Get to grips with the Thai Rental Law

Should my tenant be paying one month, or two months’ rent as a deposit? Can my tenant vacate the property before the one-year term expires? The answers to these questions will depend on whether as a landlord you must abide to the recent Thai Rental Law.

Announced earlier in 2018 and effective as of 1 May the same year, there has been some confusion amongst tenants and landlord about what this law entails and who it affects. The first point to be aware of is that not every letting must abide to this law, and which property does and does not will depend entirely on the landlord.

Terminology.
In essence this law looks at addressing residential lettings as a form of business. Defining them as a ‘Contract Controlled Business’ and labelling all persons owning more than five buy-to-let properties as ‘Business Operators’. Note these properties do not have to be in the same building and hotels are exempt. Anyone owning less than this magic number are immune from this law and need not worry about the requirements it brings.

Deposit.
Business Operators with a portfolio of five or more properties must adhere to these terms and the first change is related to the tenant’s deposit. The amount that can be collected is just one month rather than two which is the norm in Thailand. An inventory must be affixed to the tenancy agreement stating the condition of the property at the commencement of the term, and this document will be used at the check-out at the end. Landlords must return the deposit immediately when the tenant leaves the property unless there is a dispute and they have seven days to complete this.

Termination.
Tenants are given more flexibility under the Thai Rental Law since they can end the tenancy provided that they have given 30 days prior notice. On the other hand, Business Operators are not allowed to insert any clauses in the agreement to terminate the tenancy from their side. Previously any tenant wanting to end the tenancy before the end of the term would need to find a replacement tenant, but either way Bangkok has a healthy supply of tenants looking for condominiums to rent so finding a new tenant should be straightforward.

Utility rates.
Some landlords, usually of apartment blocks and not condominiums, charge an inflated rate for utilities such as electricity, water or even the Internet. The Thai Rental Law states that Business Operators are not permitted to do this creating a more transparency and fairness for tenants.