Property Rental Apps – Are they legal in Thailand?
July 15, 2020
Airbnb, Booking.com and similar apps are popular in Thailand. These online platforms allow property owners (landlords) to rent out their property (partially or wholly) on a short-term (daily/weekly) basis. With the price of renting a property via the online platforms often being cheaper than staying in a regular licensed hotel, the platforms create a viable option for travelers travelling on a budget.
In Thailand, this practice is regarded by many as illegal, but there are conflicting opinions of legal scholars on this matter. On one hand, they are seen by many as an illegal way for landlords to rent out their properties on a short-term basis as it is without acquiring a hotel license. Section 15 of the Hotel Act, B.E. 2547 (2004), states that renting out a property on a weekly or daily basis without a hotel license is illegal. However, the Ministerial Regulation to the Hotel Act B.E. 2548 (2005) contains an exemption for certain properties which has given rise to a passionate discussion whether these exemptions from the Hotel Act also apply to condominium owners renting out their homes on short–term basis:
The Hotel Act states that “any residential premises open to the public for rent with no more than four rooms on all floors in aggregate whether in a single building or several buildings and with a total service capacity of 20 guests, operating as a small business which provides an additional source of income for the owners” is exempt from the requirement of obtaining a Hotel License. The owners of such premises are required to report to the Hotel Registrar but do not need a Hotel License and do not have to comply with the requirements for hotels. The issue with this regulation is whether the term “residential purpose” refers to the condominium unit or the whole condominium (entire building).
The Condominium Act states that commercial activities may only be conducted in designated commercial spaces within the condominium building (if any). This may be e.g. a retail area in the ground floor of a condominium.
This regulation exists to ensure the peaceful cohabitation of residents. Hosting guests could disrupt the condominium’s community and lifestyle. However, landlords are quick to point out that section 1336 of the Thai Civil and Commercial Code (CCC) states that property owners are entitled to the benefits and fruits of property ownership, provided that their commercial activities, do not disrupt co-owners and residents. As for co-ownership, section 1360 of the CCC states that each co-owner is entitled to use the property in so far as such use is not incompatible with the rights of the other co-owners.
As you can see, there are those who are against the apps and those who are in their favor. To further complicate things, in May of 2018, a court in Hua Hin charged two condominium owners with renting out their condos on a daily and weekly basis through Airbnb and violating the Hotel Act.
The offenders were both made to pay a fine of 10,000-15,000 THB for their infringements.
With the court ruling in Hua Hin, many say that it is now clear that renting out your property on a short-term basis on the Airbnb platform (Airbnb hosting) is illegal. However, in Thailand, court rulings set a clear guideline for future cases, but judges are free to make their own decisions. This means that the case in Hua Hin is not binding on other judges, but Thai judges tend to follow court rulings set by previous judges. Additionally, there are still many property owners renting out their property on a short-term basis on the Airbnb platform who are confident that they are not violating any laws and thus will continue renting out their properties on the Airbnb platform.
In addition to renting out condominium units, renting out houses or villas on a short-term (daily/weekly basis) without a hotel license is also illegal. However, home and villa owners argue that a Hotel Act Ministerial Regulation states that houses or villas with less than 4 rooms, and a capacity of 20 people or less are exempt from the Hotel Act and are not considered a “hotel”. Therefore, they can rent out their house or villa on a short-term basis. In our opinion, renting out a house or a villa on a short-term basis is safer than renting out a condominium unit due to the fact that unlike the short-term rental of condominium units, there is no court decision prohibiting such short-term rents for houses or villas.
The popularity of services like Airbnb among tourists has generated abundant incomes from tourism in many parts of the world. Since the short-term rental of unregistered or unlicensed is still illegal in Thailand, we recommend property owners to rent out their properties on a monthly basis, and tourists to stay in licensed hotels in order to avoid any legal consequences.
If you have any questions regarding this matter, feel free to contact us at [email protected] or call us at +66 (0)2 117 9131-2.
