Tag Archive: property

  1. How To Legally Rent Out A Property in Thailand

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    As part of the steady economic recovery from the COVID-19 crisis, Thailand is gradually attracting tourists back into the country. Due to the increased number of visitors, short-term rentals through platforms such as Airbnb, including daily rentals, are in high demand, encouraging villa and condominium owners to set up short-term rentals by allowing tourists to stay in their properties. However, it is important to understand the legal implications of setting up short-term rentals in Thailand as a host.

    Below, we classify three different property scenarios:

    1. Condominium Units

    In most condominiums, daily rentals are usually prohibited as condominiums are not legally recognized as hotels under the law. As a result, condominium unit owners must check the rules and regulations of that particular condominium and the previous minutes from co-owner meetings before deciding to proceed with short-term rentals through Airbnb, booking.com, Agoda, or similar websites, as there may be certain restrictions.

    2. Landed Property

    Whereas for villas, short-term rentals are much more flexible as, in most cases, there are no rules and regulations applicable as in the case of condominiums. It must be noted that according to Article 1 of the Ministerial Regulation B.E. 2551 (2008), a hotel license is needed for villas or buildings with over four rooms and a capacity for over 20 guests. For most villas, this threshold for a hotel license is usually not met. Furthermore, Section 4 (2) of the Hotel Act B.E. 2547 states that the definition of “hotel” does not include accommodations established for the purpose of monthly rentals. As a result, if the villa qualifies as a hotel in terms of size and capacity, but the property is rented out monthly only, it will not be subject to the Hotel Act, which means that a hotel license or a notification of a non-hotel is not required.

    3. “Non-Hotel” Notification

    If the condominium units or villas qualify as a non-hotel through daily rentals by having less than four rooms and for a capacity of 20 guests or less, a notification must be submitted to the local district office using the following documents:

    • Land title deed/unit title deed
    • House registration book of the villa/condominium unit
    • Villa building permit
    • Villa floor plan
    • Company affidavit and other relevant company documents (if a company is the villa owner)
    • ID card/passport of the owner/authorized director of the company

    It is important to note that the illegal operation of a hotel is subject to a jail sentence for up to one year or a fine of up to THB 20,000 and an additional fine of up to THB 10,000 a day throughout the period of violation, according to Section 59 of the Hotel Act.

    If you have any questions related to property in Thailand, please do not hesitate to contact us at [email protected]

  2. The Sap-Ing-Sith – Is Thailand’s New Property Right a Game Changer?

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    The Thai Land Code stipulates that – apart from a few exemptions – foreigners are not permitted to own land in Thailand. Many foreigners seeking to buy immovable property in Thailand, therefore, chose legal structures like leasehold, usufruct, or ownership of the property by a Thai company, to mitigate the restrictions. However, these legal structures have weaknesses and, if not set up properly, may even involve legal risks. To encourage foreigners to invest in property in Thailand, the Thai National Legislative Assembly on February 8th, 2019, passed the Sap-Ing-Sith Act. The Sap-Ing-Sith Act was published in the Royal Gazette on April 26th, 2019 and will come into effect on October 27th, 2019. The new law is aiming to encourage foreigners to invest in immovable property to boost the economy in Thailand. Requirements, as well as the rights and obligations of the Sap-Ing-Sith, are as follows:

    Definition of Sap-Ing-Sith

    The Sap-Ing-Sith grants its holder the right to use an immovable property and can be established on land with a valid Chanote (Land title deed), buildings placed on land plots held under a valid Chanote and condominium units as defined in the Condominium Act. It is possible to register a Sap-Ing-Sith for a period of up to 30 years. The Sap-Ing-Sith has to be made in writing and registered at the competent land office.

    Registration of a Sap-Ing-Sith

    After the parties reached an agreement, the registration of the Sap-Ing-Sith at the Land Department takes place in two stages; first, the Property-Owner has to register a Sap-Ing-Sith for the property. After registration of the Sap-Ing-Sith, the transfer to the other party has to be registered. The registration fee is 20,000 THB. If the land plot where Sap-Ing-Sith should be registered is subject to a mortgage, consent from the mortgage holder is required. After registration, the Sap-Ing-Sith holder will receive a certificate of the Sap-Ing-Sith from the Land Office, which he can use to prove his right. The Land Office will also keep a copy of this certificate.

