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New Law to Reform Rules Regarding Leases in Thailand

Transcript of the above video:

In this video today as the title suggests, we are going to be discussing leases in Thailand and a recent Consumer Protection Law that is going to come into effect May, 2018 which is going to reshape the legal landscape with respect to leases here in the Kingdom.

A couple of things: 1.The penalty for being in violation of the new law, and we are not going to go through every aspect of the new law. Those who are interested, and this should not be taken as a substitute for Legal Assistance or legal advice, I am just sort of doing an overview in this video of some of the changes that one can expect with respect to laws regarding leases in Thailand moving forward. Penalties: Up to a year in jail and up to 100,000 Baht fine for failure to comport with the law. Some other highlights include:  it looks like only 2 months’ rent will be allowed to be taken up front and this also applies retroactively so this part of the law is going to operate going backwards so there are going to be some landlords, assuming here in the Kingdom who are going to need to go ahead and restructure their lease agreements and possibly have to disperse refunds of previously obtained deposits associated with prior leases that were made here in the Kingdom.

Basically there is a practice here in Thailand, I have seen it happen quite often, especially with high demand property where a landlord will say we're basically a landlord will say, "okay give me 30 days deposit, I will hold the condo.  If you don't end up renting it you don't get your deposit back” basically it is sort of like earner's money in an American legal context but over here it is basically a deposit that is required by the landlord for them to essentially sort of allow an individual to keep that in limbo. It appears that that is not going to be allowed anymore under the new law and again it looks to me like it's viewed in the context of some sort of unfair advantage kind of situation and they don't want to see people being taken advantage of, consumers being taken advantage of, by people that are essentially operating in sort of almost an adhesive contractual environment where they basically just have a great deal of leverage over the renter. It smacks of somewhat unfair advantage to sort of completely leverage that individual by things like these deposits. That seems to be the policy argument behind the new changes. Another thing that will be very interesting with respect to the upcoming legislation is: in the past landlords would frequently basically sort of dictate the terms of utility bills and water bills and various other things associated with security or telecommunications issues, things like this. Landlords would sort of, there was the cost and then they would sort of add on a sort of a premium "just because", for the tenant and this practice is apparently going to be outlawed as well under the new rules. All these utility issues security issues, telecommunication things all of that has to be passed on to the tenant on an “at cost” basis rather than sort of the landlord, so if the landlord gets an electric bill for 700 Baht and he tells the tenant, you need to pay me 1,000 baht for electric that will no longer be allowed. This was a practice that had occurred in Thailand for some time and it looks like that this recently promulgated legislation is going to be utilized to put that practice out of practice.

So it looks like these changes are going to be for the most part beneficial especially to tenants. How they are actually enforced remains to be seen as the law hasn't come into effect yet but I think it is safe to say that many changes are coming with respect to lessor or lessee relationships here in the Kingdom of Thailand.