New rental law to start on May 1

property lawyer
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IMPORTANT: A new rental law that includes some major changes to Thailand’s property sector will come into force on May 1.

Since first being revealed by ThailandProperty.News on January 16 there has been no coverage of this important news in any mainstream media or property outlet.

Law firm Tilleke & Gibbins has now issued a detailed clarification of the requirements of the new rental laws that will become effective on May 1.

They describe the new rental law as having a very significant impact on residential lease contracts in Thailand.

Residential property leasing will now be deemed to be a contract-controlled business following publication in the Government Gazette last week. This will come into effect of May 1, 2018.

Being designated as a contract-controlled business is intended to ensure that contracts contain necessary terms and conditions to prevent tenants from being unreasonably disadvantaged by unfair contract terms.

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 separately.

So, for landlords or companies that own and rent five or more properties, this is an important development. It’s also important for their tenants.

The notification imposes the following requirements:

1. Residential lease agreements must include a version in Thai, and must contain the following details:

a) The name and address of the business operator and its authorised person;

b) The name and address of the lessee;

c) The 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 fees, 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) The 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 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.

Also, under section 35 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 advice was published by Tilleke & Gibbins’ Chaiwat Keratisuthisathorn.

In summary, ThailandProperty.News notes the following important points.

1) This new legal development will only apply to residential property landlords with five or more properties. Given the passion for property investment in Thailand, we know there will be a considerable number of Thai landlords affected by this development.

2) As a tenant you should request an English version of your tenancy agreement, even though the need for a Thai language one is specified. If it’s a translation, remember that it will only be as good as the translator’s skills.

3) Landlords are prevented from charging more for basic utilities than they actually cost.

4) Landlords can only request one-month in advance rental payment and one-month as a security deposit. Currently almost every rental requires two-months as security and one-month rent in advance.

5) Wear and tear cannot be used as a reason to not return any deposit, which also must be returned within seven days.

6) Even when signing a one-year agreement, or longer, tenants have the right to leave giving 30 days’ notice. No more “take over my lease” listings in these cases, we think.

7) Landlords can still inspect their property during an any rental period, but not without advance notice.

As with any property rental, ThailandProperty.News suggests you either (a) obtain legal advice before signing a legal rental agreement, or (b) ensure you fully understand the legal implications of any documents you sign.

67 Comments

  1. Hello. Looking for some advice if possible. I rent a house and I pay the water and electricity bills directly to the government every month. My average monthly water bill is around 300 baht, however, last month I received an 11,000+ baht water bill because the big water tank broke and I noticed only after I received the massive bill (the tank is underground). I reported the issue to the landlord and at first they wanted me to take charge of all expenses for water usage. After some arguing, they proposed that we each cover 50% of the expense. Still, I don’t believe this should be my responsibilty, I believe that the landlord should cover the whole expense. To get more into details, actually the tank already had a problem in the past which at that time I promptly reported to the landlord, but after many promises to have it fixed in a short time nothing ever happened to the point I eventually bypassed the tank myself with a pipe going straight into the house and a valve preventing water from going into the leaking tank. All worked fine for more than a year, until last month when the valve on the bypass had some issue and let the water flow into the (broken) tank again. Is this matter backed up by any law? Who should pay the bill, me or the landlord? Thanks for your advice.

  2. Claire, thanks for your question.

    It all comes down to whether the legal owner of the property has five or more rental properties. The management company, as you say, may be looking after many properties but it all comes down to the owner. Right now, there is no way to find out independently whether your landlord has five or more properties, other than asking and hoping for a truthful answer.

    If your landlord does own five or more then you have the right, under the new law, to terminate your rental contract with 30-days notice.

    I hope this helps. There is a lot of confusion on both sides, and likely the whole aspect of rentals is not done with. Many landlords are simply ignoring the new law and that’s not what the government intended.

    Thanks again, Andrew.