    Rights and duties in relation to the Sap-Ing-Sith

    There are several rights and obligations in relation to the Sap-Ing-Sith, which are surpassing the rights of a standard leasehold. The most significant rights and duties are shown as follows:

    Rights of the Sap-Ing-Sith holder:

    • Use the property as shown on the details of the certificate issued by the land office;
    • Transfer the Sap-Ing-Sith to a third party without the owner’s consent;
    • Use the Sap-Ing-Sith as security for a mortgage (not registered);
    • The Sap-Ing-Sith is inheritable under statutory inheritance law; and
    • Make alterations/additions to the property without the owner’s consent.

    Duties of the Sap-Ing-Sith holder:

    • Has to return the property in an „as is“ condition at the end of the period unless otherwise agreed; and
    • Liable for the property like an owner. Exception: the right to follow and recover the property from a third party that is not entitled to possess the land, and the right to prevent unlawful interferences from the property.

    Rights of the Property-owner:

    • To transfer the ownership;
    • Use the property as security for a mortgage; and
    • Use the property security according to the Business Collateral Act B.E. 2558.

    The execution of all rights mentioned above requires written consent by the Sap-Ing-Sith holder.

    Obligations of the Property-owner:

    • Can’t create other rights on a property with a Sap-Ing-Sith without consent from the Sap-Ing-Sith Holder;
    • Can’t terminate the Sap-Ing-Sith before the expiration period if a right of a third party is affected. 


    As foreigners will be permitted to hold a Sap-Ing-Sith, it might become an interesting alternative to other legal structures that allow foreigners to possess land in Thailand. Also, when keeping in mind the advantages of the Sap-Ing-Sith, like the possibility to mortgage it, and the right to sell the Sap-Ing-Sith without consent of the owner, there are many scenarios where a Sap-Ing-Sith can be very useful. The Sap-Ing-Sith is not a game-changer, as the maximum period is still 30 years and thus the same duration as a normal leasehold. And most other rights that the Sap-Ing-Sith grants could also be granted with a standard leasehold agreement. But still, the Sap-Ing-Sith Act shows the ongoing liberalization of the Thai property market, which will certainly be welcomed by foreign investors. We expect that most foreign property buyers will likely prefer the new Sap-Ing-Sith over the traditional registered lease.

    We will monitor the impact of the Sap-Ing-Sith on the Thai property market when it comes into effect and will keep you updated. If you have any questions regarding this matter, feel free to contact us at [email protected].

  3. 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.

    Residential Property Leasing

    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.

  4. How to Secure the Purchase of Property?

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    The purchase or sale of a property is a legal transaction with a far-reaching legal and financial impact.

    To secure a prospective purchase or sale of property legally, both the buyer and the seller may enter into a so-called Memorandum of Understanding (MoU) on the intention to conclude a main contract later. The parties of such a MoU can sanction a breach of the intention to conclude the contract later, with legal consequences such as compensation of damages. If the MoU is worded correctly, it should not be possible to enforce the transfer of ownership of the property, or payment of the purchase price, on the basis of the MoU. However, it should strongly incentivize the parties to enter into the main contract, since a breach of the MoU would carry a contractual penalty, and compensation, if the parties agreed on such legal consequences in the MoU. 

    Without such a specific MoU, a planned purchase or sale could otherwise be cancelled without consequences, as there is no – at least no provable – agreement on the transfer of ownership until then.

    Therefore, a properly drafted MoU is the ideal basis for such a legal transaction. It should be made in written and cover the following issues:

    • Contracting Parties
    • Relevant Regulations by the Land Registry
    • Object of Purchase
    • Purchase Price
    • Payment Arrangements
    • Transfer Conditions
    • Costs and Taxes
    • Conveyance
    • Compensation of Damages
    • Final Provisions

    In addition, essential agreed terms should be included, particularly with respect to the registration by the competent official and the requirements of the individual case.

    The MoU is a good foundation and should be considered an essential element of the purchase and sale process of a property.

  5. Bangkok Property Market Performs Strongly in 2017

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    In Q4 2017, the Bangkok condominium market grew steadily, particularly in the downtown area of the city. The number of new properties launched in 2017 overall also grew year on year by, with a 51% increase compared to 2016. Bangkok’s condominium market is likely to continue to grow in the future, given the many new mass transit lines and pipelines under construction (for example the MRT Pink Line, MRT Yellow Line and MRT Orange Line).

    Land prices and the lack of remaining downtown new development space has opened the way for new locations to become up and coming property hotspots. Projects that are in prime or new locations with appropriate pricing to compliment market demand continued to performed well.

