consumers in the course of sales or services. Designation as a contract-controlled business is intended to ensure that contracts contain necessary terms and conditions and to prevent consumers from being unreasonably disadvantaged by unfair contract terms.
On February 12, 2017, the Contract Committee used that power to issue “Notification of the Contract Committee Re: The Stipulation of Residential Property Leasing as a Contract- Controlled Business B.E. 2561 (2018)” (the “Notification”), which was published in the Government Gazette on February 16, 2018. As a result, residential property leasing will be deemed a contract-controlled business as of May 1, 2018.
The Notification defines a “residential property leasing business” as a business that leases (or subleases) five units of property or more to individual lessees, for residential purposes, in exchange for a fee collected by the business operator, regardless of whether or not the units are in the same building. Property is defined to include any accommodation, house, condominium unit, apartment, or other kind of residential property leased for residential purposes, excluding dormitories and hotels which are regulated under a separate regime.

The Notification imposes the following requirements:

1. Residential lease agreements must include a version in Thai and must contain the following details:
a) Name and address of the business operator and its authorized person;
b) Name and address of the lessee;
c) Name and location of the property;
d) Details of the property’s physical condition, including any items and equipment in the property;
e) Term of the lease specifying its commencement date and expiration date;
f) Rental fee rates and due dates for payment;
g) Public utility fee rates and due dates for payment;
h) Service fee rates, which must be reasonable and at the actual cost paid for the services, and due dates for payment; 
i) Other fees and expenses (if any), which must be reasonable and at the actual cost paid, and due dates for payment; and
j) Amount of security deposit.
2. Invoices for the fees in items (f)-(i) above must be sent to the lessee at least seven days before their due dates, and the lessee will have the right to check information related to the payments shown in the invoices.
3. Details of the physical condition of the property and equipment (if any), inspected and acknowledged by the lessee, must be attached to the lease agreement, and a duplicate must be delivered to the lessee.
4. The security deposit must be immediately returned to the lessee at the end of the agreement, unless the business operator has to investigate any damage to ascertain whether or not it is the responsibility of the lessee. If the lessee is found not to have caused such damage, the security deposit must be returned within seven days from the end of the agreement and the business operator retaking possession of the property. The business operator is also responsible for any expenses incurred in returning the security deposit to the lessee.
5. The lessee has the right to terminate the lease agreement early provided that at least 30 days’ advance written notice is given to the business operator.
6. Any material breach for which the business operator can terminate the agreement must be clearly written in red, bold, or italic font. The business operator can only terminate the agreement if written notice has been given to the lessee to rectify the breach within 30 days of receipt and the lessee fails to do so.
7. The agreement must be made in duplicate, one of which must be given to the lessee immediately upon execution.
Under section 35 ter of the Consumer Protection Act, any residential lease agreement which does not contain the required terms above shall be interpreted to include them as implied terms.
Residential lease agreements must not contain:
1. Any waiver or limitation of the business operator’s liability from its breach of agreement or wrongful acts;
2. Any advance rental fee equivalent to more than one-month’s rent;
3. Any term allowing the business operator to change the rental fees, public utilities fees, service fees, or any other expenses before the end of the agreement;
4. Any security deposit of more than one-month’s rental fee;
5. Any term allowing the business operator to confiscate the security deposit or advance rental fee;
6. Any term allowing the business operator or its representatives to inspect the property
without prior notice;
7. Any stipulation of electricity and water supply fees exceeding the rates specified by the relevant authorities; 
8. Any term allowing the business operator to prevent or obstruct the lessee’s access to the property to seize or remove the lessee’s belongings if the lessee defaults on rental fees or other expenses related to the lease of the property;
9. Any term allowing the business operator to request any fee or expense for renewing the lease;
10. Any term allowing the business operator to terminate the agreement early other than for a material breach of the lease agreement by the lessee;
11. Any term making the lessee liable for damages incurred due to ordinary wear and tear from usage of the property’s contents and equipment;
12. Any term making the lessee liable for damage to the property, contents, and
equipment that was not the lessee’s fault and in force majeure situations; and
13. Any term making the lessee liable for defects to the property, contents, and equipment incurred due to ordinary wear and tear through usage.
Under section 35 quarter of the Consumer Protection Act, a residential lease agreement that includes any of the prohibited terms above shall be interpreted as not including them.
Any business operator who fails to meet the above requirements may be subject to imprisonment not exceeding one year and/or a fine not exceeding THB 100,000 (section 57 of the Consumer Protection Act).
This summary is designed to provide general information only and is not offered as specific advice on any particular matter.

Source:http://tilleke.com/sites/default/files/Feb_18_Residential_Building_Leasing_Business_Subject_to_Contract_Controls_0.pdf

(12) Comments

  1. Geoff Hollick

    on   said 

    Just a quick question if I may. I imagine most long term expats are on roll over 1 year leases for their rented abode. Some contracts, I imagine most, do not meet the requirements of the new regulations. Some are very very basic. Should we expect that new contracts will be in place from 1 may or is there some sort of grandfathering arrangement…….and…for those that have paid two or three months deposit years ago, should they expect a month back, if so when, (for example when you do an extension or new contract that now stipulates one month should you get any over and above you have paid then). Many thanks

    Reply
    • Perfect Homes (Chiang Mai Properties)

      on   said 

      Dear Geoff,
      Thank you for your questions. As I am guessing that you have been in Chiang Mai for a fair time already, I am sure you understand that many new laws and regulations are brought in an very little information about them and how they will be implemented is know. Well believe it or not the same applies here.
      There are a many rumors floating around and many buildings and tenants that it should affect have any idea about the new rules.
      So honestly at this stage I have to answer, “your guess is a as good as mine”

      Reply
    • Evan Mylo

      on   said 

      I was lucky and had a good owner for the condo I rented. It was a condo having both a great price and location…two bedrooms/baths…two large HD TV’s… with suede wraparound and even a Jacuzzi. HUGE teak wood desk and fax machine, etc. Unfortunately for him, like other owners of condos in Thailand, management and reception makes for keeping good tenants very difficult. My electricity and water were also charged at prices they were supposed to be, same as a local pays.