  3. Hi, Can you clarify that if a management agency looks after the property on the owners behalf that the new law to be able to terminate the rental contract early as a tenant is in effect? The management company looks after more than 5 properties. Or does the actual owner of the property have to own 5 properties even though they aren’t the ones who draw up the contract.
    Thanks
    Claire

  4. Hello Foo Yin, thanks for your comment.

    Yes, the landlord (however they do it) can and should get the actual figures from the utility companies, but what has been happening is that some have been charging two, three or four times the actual amount used by the tenant. Profiteer in this way is not allowed under the new law.

    So in short, yes, your way of doing things would solve any problems.

    Thanks again,

    Andrew.

  5. Landlord can go to the concerned utility authorities to enquire the billing based on meter reading over a certain period to charge incumbent tenant accordingly. Wouldn’t this solve the issue of calculating the utility bills and settle outstanding payments?

  6. Andrew if this law applies to long term leases where I paid 30 years in advance, how would you go about revoking the lease and getting the remaining 27 years rent back as the current economic circumstances are unlikely to recover that much if I tried selling the lease.

  7. My interpretation of what is written here is that the security deposit and last month’s rent are separate entities. Therefore a landlord should be entitled to ask for 1st month’s rent, last month’s rent, plus a security deposit (not to exceed the amount equal to one month’s rent). Therefore, it is perfectly acceptable to require the equivalent of 3 month’s rent upfront.

    Additionally, if the statement in this article is accurate (semantics here), the new law only applies to Landlords and businesses that own AND rent 5 or more properties (it doesn’t say OR – this is a simple conditional logic statement – as both requirements must be true before the law is executed). Therefore, if a real estate agent or landlord doesn’t both own AND rent 5 or more properties, then they are exempt from these rules. (see conditional logic statements for more information)

    Finally, as a thought toward the allowable 30-day cancellation notice allowing any tenant to break a long-term contract with a 30-day written notice:

    1.) Currently, most property owners are happy to accept a lower rental fee for a guaranteed long-term rental contract, but this willingness to drop their rates could change quickly.

    2.) If long-term renters are able to negotiate a significantly lower rental rate in exchange for a “guaranteed” long-term contract, but are regularly breaking their agreements early, this will obviously give landlords pause to accept lower rental rates with other future long-term renters.

    3.) Landlords getting burned enough by short-term renters claiming to be long-term clients who are just scamming the system to get a lower rate will make the rental market more expensive for the honest renters who do intend to stay in a property long-term. This is a lose-lose situation for everyone. Overall rental rates will increase for both the short-term & long-term clients, just to off-set the short-term scammers.

    In the end, Thailand will lose out with less tourism as prices quickly increase in the rental property market.

  8. Hello Petula, this new rental law only applies to landlords with five or more residential properties. If you have commercial property this new law makes no mention of them. If you are operating hotels or dormitories then you would be covered under the Hotel Act.

    Thank you for taking the time to reach out, and please keep in touch.

    Andrew.

  9. Hi, would you happen to know if this only applies to residential properties and not to space rented for commercial purposes? As in any space rented for commercial would still be under any contracts signed including no return of 2 month deposit if 3 year contract not fulfilled? Thaks…

  10. The New Law represents a short-term dent Income dent and higher uncertainty to Apartment owners some of them highly leveraged as is. The natural move would be for apartment owners to allocate a higher share of their units to monthly rentals and offer a single price (Monthly with possibility to renew) as opposed to the current multiple structure: Monthly, Quarterly, 6 months and 1 year..

    Apartment owners can then promise a discount in the two last months or kickback if the tenant ended up staying longer for a full year; and the unit was returned in good condition.

    However, Rental Apartment owners will clearly develop a management bias towards short-term rentals and will refuse the renewals if they have got a booking in hand for a higher monthly rental.

    This will push some tenants out of the apartment market into the Condominium Market… operating under the historic lease agreement laws…

    I do hope Agents realize the need to start asking from a total or partial commission payment from the Tenant…particularly on Apartment deal. That is the best guarantee to a Landlord that a tenant won’t be hopping around for properties.

