As the economy recovers from the COVID-19 crisis, Thailand is again attracting more and more tourists to the country. Visitor numbers are increasing, and short-term rental businesses through platforms such as Airbnb, including daily rentals via other online platforms, are gradually becoming more popular, encouraging villa and apartment owners to set up short-term rentals to allow tourists to stay in their properties.
Problematically, however, properties in Thailand are generally not allowed to be rented out for less than 30 days unless you have a hotel license, while condominium units are restricted to being used for short-term rentals under Thai Condominium laws.
In our experience, acting contrary to these requirements may constitute a criminal offense under Thai law.
Online rental platform – what is it?
An online rental platform is an online marketplace for travelers looking for accommodation, for example, Airbnb, Agoda, or Booking.com. The groundbreaking model allowing private landlords to host vacationers and business travelers has effectively transformed the digital platform into the „world’s largest hotel“.
Online rental platform’s legal status is still uncertain
Online rental platforms continue to face massive criticism for being major competitors to regular hotel and accommodation businesses. Hotel owners are not pleased about declining revenues while continuing to pay the overhead costs for their properties. As a result, they view online rental platforms such as the Airbnb model as an unacceptable hardship. As a result, like other countries, Thailand has imposed restrictions against Airbnb and its operations.
We have to be focused on two Acts, the Condominium Act B.E. 2522 (1979) (the „Condominium Act“) and the Hotel Act B.E. 2547 (2004) (the „Hotel Act“).
The Condominium Act, section 17/1 paragraph 2 states that no person shall be permitted to operate their business in the condominium except for the provided specific area of the condominium building. This regulation applies to short-term rentals via an online platform.
Another concern is the Hotel Act. Under the Hotel Act, the definition of „hotel“ is a lodging premise established for commercial purposes to provide temporary accommodation to a traveler or any person for consideration. Therefore, a monthly rental or more is exempt from the definition of temporary accommodation of the Hotel Act.
Section 1336 of the Thai Civil and Commercial Code („CCC“) states that the unit owner can enjoy his rights over his property if it does not disturb others. However, the Condominium Act, which governs the usage of the condominium unit, prohibits the condominium owner from using his condominium unit for short-term rental.
Regarding landed property, the related piece of legislation is the Hotel Act which is, in principle, the same as for the condominium unit, which restricts the usage to short-term rental, except if such house owners have a hotel license. If the house owner has more than 4 rooms and is entitled to hold more than 20 occupants at a time, the property owner is entitled to apply for a hotel license to operate a short-term rental legally.
On the other hand, the house owner is entitled to apply for the non-hotel license if the property has fewer than 4 rooms and cannot hold more than 20 tourists at a time but still wants to operate a short-term rental. The owner has to apply for a non-hotel license. This will allow a short-term rental of a house to be valid and legal.
There are some specific requirements for each type of license. For example, for a non-hotel license, the owner must be a Thai national. Foreigners or juristic persons may not apply for this type of license. The reasoning behind this rule is to increase local people’s income, who could use their houses as accommodation for tourists as their additional main income source. The hotel license has stricter requirements than non-hotel licenses, such as hotels may not be located near historical sites, and entrance to the hotel must not cause traffic problems. Moreover, before applying for a hotel license, the building must also comply with the Building Control Act B.E. 2522. The regulation stipulates many more obligations for the applicant to comply with.
The legality of online short-term rental platforms in Thailand is still up in the air. The condominium is not allowed to rent on a daily or weekly basis. However, this is not a general rule, and it depends on whether each condominium regulation allows it.
In order to legally operate a short-term rental business, the house owner requires a hotel or a non-hotel license, as the case may be, subject to the Hotel Act. A house with fewer than 4 rooms and 20 occupants maximum shall obtain a non-hotel license; however, a house with more than 4 rooms and more than 20 occupants in the building must obtain a hotel license.
Thus, the legal status of online short-term rental platforms is still unknown as there is no clear answer by government authorities whether it is possible to do or not.
If you have any questions related to property in Thailand, please do not hesitate to contact us at [email protected]
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Fabian, a founding partner of FRANK Legal & Tax, is a German-trained lawyer with expertise in corporate/commercial, real estate law, and litigation, and has been practicing law in Thailand since 2005.