Government Regulations for Rental BusinessComments Off on Government Regulations for Rental Business
Due to the increasing popularity of condominiums and apartments in the city, which comes with several issues related to rental and utility bills; as a result, the Contract Committee of the Consumer Protection Board has issued a new notification, the Stipulation of Residential Property Leasing as a Contract-Controlled Business B.E. 2562 (2019) (the “Notification”), published on 31 October, 2019, this new Notification has canceled the earlier Notification the Stipulation of Residential Property Leasing as a Contract-Controlled Business Contract-Controlled Business B.E. 2561 (2018).
In our experience, some of the key requirements under the new Notification are detailed as follows:
- Residential property leasing business means a business that leases (or subleases) five units of property or more to individual lessees, for residential purposes, for a fee charged by the business operator, regardless of whether the units are in the same building or not. This includes all types of residential property that are leased for residential purposes, except for dormitories and hotels, which are regulated with different regulations.
- Residential lease agreements must include a Thai version and certain information mandated by the Notification.
- The business operator’s right to terminate the agreement must be written in red or black letters, or in bold or italics, and underlined, or emphasized in other ways that make such terms more pronounced than the other content of the agreement.
- Invoices for the rental fee, public utility fee rates and service fee rates must be sent to the lessee at least three days prior to their due dates, and the lessee will have the opportunity to inspect the information on the invoices relating to the payments.
- Details of the physical condition of the property and its contents, inspected and acknowledged by the lessee, must be attached to the lease agreement.
- Show a calculation method of utility rates such as electricity bills, water bills, telephone bills.
- The security deposit must be immediately returned to the lessee at the end of the agreement unless the business operator must 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.
- In case the agreement has a fixed duration, the lessee has the right to terminate the agreement before expiration, provided the lessee has leased the property for no less than half of the period specified in the agreement by providing at least 30 days advance written notice to the business operator, and must not be in default in respect to paying the rental fee or other expenses.
- The business operator can only terminate the agreement if the written notice has been given to the lessee to rectify the breach within 30 days of receipt and the lessee fails to do so. However, only 7 days advance notice is required if the cause of termination results from actions of the lessee that affect the livelihood of other lessees. No advance notice is required if the lessee does not comply with the law and the regulations relating to public order and good morals.
Under the new Notification, in our experience, clauses that have the following effects shall be invalid.
- Waiving or restricting the liability of a business operator for breach of contract or wrongful acts.
- Requiring advance rental fees equivalent to more than 3 months of the monthly rent and security deposit combined.
- Entitling the business operator to change the rental fees, public utility fees, service fees, or any other expenses before the end of the agreement.
- Any provision that allows the business operator to seize the security deposit or advance rental payment without any fault on the part of the lessee
- Any term that allows the business operator, or its representative, to inspect the building or property without prior notice, unless an emergency situation exists that could cause damage or have an impact on the business operator or other lessees if the business operator does not conduct such an emergency inspection
- Any provision for electricity and water supply fees is higher than the rates set by the appropriate authorities.
- Any term allowing the business operator to prohibit or obstruct the lessee’s access to the property in order to take or remove the lessee’s possessions without exercising the right to legally terminate the agreement.
- Any term that allows the business operator to request any charge or expense in exchange for renewing the lease.
- Any term permitting the business operator to terminate the lease agreement without the lessee causing a material breach of the lease agreement;
- Any provision that holds the lessee accountable for losses resulting from normal wear and tear of the property’s contents and equipment.
- Any term that holds the lessee liable for damage to the property, contents, and equipment that occurred due to circumstances beyond the lessee’s control, such as force majeure.
- Any term that holds the lessee responsible for problems in the property, contents, and equipment that occurred as a result of normal wear and tear.
The rental company has grown exponentially in recent years, and the consumer protection council has noticed a growing problem. As a result, a new notification has been issued to bring the legislation up to date. The major difference between this new notification and the previous version is the right of the lessee to terminate the contract and specifics related to the advance rental payment.
Feel free to contact us at [email protected] if you have any questions about the above information.
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Fabian, a founding partner of FRANK Legal & Tax, is a German-trained lawyer with expertise in corporate/commercial and real estate law, and litigation, and has been living and working in Thailand since 2005.