    Looking back in 2 or 3 years… market users will realize that all this overregulation may have been the trigger for less available supply (in central areas) and higher rental prices.

    The past anger over apparent loss of a deposit will be replaced by current anger by higher monthly rentals fees and agents demanding a commission or getting paid per hour on unit scouting.

    Perhaps this is exactly what the market needs! A good kick in the butt.

  11. Hi Goran, and thanks for your question.

    The only way this will apply to you is if your landlord has five or more rental properties. And there’s the challenge – how do you find out? If you are on good terms you can ask, but if your landlord has less than five properties this new law will not apply to you.

    Thanks again.

  12. Hi Andrew,
    Thanks for a very interesting site, and enlightening discussions.
    A quick question: We moved in at 39 Boulevard, BKK, on Jan 29, and will move out again at the end of June.
    The law came about just today – on May 1st.

    Does it apply for us, too? Or only for contracts signed as from today onwards?

    Thanks!
    Göran Adamson

  13. Hello Gamba, and thanks for your message.

    The new law is in Thai, and that’s the official version. An English legal interpretation is also available as a download at the top right of this page.

    Remember, this only applies to landlords with five or more residential properties. Hotels, hostels, etc, come under different laws and legislation. According to the new law, a landlord can only request one month of deposit and one month of security prior to the start of the rental.

    The 30-day notice period, as I understand it, can be for any reason or no reason. The tenant only has to provide the landlord with 30-days notice and, after checking, the landlord then has seven days following to return the deposit.

    Commission. I think you will struggle to find any tenant to pay agency commission. From what I understand, and I am not a lawyer, anything that does not currently exist will be deemed unfair if it was to be introduced under the new law.

    If you choose to market and find tenants yourself, there is no need to pay any commission. What you are paying an agent for is their marketing costs, knowledge, etc, so if you think you can do it better – and I know many landlords that do it themselves – then there’s no reason not to try. You will need a good knowledge of how tenants find properties, as well as a good website that ranks well for what your tenants will be searching for.

    Good luck, and keep in touch.

  14. I understand the Tenant pay official tariff and the landlord now can charge the actual cost of running the communal area as a service fee. Cost benefit for landlords can be same same , Correct ?

    30 days termination are only when move Ect. other part of Thailand or homecontry, like that correct. ?

    Commision. ? I think it is more fair the Tenant pay. Tenant choose the agent to find a new home anyway. Tenant can save the commision if do all works self. I will try to change that with all our agent if possible. Any other idear or correction ?

  15. Paul, thanks for taking time to comment. I think this is one of the easiest questions because profiteering from utilities, where the landlord has five or more rental residential properties, is strictly NOT allowed as part of this new law. It will be enforceable through the Office of the Board of Consumer Protection, and I think it will take until July or August before we know what is happening because that government body is not the quickest.

  16. Hi Andrew, I’m interested to read about this new legislation. However, my conversations so far with a number of agents (who have been suitably vague about their interpretation of the rules) have suggested that landlords are going to continue charging what they like for utilities. In reality, how enforceable is it going to be, do you think?

  17. Dave, thanks for your interesting comments.

    Right now it is normally the responsibility of landlords to make insurance arrangements for their property. Indeed, where finance is concerned it will be mandatory.

    I’ve never seen any rental agreement that makes a specific mention of insurance being an added extra for a rental agreement, and because the whole premise of this new rental law is fairness I believe that insurance costs would be deemed unfair if they are now added to agreements where they were previously part of the agreement. Just my thoughts, but an interesting point. Thanks again, Dave.

  18. Hello Paul, thanks for taking the time to comment.

    I’m not a lawyer but my impression would be that most current “furnished” agreements would naturally include furniture within the deposit paid. In all the agreements I’ve seen, there has never been one that clearly defines a separate fee for furnishings.

    I’m aware some affected landlords are trying to find ways to ‘recoup’ that lost month, and this might be one, however this new law is all about fairness and I think any tenant who did make a claim with the governing authorities would likely be treated well.

    What are your thoughts? I know we’re hooked up on Facebook if that’s easier for you …

    Thanks again.

