Legal or not, that is the question in Thailand
By Colin Hastings
By Colin Hastings
WITH as many as 43,000 properties for rent on its listings in Thailand, Airbnb has become a major competitor in this country’s hotel industry. Its phenomenal growth in only a few years has caught hoteliers by surprise. Understandably, they are not happy with this foreign interloper, despite the fact that Airbnb has only a tenth the number of rooms on its books compared to the Thai hotel industry.
They point to the low rates Airbnb offers its customers – on average roughly 30 percent less than hotels, which face much higher operational costs and taxes. To back their case, they also claim Airbnb is undermining the local hotel industry because of its lack of regulation, health and safety standards.
But it is not just hotels that object to Airbnb, now the world’s largest accommodation provider - even though it does not own a single property Condominium juristic persons have joined the chorus of critics, saying that owners and long-term residents are having their daily lives disrupted by transient Airbnb guests who ignore in-house rules, throw noisy late-night parties and do not respect common areas.
They point to the low rates Airbnb offers its customers – on average roughly 30 percent less than hotels, which face much higher operational costs and taxes. To back their case, they also claim Airbnb is undermining the local hotel industry because of its lack of regulation, health and safety standards.
But it is not just hotels that object to Airbnb, now the world’s largest accommodation provider - even though it does not own a single property Condominium juristic persons have joined the chorus of critics, saying that owners and long-term residents are having their daily lives disrupted by transient Airbnb guests who ignore in-house rules, throw noisy late-night parties and do not respect common areas.
There is also the question of security since some visitors do not register their address with the immigration division, which is against the law.
When it comes to the laws covering the kind of rentals offered by Airbnb and other similar booking agencies, there are several schools of thought.
Last year, for example, the Phuket Provincial Land Office sent a notice to all 234 registered condominium projects on the island saying that daily renting by condominium owners was a violation of the Hotel Act 2004.
According to leading global commercial real estate company Colliers International, the Hotel Act requires properties offering commercial accommodation on a less than monthly basis to have a hotel license.
“However, Ministerial Regulation 2008 that governs hotel operations specifically excludes properties for temporary accommodation from being considered hotels if (a) they have four rooms or less, (b) they can accommodate no more than 20 people, (c) they create additional income, (d) they promote tourism or local culture and (e) the authorities have been notified.”
This exemption, added Colliers, is designed to exempt guest houses and homestays from the requirements of the Hotel Act and can be viewed as generally supportive of Airbnb-style short-term rentals.
A condominium in Hua Hin that clearly has had some negative experiences with Airbnb recently posted a notice aimed at “travellers, tourists and backpackers.” Its message was blunt.
‘This condominium is for residents only and is NOT A HOTEL.’
It went on: ‘Daily and weekly rentals are not allowed and are illegal under Thai law,’ and it threatened to prosecute trespassers.
This same condominium also handed out copies of a letter from the local city hall, which was also adamant about the legality of Airbnb-style lets.
Among its warnings were the following: *
*Letting units for less than one month to travellers for financial gain is against the law as it is equal to a hotel business without permission as defined by Clause 15 of the Hotel Act 2004.
* A letting business of less than one month for travellers for financial gain might also be against the law concerning conducting business inside a condominium, according to Clause 17/1 of the Condominium Act, 1979.
* If co-owners allow foreigners who are permitted to stay in the Kingdom temporarily to stay in their units, the unit owner must inform an official at the immigration office located within the area of the unit within 24 hours. In the case that there is no immigration office in the area, co-owners must inform a local police officer at any local police station.
* The Condominium Juristic Person should arrange to display a notice to promote awareness of this situation in the English and Thai languages, to be posted within the common area of the condominium to inform all co-owners to comply with these rules.
* The Condominium juristic person must inform condominium staff not to permit, neglect or participate in the above-mentioned breaches of the law.
Tax is another issue. Legal experts say that if you or your company own a condominium unit or villa in Thailand that was used, even if only for one day, by someone other than its legal owner (with or without you having received rental income), then you or your company have incurred liability under the House and Land Tax Act (HLT 1932).
According to Duensing Kippen, Attorney & Arbitrators, the HLT tax is imposed by local tax offices on the owner of such structures if they receive or should have received rental income.