    Due to the high proportion of units from projects that have been sold and that have been completed since 2014 in the downtown area, there does not currently appear to be a risk of oversupply in the area. Increasing land costs are a central factor that has resulted in price increases. More projects are opening up in new areas due to the construction of the approaching transport connections.

    During the past one to two years, the average selling price of new condominium units has continued to rise at approximately 15–20% annually. Condominium prices are expected to increase similarly next year, particularly in in the downtown area.

    Expatriates work permits in Bangkok increased 1.3% Quarter on Quarter and 3.1% Year on Year. Typically, expatriates have favoured certain areas and this continues to be the case, particularly the Sukhumvit, Silom/Sathorn and Central Lumpini areas, due to their easy access to the BTS Skytrain, along with convenient shopping and dining options.

  6. Good news for property buyers

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    The cabinet has on October 13, 2015, approved significant tax incentives related to the property sector. The property transfer fees were reduced from 2% to 0.01% and the mortgage fee from 1% to 0.01%. The purpose is to support low-income earners who would like to buy homes priced below 3 million baht. The reductions will take effect this month for both new and second-hand homes. However, the effective date of this property measure is only on October 29, 2015 to April 28, 2016.

    Meanwhile, Government Housing Bank (GHB) will provide 10 billion baht in mortgage loans for low-income borrowers until the end of next year.


    Please find more information about this news from the following link: http://www.bangkokpost.com/news/general/728176/cabinet-approves-tax-fee-cuts-for-home-buyers

  7. Reduction of Property Transfer Fees Proposed

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    According to media reports, the government’s economic teams, real estate groups and major developers are proposing a reduction of property transfer registration fees from 2% to 0.01%. Furthermore, mortgage fees are proposed to be decreased from 1% to 0.01% with the goal of supporting the real estate sector in Thailand.

    Apisak Tantivorawong, Finance Minister, purportedly said he is confident that the conclusion of measures to spur the property sector would come soon, and it would revive the real estate business. Industry consultants and experts have been urging incentives that would help home-buyers with more affordable rates, to lower their financial burden while giving them enough time to prepare for an ownership transfer. It is important to note that the measures have not been approved as yet, but if they are this certainly would be good news for buyers and property investors in Thailand.

    We will keep you informed about new developments in the matter in this news blog.

  8. New Inheritance Tax and Property Tax in Thailand?

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    Plans to reform Thailand’s tax system, including the introduction of inheritance and property taxes, have been approved by the Chief of the military-led National Council for Peace and Order (NCPO), Gen.Prayuth Chan-ocha.

    The proposed reforms would raise revenue by increasing taxes primarily on the wealthy. Thailand’s Ministry of Finance (MOF) has said Chan-ocha wants the new tax system “to be a mechanism for fairness and income generation for local communities.” Estimates project the new taxes could generate as much as US$3.1 billion.

    The approved tax reforms are not completely new to the Thai government. Proposals for inheritance and property taxes have been around during Thailand’s numerous administrations in the last decade, but never gained the necessary support for implementation.

    The inheritance tax will reportedly levy taxes of five to 30 percent of all domestic assets passed down to heirs, such as real estate, automobiles, stocks and bonds. Certain assets can be moved or already exist overseas, however, raising concerns over potential loopholes. Some believe an inheritance tax will also discourage Thais from saving income within the country.

    Thailand is not the first ASEAN nation to implement an inheritance tax. Singapore and the Philippines have implemented inheritance taxes, and other Asian adopters include China, Taiwan, South Korea, Japan and India.

    There are few details, as yet, on the land and buildings tax. An old tax bill proposal from a prior administration suggests a maximum tax of 0.5 percent of the value of properties that exist for commercial use, as much as 0.1 percent for private residences and no more than 0.05 percent on land used for agriculture. Temples, palaces and public areas would be exempt. Other sources say the new land and building tax rates will range from 0.05-2 percent and take into account land purposes and improvements made to it. Exemptions, such as for residences of lower appraised property values, are still being determined.

    It is also expected that the reforms will include specific tax cuts for those with the lowest incomes, detailed of which are yet to be specified.

    The Revenue Department is drafting the tax reform bill for submission to the new interim civilian Government, before it is then to be reviewed by the National Legislative Assembly.

  9. How to will your Thai Property

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    For many people, estate planning and the preparation of the last will and testament is a dreaded thought and something that is rather avoided. However, it is certainly advisable to settle such affairs, and this holds true in particular if you have property in Thailand.
    Phuket News - The Importance of Preparing a Thai Will_Page_1
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