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All change in rentals: New laws provide more protection for lessees

PHUKET: On Feb 18, Thailand issued a notification under the Consumer Protection Act (1979), which regulates leases of residential structures, including houses, apartments and condominium. Pursuant to the notification any person or company that leases five of more residential structures (with some limited exceptions) is considered a residential structure “business operator”.

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By Jerrold Kippen

Saturday 24 March 2018, 10:00AM


The new regulations come into effect on May 1, with a raft of changes that protect lessees. Image: The Phuket News

The new regulations come into effect on May 1, with a raft of changes that protect lessees. Image: The Phuket News

The notification will come into effect on May 1, 2018 and requires all residential lease agreements between a business operator and the lessee to include a readily legible version in Thai.

Details of the physical condition of the property and equipment (if any), inspected and acknowledged by the lessee, must be attached to the lease agreement.

The entire agreement must be made in duplicate, having the same content, and one copy must be given to the lessee immediately upon execution.

The agreement must contain at least the following details:

a. name and address of the business operator and its authorised person;

b. name and address of the lessee;

c. name and location of the property;

d. details of the property’s physical condition, including any items and equipment in the property;

e. term of the lease, specifying its commencement and expiration dates, months and years;

f. rental fee, due date and method for payment;

g. public utility fee rates for example, electricity supply fee, water supply fee, telephone

fee, due dates and method for payment;

h. service fee rates for example, electricity and water meter reading fees, water pump

fee for boosting water pressure in the property, which must be reasonable and at the

actual cost paid for the services, due date and method for payment;

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i. other fees and expenses (if any), which must be reasonable and at the actual cost paid,

due date and method for payment; and

j. amount of security deposit.

The notification requires the business operator send invoices for the fees in items (f)-(i) above to the lessee at least seven days before the rental payment due date.

Furthermore, any security deposit must be immediately returned to the lessee at the end of the agreement, unless the business operator has to 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.

Significantly, affected lessees will now have the right to terminate lease agreements that come under the notification’s regulation early, provided that: at least 30 days’ advance written notice is given to the business operator; the lessee does not owe any rent; and there is a reasonable and necessary cause for such termination.

Any material breach for which the business operator can terminate the agreement must be clearly written in red, bold or italic font. The business operator can only terminate the agreement if written notice has been given to the lessee to rectify the breach within 30 days of receipt and the lessee fails to do so.

Furthermore, residential lease agreements that are subject to the notification must not contain, among other clauses, any waiver or limitation of the business operator’s liability from its breach of agreement or wrongful acts; any advance rental fee equivalent to more than one-month’s rent; any term allowing the business operator to change the rental fee, public utilities fees, service fees, or any other expenses before the end of the agreement; or any security deposit of more than one-month’s rental fee.

The notification should be welcome news to residential lessees with lease agreements regulated by it. This in turn would generally also be good news for the real-estate investment sector.

However, certain implications of the notification may be disturbing if not worse for lessors regulated by it, particularly developers who are planning to lease (and who have leased) condominiums, apartments, and villas.

We explain why in part two of this article, next week.


DUENSING KIPPEN is an international law firm specialising in business transaction and dispute resolution matters, with offices in Bangkok and Phuket, Thailand and affiliated offices in over 50 other countries. Visit them at: duensingkippen.com

 

 

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