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.