  19. It is not clear to me if the word “Deposit” includes deposits paid for the rent of Furniture or the provision of Services. Rental agreements commonly divide up the rent payments into these categories. Any answers?

  20. Both the Thai legal version and an English version written by a law firm are on the home page, top right. Let me know if you have any further questions, Michael.

  21. Roger, if your residence is a hotel then it will have separate rules and be treated as a hotel. That has much more onerous requirements and is regulated in a different way. The question you need to answer is whether they are legally registered as a hotel; many claim to be but are not so would, I think, be treated as renting units under this law. Ask to see their hotel license number because you need it for immigration, for example.

  22. Garry, I believe it applies to all property rentals anywhere in Thailand, whether leasehold or freehold, where the landlord has five or more properties.

  23. Our room is located in what they call a Condo-tel. So they pimp out rooms on the daily, but many units are owned by individual owners. Do you think my building is considered covered by ‘hotel’ rules since it’s part ‘hotel’?

    Also, has anyone figured out a way to ‘look up’ how many units a landlord owns in Thailand?

  24. Another issue is the rights of the Tenant to gain and access information from the body corporate/ Condo Management.

    If the body corporate fails to maintain a safe and secure environment then this will rightly give be cause for the tenant to cancel their contract. In many cases self-managed condos will find themselves in conflict with this law and could be held liable for any breaches. Tenants and landlords will have to be made aware of the body corporate/Condo rules and have access to the management public documentation.

    For example in a case where the condo management changes the hours of operation of the swimming pool, Gym or pother facilities without seeking the consent of all the tenants and owner could be problematic. This would be a change of the terms of the lease agreements as the tenant who signed a lease could find that their privacy and right of enjoyment has been diminished. It could also give cause for further liability if the changes to building practices was not done in accordance with the buildings rules and relevant legislation. eg failed to ensure that emergency lighting and alarms was working. Swimming pools and common property in a safe condition

    Failure to tale out public liability insurance would also become a major issue of concern.

    The landlord. agent and condo management would have a fiduciary duty of care and responsibility

  25. The limitation of ownership of five apartments only applies to parts of the legislation it is not a get of of trouble free card.

    Market pressure will ensure that these standards apply to all agreements. A single month rental deposit is common though out the world.

    This proposal brings Thailand in line with other member states of ASEAN Properties that are leased through an agent would be caught up in this process as would condo management who fail to provide a safe and well maintained premises. Swimming pool. left mantianance and emergency evacuation lighting etc.

    Condo management will have to accountable to tenants as well as landlords.

    Public liability insurance should be mandatory in all multi dwelling buildings. Aging poorly maintained building stock would become a liability

    This issue and legislation will not adversely effect professional and reasonable landlords/agents. If anything it will enhance the role of the agent and the building management. and weed out shonky operators

    The only one to fear this legislation are those landlords that ripp-off their clients/tenants.

  26. As a tenant who has been “screwed” twice by two separate owners (both farang) with multiple units, it is clear to see that this new law has been brought about to balance landlord / tenant agreements. Landlord 1 assured me that wi-fi was super fast. It turned out it was slower than super slow – 9 MB. Landlord 2 assured me the condo was very quiet and peaceful. He failed to tell me the two Mosques down the road called to prayer at 05.00 via loudspeakers! In both cases I needed to move for these reasons, and lost nearly THB 100,000 including four months lost deposits, moving costs etc. They were both professional landlords with 5+ units. I guess they will label themselves as hotels to get around this new law. Thailand has a reputation for non return of deposits, and tenants need some protection. Overcharging for utility bills is a blatant attempt to profiteer and disguise add on profits.

  27. Hello Andrew,

    Thank you for your answer on my post dated March the 12th. I am sure all houses are in the same name / company because all rental contracts are signed by the same limited company representative. I checked this with my neighbours. I talked with the manager and it is amazing. They don’t have any knowledge about the upcoming changes. They literally told me that they haven’t heard anything from the Thai goverment about this. I will be a huge surprise to many of the landlords / owners.

