Letting property in Thailand has never been easier as the country is currently in the midst of a property boom brought about by low interest rates and the resurgence of the real estate market as a lucrative source of middle to long term investments. Economic factors aside, the Thai legal system is relatively lax in terms of rent control and regulation as the country’s legislature has yet to pass a more detailed statute that will adequately address the relationship between landlord and tenant.
Despite the gains and advantages of becoming a landlord, there are still a few details to bear in mind in order to avoid any pitfalls in letting real property. The following are some of the most important considerations to take note of:
First, every potential lessor should have a working knowledge of the legalities surrounding a rent contract. Under the Civil and Commercial Code, a rent agreement is unenforceable unless evidenced by a writing signed by the party liable. In case of one exceeding three (3) years or existing during the lifetime of either party, it shall be enforceable only for three (3) years unless it is made in writing and registered by the competent official.
Second, every rent agreement cannot exceed a period of thirty (30) years and any excess shall be reduced. Moreover, note that the law does not allow any extension and any renewal is entirely voluntary on the part of the lessor despite any stipulation calling to that effect after the lapse of thirty (30) years.
Third, any potential landlord should bear in mind the different duties and obligations prescribed by the law. As a rule, the lessor is liable for the expenses incurred in repairing the property except only in two situations. First, when the expenses incurred was related to the maintenance of the property and second, where the nature of the expenses are by law or custom, to be borne by the tenant. As to costs however, the law requires that both parties answer in equal shares.
Another duty imposed is the delivery of the premises to the tenant in a “good state of repair”. The law gives the tenant the right to terminate the contract if the property delivered is not suited for the purpose for which it was let.
Fourth, deposits are securities in favour of the landlord and It is usual practice to demand one (1) month in advance and a security deposit amounting from two (2) to three (3) months prior to occupancy. As a rule, the return of a deposit is made one (1) month after the termination of the lease. The deposit may also be used as a fund from which unpaid expenses and other costs may be recovered.
Last, the terms for terminating the agreement should be provided. Under the Code, a rent arrangement is terminated upon the expiration of the agreed period without notice. If no period is agreed upon or presumed, either party may terminate the agreement at the end of each payment period with notice. Note that if at the end of the agreed period, the tenant remains in the property and the lessor knowing thereof does not object, they are deemed to have renewed the contract for an indefinite period.
Irrespective of the imbalance present in the current legal system, renting out property still remains one of the most lucrative endeavours in the country. As such, any individual wishing to take advantage of this situation should understand the responsibilities and obligations involved in order to ensure a continuous return of investment.