Residential Property Leasing as a Contract-Controlled Business

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Overcharging tenants for electricity and water was a common practice among landlords in Thailand. Weak regulations laid the foundation for the collection of exaggerated deposits and punitive methods of landlords if tenants did not pay their rent.

The Contract Committee of the Consumer Protection Board aims to end such practices with “the Regulation of Residential Property Leasing as a Contract-Controlled Business B.E. 2561” (the “Regulation”). Since May 2018 residential property leasing is considered as a contract-controlled business.

According to the Regulation the residential property leasing business is considered as a business which involves the lease or sublease of five or more units to individuals. The term ‘property’ has a broad meaning; it includes all kinds of residential accommodations, such as apartments, condos, flats and houses.

Such lease agreements must comply with the following requirements:

  • The agreement must be composed in Thai language (in addition to other languages, as the case may be) and include information on the business operator, the lessee and the property itself, the property’s condition and equipment. The lease agreement must contain the start and end date of the lease, rental and utility fees, due dates and other reasonable costs such as service fees and security deposit.
  • All invoices must be sent seven days before the due date. The business operator is obligated to provide a duplicate of the lease agreement and attach the tenant’s acknowledgement of the property’s condition and equipment.
  • The business operator has to repay the security deposit within seven days after the termination of the lease agreement and the inspection of the property’s condition.
  • The tenant has the right to terminate the lease agreement any time by giving written notice to the business operator 30 days in advance.
  • Clauses which give the business operator the right to terminate the lease agreement prior to the originally agreed period of time must be written in bold, italic or red letters.
  • If the tenant is in breach of the contract, then the business operator is required to give the tenant 30 days to eliminate the breach before termination.
  • It is forbidden to incorporate clauses which waive or limit the liability of the business operator who is in breach with the lease agreement or acts wrongfully, allow the business operator to request an advance rental fee of more than one month’s rent or to alter the rental rates or any fees during the duration of the lease agreement. The security deposit must not exceed the amount of more than one month’s rent, and terms which allow the business operator to seize the security deposit or advance rent are void.
  • Before inspecting the property, the business operator has to notify the tenant within a reasonable time.
  • Terms which allow a higher billing for electricity and water than the rates prescribed by the authorities are prohibited as well as stipulations which enable the business operator to bar the tenant from entering the accommodation or confiscating the tenant’s possessions.
  • Fees for prolongation of the rental agreement and terms which allow the business operator to terminate the lease agreement earlier without cause, such as material breach of the contract, are forbidden.
  • Normal wear and tear of the property or its interior and defects that result out of wear and tear shall be borne by the business operator only.
  • The tenant is not liable for property damages caused without the tenant’s contribution.

If a lease agreement includes above-mentioned clauses, such clauses will from now on be deemed invalid. A business operator who fails to follow the Regulations could face criminal prosecution.

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