    Also my neighbours weren’t aware but they will contact the lessee this week as well.

    Regards,

    Jack Boomsma

  28. Alfie, thanks for your comments.

    First, this and other issues are being discussed at a networking event this coming Friday evening. Details are on the top right on this website – it is being organized by Prop2Morrow and I will be highlighting the important parts of this new law.

    Can I ask, what do you find confusing? I will do my best to answer any questions.

    Thanks again Alfie.

    Andrew – Editor, ThailandProperty.News.

  29. Hi all, I think a meeting with real estate agents and with someone with real understanding about the new changes would be good. This is very important to get this right as some of it is confusing.

  30. Thanks for your comment Terry. You make some interesting points, but I think we are just as surprised as you about the reaction to this news – on both sides.

    I think the fact it’s got traction is because it’s a big change for some people. Agents that handle rentals get one-month in commission for a one-year agreement, and I don’t know whether some will move to a fixed price transaction – that would seem to make sense to me.

    The non-return of rentals in a problem for Thai and non-Thai landlords, and enforcement, as some others have mentioned, will be the largest problem. I do not believe the enforcing authority are prepared for what is coming.

    Thanks again Sir, your comment is very much appreciated.

  31. Hi. A bit surprised by the strong reactions against the 1-month max deposit. I don’t really see the problem as in my country – France – the legal maximum deposit is also 1 month rent, and it certainly doesn’t prevent owners to rent, even luxury properties. If I remember well, it was also 1-month in Australia and in Brazil.

    About the 1-month to the Agent, seems a strange rule to me, and surely it should be change to something like “a percent of the rental fee during the first year”. To be negotiated…

    I think this law it’s a good thing as many farang owners abuse of the system and never give back the deposit. This is especially true in Pattaya were many tenants return to their home country after the rental, and owners know they will not be able to do anything against them… 🙁

    • Hi Terry,

      The difference between France and Thailand, In France, the tenant pay himself the agency fee = 1 month of the rental fee. In Thailand, landlord use the 2nd month of security deposit to pay the agency fee.

      • Hi Chris,

        The situation in the Netherlands is similare to France (1 month) and there the landlord pays the agency (if used) so I fully agree with Terry that I also don’t understand this whole fuss on the 1-month. My Thai experience with landlords is that they’ve always abused the previous situation never to pay back any deposit at all even though returned in great shape. So I’m very happy that this malpractices now finally (at least for the bigger landlords) will be addressed.
        Regarding this “we have to pay the agency”… It’s no obligation to use an agency, it’s a choice.. Feel free to list your property by yourself and save on the agency…

  32. Hello Jack. Thanks for your comment.

    First, I am not a lawyer so this reply is only based on my experience and observations. What you do really depends on (a) your relationship with your landlord, and (b) whether you wish to stay in your current property. If you’ve already told your landlord you need a contract for immigration, you could try one more time. Your landlord needs to report that fact you are staying in his/her property to immigration anyway.

    The contract needs to come from your landlord, and I am sure if he/she has multiple properties they must have a default contract.

    Right now I think your position is not good, in some ways. You have no legal agreements to prevent your landlord giving you notice to quit, for example. He/she could also claim for damage or lost furniture that wasn’t even there when you started to rent. If you have no intention to stay you could use the delay in giving you a legal contract as one reason for looking around for alternatives.

    As a non-Thai a rental contract can be used for many things, and is sometimes a necessity for phone contracts, for example. You should really do everything to encourage your landlord to give you one, and one that is backdated and one you understand.

    As for May 1 and the new law, one question many are asking is how can you, as a tenant, know about the ownership of your landlord? Maybe he/she has the properties in different family names?

    I agree the new law does provide many advantages for tenants, but don’t wait until May 1 to get your contract sorted. Good luck.

    Andrew – Editor, ThailandProperty.News.

