From 1st May, there will be sweeping changes affecting tenancy laws in Thailand. The main changes which fall under the ambit of the Consumer Protection Act are as follows:
30 DAYS’ NOTICE TO QUIT ANYTIME
Tenants can give 30 days’ notice to move out anytime as long as their reason is reasonable. Tenants are not obligated to find another tenant to take over. Acceptable reasons include job transfer or moving abroad. However, it is not clear what the yardstick is for determining what is ‘reasonable’. This poses potentially a big problem for landlords who would face uncertainties in their rental income flow. This is however mitigated by the fact that this new law applies only to landlords leasing out 5 or more residential units which is considered a ‘residential lease business’. But if caught flouting the rules, landlords face jail time which is unduly harsh for what is essentially a civil offence.
NON-COMPLIANT LEASES NULL AND VOID
All existing leases which do not comply with the new law will be considered null and void; and their terms replaced by the new law. This retrospective piece of legislation again is a dramatic annulment of all non-compliant leases. It is however unclear whether the entire existing contract is null or void or only those terms which do not comply with the new law. If the latter, then theoretically, existing contracts do not need to be replaced because the new terms would automatically replace the non-compliant terms.
2 + 1 ILLEGAL
The typical 2 months security deposit plus 1 month advance rental is now illegal. Landlords can only ask for one month’s security deposit and one month’s advance rental. Landlords will have difficulty recouping their losses if the tenant leaves behind unpaid bills or damages amounting to more than one month’s rental.
This amount cannot be used to top up any unpaid rent or damages. This begs the question as to why a security deposit is required at all if the landlord can’t utilise it.
Landlords in Thailand tend to pass on the repairs and maintenance even of a routine nature to the tenant. This is now considered illegal along with marking up the charges for utilities such as electricity, water, telephone, internet, etc. Landlords must now charge at cost otherwise it is considered profiteering and hence illegal.
7 DAYS’ REFUND OF DEPOSIT
Security deposits must be returned within 7 days instead of the current 30 days. This allows very little time for landlords to assess the damages to the unit when tenants leave.
In the event of non-payment of rental, the landlord cannot change the locks or remove the tenant’s belongings. This is considered a criminal act of trespass and the landlord can be prosecuted. Instead, the landlord must give 30 days’ notice of the breach, and if not rectified, then only can the landlord terminate the lease. This is in line with international practice.