      I received my full security deposit after returning to the USA, just as the owner promised me he would return it to me if the place was in good condition, but events leading up to the couple of agreements signed proved to me trust was a HUGE issue between landlord and tenant in Thailand.

      I feel with new ownership happening in Thailand, but prices being kept elevated or being raised, this is giving cause for more of a good offer by way of incentives for people to stay longer, or come and rent in Thailand.

      I was so thrilled by the honesty that seemed forthcoming from the owner of the condo I rented for almost three years that I even left a bunch of art for his fabulous place.

      I am glad these new law as are being implemented in Thailand for renters as I am the only person I have heard of that received their security deposit back at end of stay…let’s hope the other issues that are causing many to move out of Thailand do not make the new and better laws for tenants worthless..and the Thai people deserve the good economy that keeps them housed and fed and with a 1$ cost for visit at any health care facility if the need arises.

      Reply
  2. brian

    on   said 

    The new law regarding electricity charges will make assessment of comparable rental values much easier, I am a long stay in a hotel/apartment block, I am charged 8.2bht per unit, 100% more than the electricity company charges, I just receive a scribbled note on the back of a bus ticket…last months was 15,000bht for the room, water 400bht, electricity 3,500bht. never any mention of how many units…..killing the golden goose.

    Reply
    • Perfect Homes (Chiang Mai Properties)

      on   said 

      Hi Brian, it is not unfair to let owners chose the rates they charge for water an electricity etc, but it definitely should be 100% clear from the start and proof of usage should be presented at the start for sure!

      Reply
  3. Robert J Haydock

    on   said 

    Never thought I’d see Thailand follow the UK in trying to discourage investment in property. I’m all for protecting Tenants but what’s the point of having a fixed term contract if a Tenant can give 30 days notice? I expect this situation does not work the other way round – with Landlords having equal flexibility? I suggest that all Landlords request their Agents include a clause whereby if a Tenant wishes to leave before the end of their fixed term, they agree to contribute a proportional cost to the re-let fee – ie a 6 month contract, Tenants move out after 3 months & so pay half the re-let costs. I think Government forgets that Landlords offer a much needed service & the majority aren’t unscrupulous!

    Reply
  4. bryan keeling

    on   said 

    Hi …I have been living at a condotel in Chang Kien off Huay Kaew Rd, where there is a mix of guests staying here, some stay a few days and others longer, although there are several people who have been here for 8-9-10 years, there isn’t a rental agreement, we are all charged 8+ baht per electricity unit, none of us receive any notification of how many units we have used, just a note on a plain 3×2 inches piece of paper, with date, room rate 15,000bt, electricity 3972bt, water 400bt, no indication of how many units have been used or the electricity unit cost, which, when I challenged the owner, said that I was on 6bt a unit, surely he should give me a proper reading from the meter, or ask the electricity company to do a reading and charge me separately.
    Is it the fact that there is no formal agreement between owner and guest, that abrogates the owner of any responsibility regarding the new regulations?

    Reply
    • Perfect Homes (Chiang Mai Properties)

      on   said 

      Hi Bryan,
      I certainly do not think the owner is except from the new laws, but getting him to change his was might be a little harder than in many other countries, I am just curios why does every one stay in the building, if there are no contracts then vote with your feet? Are the rents very low and the building owner makes up for it with increased costs??

      Reply
  5. Matt

    on   said 

    Problem remain the same, it’s the gap between laws and their enforcement. Even though all rental agreements are suppose to be equals, most landlords do as they wish and if you don’t agree, you may look for another place.

    Reply
    • Perfect Homes (Chiang Mai Properties)

      on   said 

      As long as contracts are clear and stuck too. Then you have the right to enter into the contract or not.
      It is unfair once either party does not stick to the signed agreement.

      Reply
  6. brian

    on   said 

    Hi there,
    I have rented many condos on one monthly basis on my many trips to Thailand and only problem I have had is the same as many with no actual proof of exact meter reading and amount just scribbled on small piece of paper and me having to believe this is correct.
    Some landlords have included water and electricity in rent which is great.
    My question about new laws is “why does new law only come into play with landlords or business that own 5 or more residential premises ?????? whats the difference between landlord that owns 4 properties than someone who owns 5 ????? and there is probably more 1 rental property owners who do the wrong thing by their tenants rather than the owners of 5 or more that would have a steadier flow of income so not really having the need to rip tenants off for small gain !!!!
    New law should be for all owners regardless of how many properties they own as this still leaves the door open for many falung to still get ripped off by greedy landlords and giving a free licence still for owners of 4 or less properties to rip tenants off and maybe just get a smack on the hand and not receiving term of imprisonment or hefty fine.
    Once again just another form of Thai corruption !

    Reply
    • Perfect Homes (Chiang Mai Properties)

      on   said 

      Hi Eric,
      As you say, you have had very few issues in Thailand with owners. Why penalize all owners for the problems caused by the few.
      Owners should be allowed to set the contracts in a fair way and both parties should stick to the contract. If the prospective renter does not like the terms and conditions of the contract then he can simply chose another place with terms he/she is happy with.

      Reply

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