  33. Request for advice: I moved into a house on January 13th in a residential area with more then 5 properties owned by 1 landlord. I did pay 2 months deposit when I moved in but I still don’t have a rental contract. I requested this several times now, also because i need this for the immigration office. With the new upcoming law in mind what is wise to do? Draft a contract with the new rules already in place? And delay till May the 1st? For me as a tenant this law is a huge advantage. Much more fair and also in line with international standards.

  34. Thanks for your comments, and for your kind words about this website. I would agree with everything you have said, except that I have seen a huge increase even during the last 12 months, of tenants taking to social media complaining about the loss of their two-month security deposit. Most seem to take it as being part of renting in Thailand, but I always suggest the Office of the Board of Consumer Protection as one way, free but not always quick, as one way to examine the options available. For that you need signed agreements and evidence, pictures, etc, but I know at least ten cases where just the threat of involving this Government body has been enough.

    Thanks again David, for your comments.

  35. I worked in a Bangkok real estate agency for many years and, to be honest, I am not sure what difference this will make to the average expat or owner. Like many Thai laws, it seems to be a lot of noise over a new law that, in truth, will change very little. Real estate agencies in Bangkok need radical changes, regulation and all sorts. Yes, sometimes you get a bad owner who steals the deposit as mentioned above, but I have also seen the other side of the coin where a pleasant, professional mild-mannered gent of a tenant turns into a monster after a few months in the bar scene and trashes some poor owners’ place, leaving them seriously out of pocket. Renting, owning and buying in thailand is no better to investing in an AIM stock in the U.K. It is the wild west of real estate, a total gamble. It does not help that most agents and news sites (this one aside), always talk the market up, up and up, while the truth is not at all what you would expect.

  36. This appears to be a step in the right direction for tenant protections; though does not protect owner(s) from damages (hence the typical 2 month deposit). If you’re in an annual contract, it would seem the tenant should provide a verifiable reason to vacate (this is common in the states).

    For owners looking to hide income an average of 12.5% income tax .. it will be interesting to see how the market reacts, and how it is monitored. The Land Dept is the source of info on the owners.

    The buildings are typically the ones to tack a premium on utils.. will they be mandated to comply to the new law, I wonder.

    I hope this is one of many steps toward (desperately needed) real estate estate reform in Thailand to protect agents, buyers, and sellers.

    Thanks for the article!

  37. I don’t understand how a new law which is supposedly drafted to protect renters will bring landlords more into the tax scheme?

    Nor, why anybody with a nice, furnished place would rent it out it they can only get one month as a security deposit, especially if that deposit tmust be paid to the real estate agent as commission.

    The real estate agent will now no doubt tell us how to get around this, … blah, blah … but let’s fact it, they are not at risk if something goes amiss (renter not happy).

    The property owner gets the brunt, the law, the fine … even the prison sentence that is being threatened by this law. As is this, it is a property renter can-of-worms new nightmare.

    Perhaps all should all go the AirBNB way, as that way, at least, one has some recourse if a property owner gets abused. As this new law will be, there is no owner recourse … it’s a game changer.

  38. Thanks for your kind comments Paul.

    I think rather than taking multi-landlords out of the sector, the Government might be trying to bring them into it, legally. I know from my own experiences that some landlords will only want to take rental payments in cash – for obvious reasons.

    When I first published about this new law passing through Cabinet in early January I wrote there were more questions than answers, and now we know more details I still believe that to be the case.

    Thanks again, Paul.

  39. Thanks for running this site AJB. Now why would the govt. want to take multi-landlords out of the property rental business? The way things are it already got most individuals out of the SET stock market investing, due to brokers obsession with trading/or manipulating stocks…when many studies over decades have shown most individual traders loose money over time. Post that they bad mouth stocks, when it was the ill-strategy so favored here. Over the past say 12-18 months, there has been a tremendous decline of individual stock investors in the SET, yes despite the market being more bullish. Now on top, there will be less reasons to rent properties out! Hence where are individual investors supposed to go in Thailand? Which is becoming increasingly so an intermediation of savings nightmare.

