EXCLUSIVE: Sensational, and perhaps wrong, media headlines in recent weeks surrounding a court case in Hua Hin suggested that landlords engaging in short-term rentals through the global website Airbnb are breaking the law.
Bangkok-based lawyers SBLaw Asia has a different view and claims that most landlords who have four or fewer properties for short-term rents in Thailand of less than 30-days will not be breaking any laws. Their views are not alone among a significant number of Thai lawyers who have examined the relevant governing law(s).
That said, there are incidents where individual condominiums have banned their owners from engaging in short-term rentals, and that is a matter for the juristic committee for each development and would overrule current Thai law, and thus be illegal.
Several listed developers ban all short-term letting in each of their developments, so landlords are advised to check with their individual juristic offices if they intend to work with Airbnb or other similar short-term holiday rental firms.
The recent cases that grabbed media headlines do not set any precedent in Thai law, because Thailand law does not operate on legal precedent, SBLaw Asia confirmed.
So, the ruling that was made in Hua Hin, whatever it was, will not apply throughout Thailand.
It also said that no detailed legal report of these cases has emerged so far, so there is no public knowledge of the case and why the landlords were fined, and more importantly exactly for what.
ThailandProperty.News suspects that something would have gone seriously wrong between the landlord and the tenant/tourist for a case to be brought before a court.
More than 40,000 Thailand properties are currently listed on Airbnb, according to the company, and it also said that more than 770,000 overseas tourists used Airbnb in Thailand during 2017.
There would only be one loser if Thailand were to truly make short-term rentals through Airbnb illegal.
SBLaw Asia published a White Paper on the subject of the legality or otherwise of Airbnb in early 2017 which is summarised below.
It noted that it is important to remember that the Airbnb operation is legal in every country in which it operates. There have been no challenges to its methodology. There have been local challenges to the market it creates, but those challenges are not made to the company or its users. Those challenges have been made by introducing, amending or enforcing local or state laws relating to the use of property.
Thailand has not introduced any such laws. Thus, the letting of rooms within a unit can only be challenged by existing laws.
In Thailand, The Hotel Act (2004) presents the principal challenge.
This law prohibits any premises being used as a hotel without an appropriate licence and It is difficult, if not impossible, for residential owners to obtain such a licence.
This is because the Hotel Act requires that certification of the premises is obtained under the Building Control Act (1979). Those requirements are readily satisfied by purpose-built hotels, but not for residential premises.
Back in August 2016, the Ministry of the Interior’s Ministerial Regulations prescribing descriptions of other types of building used for a hotel business operation became effective.
These remain in effect until August 2021, and applications under these regulations must be made within that time and applies only to buildings which existed on the above date.
The regulations are too lengthy to set out here, but the most beneficial changes relate to the provision of ‘room only’ lettings.
The principal changes were that the percentage of “open/unused” space is reduced from 30 percent to 10 percent, and the walkway width being one metre. and the stairway width 0.9 metres.
These changes make it possible for residential units to obtain a licence under the Hotel Act.
This application can be recommended to owners, especially those with multiple units, and currently running often substantial Airbnb businesses.
The expansion of Airbnb operators, whilst the subject of opposition from hotels, is, was nevertheless welcomed by previous Thai governments because it enhances both the tourist industry and investment in property.
SBLaw Asia said that It should be noted that the Hotel Act is rarely, if ever, enforced against residential owners. There is a lack of personnel to enforce it, and there is no political will so to do.
The Act specifically excludes places rented out for monthly periods
It should be noted that there are other laws which are probably breached by an Airbnb operation, the law firm noted.
There have been many objections in previous years and more recently by property owners on social media to the operation of an Airbnb business. Some condos have signs displayed prohibiting it, but to what degree are these objections legally actionable?
Section 17/7 of the Condominium Act provides that no commercial trading shall be conducted in a condominium building except in the commercial area specified in paragraph one of that Act.
According to Section 65 whoever violates Section 17/1 shall be penalised with a fine of not more than THB 50,000, and the offender shall be further penalised with a daily fine of not more than THB 5,000 throughout the period of violation or not complying with such provisions.
In mid-2016 it was legally undecided whether operating an Airbnb business is commercial trading, and any prosecution would be subject to the provision of evidence and witnesses.
Could a joint owner or the management complain under the Hotel Act?
It is thought unlikely because the Act does not confer rights upon an individual and the courts would most likely not admit such a claim.
There is nothing in most standard condo management regulations which allows a co-owner to complain.
The co-owners could provide such a right by passing appropriate resolutions, including in the Mangement Regulations, to include a rule prohibiting daily lettings.
This would be effective by virtue of section 39 of the Condominium Act, which gives the management a right to action.
Each such case would have to be decided on its own merits and would be subject to the vagary, expense and delay inherent in the courts.
A victory, though, could see the condo owner deprived of his property.
Finally, look at the Ministerial Regulations to the Hotel Act (2005).
This Act allows property in some areas “with no more than four rooms on all floors” to be exempt from the Hotel Act.
No court has yet decided if it applies to the whole of a condominium building, or each individual unit within it.
This is unlikely to prove a help to operators of Airbnb businesses.
So, in conclusion, the law firm admitted here are risks to operating an Airbnb business, but most clients take the not unreasonable view that the risk is small.
In the absence of condo owners passing appropriate resolutions, the management of condominiums have no grounds upon which to object.
The basics of Airbnb being legal were discussed during the Future Property Expo in Bangkok during May 2018.