Hughes Krupica: The rights & wrongs of Residential Commercial Letting Policy

If the current regulation isn’t good enough, then many will have to wait for it to catch up with modern practices. However, it is for Thailand and its government to balance regulation and choose how much and how to regulate lodging, as this is a matter of national interest and not a matter to be determined arbitrarily by say, a small management company that carries out rentals on a project that has no licensing or compliance whatsoever. The hotel business in Thailand is clearly linked strongly to its economy as is tourism in general.

Making this situation somewhat worse is the modern phenomena of fake, or just defective, scare-tactic information. If you conduct an internet search on hotel licenses and accommodation you will come across all sorts of news articles, supposed ‘learned’ articles citing huge tracts of law that will make the average property investor nod off into their Coffee Martini.

There is an overload of damming information citing exemptions for room counts, lack of clarity on whether rooms in a villa are ‘rooms’ in the exemption, sometimes no mention of the processes of obtaining environmental consent, confusing explanations of how to apply for a hotel license and omissions relating to the declaration process that a property isn’t being used in a hotel programme.

“Worse still, some developers appear to be promoting property which hasn’t been built and hasn’t been designed to conform with building control requirements, comprising promises of returns entirely based on rental returns if the property is used in a hotel programme - and are apparently able to sell the units like hot cakes because they have used the bait of a ‘guaranteed rental return’.

Some readers may wonder why I am not providing a clear succinct guide on whether their prospective residential, or in fact commercial/residential property, will or will not be legal under existing laws. The reason is I haven’t is that it depends on many factors, which have to be checked properly.

Many legal articles end with an advertisement style – “come and see us to check the position”, but I don’t need to even say that. If you are buying property which is going to be used as part of a hotel oriented use, one night rentals, rentals for less than 30 days, then you had better check properly that you know what you are doing – and that the seller/developer knows what it is doing. The government does know the position of many unlicensed projects, and is simply working its way through at its own pace to impose the regulations, which it has done with a pretty fair hand, including a moratorium period it offered unlicensed projects a while back.

As always, I remain a positive but cautious observer and participant in the property market in Phuket and further afield across Thailand. I know many developers who spend money on internal and external legal advice and really take care to get things right. Try and find out who they are when you are browsing the very nicely presented brochures.

By Desmond Hughes, Senior Partner of Hughes Krupica.
Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Commercial; Personal Injury; Dispute Resolution; and Litigation, operating in Bangkok and Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia.
www.hugheskrupica.com