    • Does this new rental law of one month security deposit applies to all rental contracts or only for those owners/contracts with five or more properties? My real estate agent explains that the individual owners (who rent less than 5 units), can still request rental contracts with 2 months security deposits. Please reply, as I have to sign my rental contract this week.

      Best regards,

      • In short Nada, landlords with fewer than five rental properties can still ask for a deposit equal to two months rent. Your agent is correct.

  40. Paul, thanks for your comments.

    Looking at what has been approved as part of the new Law, we would certainly agree that this does appear to be a very bad move for Thailand’s property sector in terms of landlords who own five or more properties. Quite why these issues were not discussed before being approved by the Thai Government is not clear.

    We think, but can only guess, that this is a move towards cutting down on landlords who “hide” their rental businesses from the authorities.

    It also looks like another step towards taking agents out of the multi-landlord property rental business, but this isn’t that way to do it.

    Thanks again for your comments.

  41. The landlord lost all his/her right, yet they are the ones investing millions. This law will make property prices drop -and for good reasons due to this stupid new law. No responsible landlord wants to rent a nice furnished place, if all they can ask for is one month security deposit…and where most of the time the security deposit would all go to the property agent as commission. As even asking for any advance rental is strictly prohibited with jail and big fine threats to the landlord.
    No reciprocity: think about this why now would any landlord commit to any longer term lease and promised rental price arrangement, when the tenant does not have to commit to anything more then 30 days. It so single handily makes all rentals now monthly only.
    Again, why would any landlord pay the yearly agent rental commission in advance, when he/she only gets 1 month deposit, as it so means all the deposit goes straight to the property agent, and the landlord gets none.

    • Paul,

      I don’t really understand your comment that the deposit should cover to pay the agency. Whether to work with an agency or not is a choice, the owner can also list it’s property by itself and pay no agency. Coming from the Netherlands having 1 month deposit and no advance rent is completely normal and the system is working perfectly fine. I do agree though with the 1 month notice. The lease terms should be respected from both ends or changed/cancelled with mutual consent.

  42. Hugh, thanks for your comments.

    There does appear to be a lot “wrong” with this new law, or at least parts that need serious clarification based on what is understood to be part of this new Law.

    It’s just surprising there does not appear to have been any high-level consultations before this even came to the Cabinet for approval.

    As it stands we think this is certainly something that is negative for current and future landlords.

  43. This is great. So now people come in and negotiate very low rent for a 2 year contract and move out after 1 month if they provide notice. Nice way to get a 31 day tenancy for LT price!
    It makes sense then to own your portfolio’s in Thai company name? Buy the condo cheaper then as the company is the owner you don’t fall foul of any of these laws.

  44. Thanks Richard, our understanding (although we could be wrong) is that this will count as ten rentals because each unit will be owned separately. Perhaps in this situation we would suggest taking legal advice.

    Your comment is very much appreciated.

  45. Chris, this is Andrew, editor of ThailandProperty.News.

    Thank you for your comments, which I totally understand. The deposit clause makes no sense. I’ve get to find a real estate agency that was aware this was happening, being discussed at Cabinet level and then published in the Royal Gazette and prepared to come into effect.

    You raise some extremely good questions, and no one has been able to answer them.

    I really don’t know how you, and others, can make your concerns known now that this will be coming in on May 1. I will try to think what’s the best way forward/ Perhaps a short meeting sometime soon with concerned real estate agents? What are your thoughts?

    Andrew.

    • Hi Andrew, thanks for your comment, yes, we should plan a meeting with agency, and maybe some landlords .. and discuss how to find out .. Thanks again

      Chris

    • AjB I paid 216,000 1 year ago..and 54,000 3 months guarentee..now they say we can pay monthly may 12 one year is up of 2 year contract..they say lk pay monthly now 18000.00 but I want to give 30 day notice and leave June 12..I believe as I read I’m due 1 month guarantee back and pay 1 month for may12 ro june12 they told my girlfriend can leave but get nothing back of 3 month guarantee 54,000..what’s legal where may 1 it’s new law

      • Michael,

        I am guessing you will have paid 2 months’ deposit and one month of security to make up the three months? What does your rental contract say?

