Residential leasing now considered a contract controlled business for landlords with 5 or more properties
Landlords with five or more residential properties will now fall under the Consumer Protection Bureau’s definition of a contract controlled business. The Contract Committee issued the“Notification of the Contract Committee Re: The Stipulation of Residential Property Leasing as a Contract-Controlled Business B.E. 2561 (2018)” and it was published in the Government Gazette on February 16, 2018. The new regulations will take effect on May 1, 2018.
The regulation defines a residential property leasing business as a business that leases five or more residential units to individuals. Those units, which are for residential use only, can be condominiums, houses, apartments and other residential property, hotels and dormitories are excluded as they are covered under separate regulations.
Key points of the regulation are that this applies to landlords with five properties or more, landlords are prevented from charging more for basic utilities than they cost, they can ask for only month rent in advance and the cost of one month rent for the security deposit. Many properties currently ask for two months for the security and one month advance rent.
Landlords are not allowed to charge for normal wear and tear usage, and must return the deposit within seven days after inspection. They are not allowed to inspect without advance written notice. The lessee is now allowed to give 30 days advance written notice of termination of the contract and is no longer required to fufill the contract fully.
Although the lease contract must be in Thai we recommend that you have it translated into English as well, Sunbelt Asia has a top notch team that can review your contract and translate it into English for you.
The new regulations stipulate that residential lease agreements must have a Thai language version and they must include:
- Name and address of the business operator and its authorized person
- Name and address of the lessee
- Name and location of the property
- Details of the property’s physical condition - including any items and equipment in the property
- Term of the lease must specify the start and expiration dates
- Rental fee rates and due dates for payment
- Public utility fee rates and due dates for payment
- Service fee rates must be reasonable and at the actual cost paid for the services, and due dates for payment
- Other fees and expenses which must also be reasonable and at the actual cost of the payment as well as due dates
- The amount of the security deposit
The landlord must include the following in the lease contract and must follow certain actions. It is important to note that if the contract does not include these terms, under Section 35 of the Consumer Protection Act, the lease agreement will be interpreted as to include them.
- Invoices for all fees including rent, utilities, service fees and other fees must be sent at least 7 days before due dates. The lessee will have the right to check information on the invoices.
- Full details of the physical condition of the property and any equipment that has been inspected and acknowledged by the lessee must be attached to the lease agreement. The lessee must be given a duplicate of the list.
- The 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 determine whether or not it is the responsibility of the lessee. If the lessee is found not to have caused damage then 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.
- The lessee has the right to terminate the lease agreement early with a minimum of 30 days advance written notice given to the landlord.
- Any material breach that allows the landlord to terminate the agreement must be clearly written in red, bold, or italic font on the lease agreement. The landlord can only terminate the lease contract if written notice has been given to the lessee to fix the issues within 30 days of receipt and the lessee does not fix the issues.
- The lease contract must be in duplicate and one copy given to the lessee immediately.
The new regulations also set out terms that residential lease agreements cannot contain:
- The lease cannot contain any waiver or limitation of the landlord’s liability from its breach of agreement or from wrongful acts
- The advance rental fee cannot be more than the cost of one-month rent
- The landlord cannot change rental fees, public utilities fees, service fees, or any other expenses before the end of the agreement
- The security deposit cannot be more than one-month’s rent
- The contract cannot contain any terms that allow the landlord to confiscate the security deposit or advance rental fee
- The landlord or his or her representatives cannot inspect the property without prior notice
- The landlord cannot charge utility fees, electricity and water supply, more than the government rate
- The lessee’s access to the property to seize or remove the lessee’s belongings if the lessee defaults on rental fees or other expenses related to the lease of the property cannot be restricted
- The landlord cannot request any fee or expense for renewing the lease
- The landlord cannot terminate the agreement early except due to a material breach of the lease agreement by the lessee
- The lessee cannot be liable for damages or defects that occurred due to ordinary wear and tear from usage of the property’s contents and equipment
- The lessee cannot be liable for damage to the property, contents, and equipment that was not the lessee’s fault and in force majeure situations, that is, unavoidable situations such as earthquakes, floods, etc.
Before signing any contract be sure to have one of Sunbelt Asia’s experts review it for you to ensure it fully complies with the current laws.
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