The upward swing in tourism, rising property prices and the upcoming ASEAN Purchasing property for rental income is a popular option among expats in Thailand. This is mainly due to the relatively low property prices that can give a good return on investment.
Areas that are popular for this include the cities of Chiang Mai, Bangkok and tourist areas such as Pattaya and Phuket. Those that are located in tourist areas tend to be short term lets, while those in the cities are aimed at longer term tenants.
The most popular areas of the cities are the business districts and many are rented by companies who need to house expat workers. There is also usually a difference in the quality of the rental property. Those in the tourist hot-spots are usually more luxurious as the rental yield is higher, while long term lets in the city only need to be fairly basic.
There are no regulations for monitoring tenancies and landlords. Tenants generally have less protection than the landlord as tenancy agreements tend to favour the landlord, but there is still the potential for tenants to cause problems as there is little enforcement of the few regulations that do exist, so a landlord who needs to evict a tenant may find that it takes months to do so as there is little support.
There is no standard tenancy agreement in Thailand but it is possible to purchase a ‘DIY’ version from stationery stores. However, these are in Thai. It is a good idea to have everything checked before either you or the tenant signs the agreement.
This basic form will not cover everything so it is a good idea to make a list of everything you need to cover before you begin. It is advisable to take professional advice at this stage as a simple oversight could cost dearly at a later date.
There is no deposit protection scheme in Thailand but they are protected very generally by the Civil and Commercial Code of the country. It is usual for a deposit to be refunded at the end of a tenancy, normally one month after the tenant has vacated the property. This gives the landlord time to assess for damages, make a calculation of any monies that should be deducted and pay any outstanding bills out of the deposit amount.
Landlords should be aware that the contract should state clearly the tenancy period. If the period is going to be more than 3 years then this lease will need to be registered at the Land Office as part of the Civil and Commercial Code. There is a registration fee and stamp duty to pay on this. Many rental agreements tend to be for a period of 1 year, particularly for expats who have a 1 year visa.
Most contracts will contain a clause which allows for the rental agreement to be extended if the tenant wishes to continue living there. They should give notice of their intention to remain. In many cases there is no clause included for a rent review but there can be a clause added reserving the right to review the rent should the tenant not give the required amount of notice of their intention to remain.
The contract should state clearly that the property can only be used for residential purposes. A tenant has the right to have an office in their home but cannot register a company to that address. The contract should also state the condition of the property and how much furniture is included in the rent.
There should be clauses included about how each party can terminate the contract if necessary. In the event of a dispute the contract should outline clearly the steps that each side can take to resolve the issue.
Circumstances under which the contract can be terminated include failure to pay the agreed rent at the agreed time and damage to the property either deliberate or a natural disaster. Maintenance of the property should be clearly outlined. Landlords are generally responsible for all major repairs while tenants are responsible for accidental or malicious damage.
The landlord should have adequate insurance for the structure of the building, but tenants are expected to provide their own contents insurance that should also cover any damage to the landlord’s property.