        The new law should entitle you to one month refund IF your landlord has five or more residential rental properties, BUT many landlords are finding ways, such as Furniture Fees or Cleaning on Check-out Fees, to hang on to that extra month. Whatever you signed before, the clauses of the new law will apply regardless. I’m not a lawyer but I am told you do not need a new contract for the new aspects to be part of your rental agreement.

        If you are sure your landlords owns five or more rental properties, you can suggest you will be seeking advice from the Office of the Board of Consumer Protection because your understanding of the new law is that your landlord is only entitled to keep one+one right now, and return another one of those (security) seven days after you leave. So in effect, my reading of this is that you should be entitled to two months, so long as you leave the place in good condition, within seven days of leaving. Let me know what happens, and good luck Michael.

  46. This is the logical continuation of the government to collect the taxes due by landlords.
    Since 2016 any foreigner rented a property must register his residential address with full landlord information, at the immigration office…. this is was the 1st step to know landlords who rent their property to a foreigner..
    The nonsence is one month deposit, how landlord can accept only 1 month deposit when they have to pay 1 month to the agency … how we should do to get our commission ? ask the tenant to pay ??.. i spoke with many of my colleagues… and everyone is agreed to say.. it’s impossible… separate 1 month deposit for the property and 1 month for the furniture ?… then how to do in case of unfurnished property ?..
    Also.. what will do the landlord to make up the shortfall ?… increase the rental fee ?… how to do when the competition in low and middle range property is so hard .. Rent price are more in a downtrend than bullish due of the very tough competition in low and middle-range segment ..

  47. Hi Michael, this is Andrew – editor of ThailandProperty.News.

    Thank you for your comment. Yes, your right that this new Law will only apply to landlords owning five or more rental properties however, from my discussions with real estate agencies over the weekend, and from personal knowledge when I worked in the rental sector for a short time, I would suggest that about 50% of rentals in Bangkok are owned by Thais that would be impacted by this Law. One of the questions will be, how does a tenant, or indeed an agent, know what they own if they fail to declare it, or have no intention of declaring it for tax reasons?

    Although the news of a new Law has been known for a few months, it seems the fact it comes into effect on May 1 has come as a big surprise to many.

    Thanks again Michael, for taking the time to comment. It’s much appreciated.

  48. Yes that is an interesting deal from the Thai Government , not bad though. Then again it only applies to large property owners greater that five so most people who rent 1 or 2 condos out it does not apply it seems. If you own an apartment building then that is another story, Thanks for the info !!

  49. This is Andrew, editor of ThailandProperty.News. I am personally very surprised at the lack of mainstream media coverage of this news, especially as it appears to have been in discussion last year, before being approved by the Cabinet in early January this year. I believe it came as a shock to most of the real estate agencies I’ve spoken to about this, and many of them, and their landlords, are still unaware.

    You’re right, of course, about the deposits. Remember this will only apply to people with five or more rental properties.

    I think this is one step towards making all rentals more transparent in terms of taxes, etc, I know, from past experiences, that many landlords will not declare the full extent of their property rental activities to the relevant authorities. That might be one of the motivations behind this, but as you say there is a lot that does appear to be wrong with what needs to be part of any Law.

    Thanks so much for your comment. It’s much appreciated.

    • Did the recent fines applied in hua hin against the accused have more than 5 properties? the news did not mention anything about that… selective reporting?

      • This was more a lack of any specific reporting. What was reported about this case was related only to the rental of Airbnb rooms, and nothing to do with whether the landlords have five or more residential rental properties. If they do then it’s more a case of selective enforcement, perhaps?

  50. What nonsense. The deposit should cover 2 months deposit to cover damages which thru experience can amount to more then their deposits. Also returning the deposit within, 7 days is not feasible as we have to make sure the electric and water bills are paid up. Whoever has come out with these terms is of course a moron and hasn’t paid or gotten any feedback, so it seems, from the owners who rent their properties

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