Just last year, the Contract Committee of the Consumer Protection Board designated the lease of residential property a “contract-controlled business.” This law took effect on May 1, 2018.
It has included new policies that, according to the Thai government, protect tenants from any unfair contract or landowner.
Who is Affected?
The new set of laws only affect those individuals or business entities who lease five or more property units in one building or more for residential purposes. Properties covered in this law include condominiums, apartments, houses, and other types of properties that are leased for residential purposes, aside from hotels and dormitories.
Other landlords outside these criteria are not obliged to follow the new laws but are highly encouraged to.
Despite the laws’ good intentions, a handful of condominium landlords are troubled that it will be more difficult to handle bad tenancies. Let’s take a look what these new laws are and how they affect landowners of Thai rental property.
Major Changes in Laws Regarding Leasing Property
Leasing contracts must include a Thai version as well. In addition, there must be a sheet detailing the physical condition of the property and its contents, as inspected and acknowledged by the lessee, attached to the contract.
Contracts Can Now be Broken If…
Before, it was a common practice for leaving tenants to find their replacement, so as not to leave the rental property empty. Now, tenants are not required to find their replacement. They can also break the contract if 1) the notify the landlord 30 days in advance with written notice, and 2) if they have a reasonable cause for doing so.
On Termination of Tenants
The landlord can terminate the contract due to any breach in agreement if the landlord has given written notice to the tenant and the tenant has not corrected the breach within 30 days.
Advance Rental Fee Collection Limited to One Month Only
Gone are the days when landlords can request for advance payments for two or more months. With the current Thai law, landlords can only ask for a month’s payment in advance. Also, security deposits should equate to no more than one month’s rent at the start of the lease.
Security Deposit Adjustment
The new Thai law addressed two major concerns regarding security deposits. The first concern is that the tenant’s security deposit must be returned immediately after the end of the contract. This is unless the lessor has to investigate any damage to judge whether or not it is the lease’s fault. If there are no damages, the security deposit must be given within seven days before the end of the contract.
Second, landlords cannot hold the tenant’s security deposit for the daily wear and tear of the rental property’s furnishings. It is the landlord’s responsibility to perform routine maintenance. Although, the tenants are advised to notify landlords when an issue arises.
Any individual or business owner 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).
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