Thailand’s New Residential Leasing Law

Thailand is well known for great eats, beaches and many temples among many things. At an area of 198,000 square miles and over 69 million people, Thailand is the 51st largest country and 21st in terms of population in the world. 

A survey in 2017 by InterNations, the world’s largest network for people who live and work abroad, rated Thailand 7th on the list of 17 countries where expatriates live the happiest lives while the World Bank Group’s Doing Business report in 2017 ranks Thailand in 26th place among 190 economies in the ease of doing business for small and medium enterprises around the world.

With Thailand a popular destination for employers and expatriates alike and coupled with a buoyant economy, Thailand’s property market looks set to return to optimism. 

The Contract Committee of the Consumer Protection Board in 2018 published on the Government Gazette deeming residential property leasing as a contract controlled business. The intention of the regulation is to give additional protection to individual tenants effective May 1st 2018.

Business operators that lease 5 units of property or more to individual tenants for residential purposes, regardless whether or not the units are in the same building, must comply under the new regulation (note: not applicable to tenancy agreements made before May 1st 2018, any adjustments needed are to be done during lease renewal). The new regulation is notapplicable if the lessee is a company (ie. corporate lease).

Some of the significant requirements under the new regulation are:

• Residential lease agreements must include a version in Thai and contain certain details required under the notification
• Details of the physical condition of the property and its contents, inspected and acknowledged by the lessee, must be attached to the lease agreement
• 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.
• Clauses with the following effects will be unlawful under the regulation:
• Waiving or limiting the business operator’s liability for breach of agreement or wrongful acts;
• Requiring advance rental fees equivalent to more than one-month’s rent;
• Entitling the business operator to change the rental fees, public utilities fees, service fees, or any other expenses before the end of the agreement;
• Requiring a security deposit equivalent to more than one-month’s rental fee;
• Allowing confiscation of the security deposit or advance rental fee;
• Any stipulation of electricity and water supply fees exceeding the rates specified by the relevant authorities; and
• Any term allowing the business operator to terminate the agreement early other than for a material breach of the lease agreement by the lessee.

While the new regulation may tilt the personal lease friendly housing market in Thailand to be more receptive to corporate leases, there has been no further details how the Thai Government will enforce this regulation systemically to check and determine whether an individual landlord owns 5 units or more of rental properties.

It is also understood that many corporate landlords have raised their concerns and are holding discussions with the Consumer Protection Agency to dispute the new regulations.