The tax is 12.5 percent of an amount equal to the annual “rental value.” Properties inhabited by the owners are exempt. The experience tab on Airbnb’s website has personal guides travellers can hire. According to Thai law, anyone wanting to be a guide must have a license to do so. Khaosod English claims anyone doing so without a license could face a B100,000 fine or up to a year in prison.
Airbnb has many happy customers around the world who welcome the booking platform’s low rates and great variety of accommodation. Its huge popularity has spawned many similar agencies, some specialising in upmarket properties. In the UK, where it is legal and tax-tolerated, it has raised eyebrows after being used as short-term hotels and brothels.
Regardless of all the chaos surrounding the company, Airbnb does not seem to be slowing down in terms of expansion and popularity amongst travellers.
When it comes to the laws covering the kind of rentals offered by Airbnb and other similar booking agencies, there are several schools of thought.
Last year, for example, the Phuket Provincial Land Office sent a notice to all 234 registered condominium projects on the island saying that daily renting by condominium owners was a violation of the Hotel Act 2004.
According to leading global commercial real estate company Colliers International, the Hotel Act requires properties offering commercial accommodation on a less than monthly basis to have a hotel license.
“However, Ministerial Regulation 2008 that governs hotel operations specifically excludes properties for temporary accommodation from being considered hotels if (a) they have four rooms or less, (b) they can accommodate no more than 20 people, (c) they create additional income, (d) they promote tourism or local culture and (e) the authorities have been notified.”
This exemption, added Colliers, is designed to exempt guest houses and homestays from the requirements of the Hotel Act and can be viewed as generally supportive of Airbnb-style short-term rentals.
A condominium in Hua Hin that clearly has had some negative experiences with Airbnb recently posted a notice aimed at “travellers, tourists and backpackers.” Its message was blunt.
‘This condominium is for residents only and is NOT A HOTEL.’
It went on: ‘Daily and weekly rentals are not allowed and are illegal under Thai law,’ and it threatened to prosecute trespassers.
This same condominium also handed out copies of a letter from the local city hall, which was also adamant about the legality of Airbnb-style lets.
Among its warnings were the following: *
*Letting units for less than one month to travellers for financial gain is against the law as it is equal to a hotel business without permission as defined by Clause 15 of the Hotel Act 2004.
* A letting business of less than one month for travellers for financial gain might also be against the law concerning conducting business inside a condominium, according to Clause 17/1 of the Condominium Act, 1979.
* If co-owners allow foreigners who are permitted to stay in the Kingdom temporarily to stay in their units, the unit owner must inform an official at the immigration office located within the area of the unit within 24 hours. In the case that there is no immigration office in the area, co-owners must inform a local police officer at any local police station.
* The Condominium Juristic Person should arrange to display a notice to promote awareness of this situation in the English and Thai languages, to be posted within the common area of the condominium to inform all co-owners to comply with these rules.
* The Condominium juristic person must inform condominium staff not to permit, neglect or participate in the above-mentioned breaches of the law.
Tax is another issue. Legal experts say that if you or your company own a condominium unit or villa in Thailand that was used, even if only for one day, by someone other than its legal owner (with or without you having received rental income), then you or your company have incurred liability under the House and Land Tax Act (HLT 1932).
According to Duensing Kippen, Attorney & Arbitrators, the HLT tax is imposed by local tax offices on the owner of such structures if they receive or should have received rental income.
The tax is 12.5 percent of an amount equal to the annual “rental value.” Properties inhabited by the owners are exempt. The experience tab on Airbnb’s website has personal guides travellers can hire. According to Thai law, anyone wanting to be a guide must have a license to do so. Khaosod English claims anyone doing so without a license could face a B100,000 fine or up to a year in prison.
Airbnb has many happy customers around the world who welcome the booking platform’s low rates and great variety of accommodation. Its huge popularity has spawned many similar agencies, some specialising in upmarket properties. In the UK, where it is legal and tax-tolerated, it has raised eyebrows after being used as short-term hotels and brothels.
Regardless of all the chaos surrounding the company, Airbnb does not seem to be slowing down in terms of expansion and popularity amongst travellers.
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