Legal Update: Short-Term Condominium Rentals in Thailand

With the rapid growth in new models of accommodation and the sharing economy over the past few years, short-term rental platforms for residential units, such as Airbnb, have gained significant traction in Thailand. These platforms cater to tourists and travelers seeking greater flexibility and convenience compared to traditional hotel accommodations.

From an investment perspective, short-term rentals of residential units have the potential to generate higher returns than conventional long-term leases, while allowing operators to adjust pricing and operational strategies in response to tourism seasons and market demand.

Currently, two key pieces of draft legislation aim to update the current Hotel Act B.E. 2547 (2004) (“Hotel Act”): the Draft Hotel and Non-Hotel Accommodation Act (“ร่างพระราชบัญญัติโรงแรมและสถานที่พักที่ไม่เป็นโรงแรม (ฉบับที่ .. ) พ.ศ. ...”) and the Draft Accommodation Establishments Act (“ร่างพระราชบัญญัติสถานที่พักแรม พ.ศ....”) (collectively, “Draft Laws”). Legislators seek to amend the Hotel Act B.E. 2547 (2004) because it no longer reflects the realities of short-term rental businesses, particularly with regard to condominium developments, and the fact that all short-term rentals of condominium units are noncompliant with the Hotel Act creates legal and practical problems. Enactment of the Draft Laws could alter the legal characterization of condominiums and other residential units in a fundamental manner, shifting them from purely residential properties to legally recognized assets for hospitality businesses.

Key Features of the Draft Laws

1. Draft Hotel and Non-Hotel Accommodation Act

This draft legislation is intended to amended the Hotel Act B.E. 2547 by adding definitions and terms governing the operation of small-scale accommodation operators that impose standards on safety, hygiene, and service quality.

Some of the notable amendments in this draft are the addition of definitions of Non-Hotel Accommodation,^*1 Immovable Accommodation,^*2 Movable Accommodation,^*3 Hostel,^*4 Guesthouse,^*5 and Homestay^*6 (collectively, “Non-Hotel Accommodations”) in Section 4 of the draft. While the regulations governing the operation of a hotel are essentially the same, the draft adds regulations governing the operation of Non-Hotel Accommodations in new Chapter 3 (Type and Operation of Non-Hotel Accommodations). This new chapter requires the operators of Non-Hotel Accommodations to register with the authorities, obtain licenses or approvals, and appoint a trained caretaker in accordance with criteria established by the government, depending on the type of Non-Hotel Accommodation.

Notably, the draft will add new types of accommodations to existing hotel accommodations, as defined in the table below.

Based on the definition, it appears that “Non-Hotel Accommodations” is intended to include other types of property, such as a “lodging, room, shared room, house, [or] building,” and that “Immovable Accommodations, Movable Accommodations, Hostels, Guesthouses, and Homestays” will be regulated by this new draft. However, given the definition, which states that a “lodging, room, shared room, house, [or] building” must have the business purpose of providing temporary accommodation services, condominium units and housing units with residential purposes may not be governed by this draft legislation, if no other explanatory sub-regulations are enacted.

2. Draft Accommodation Establishments Act

The Draft Accommodation Establishments Act represents a significant policy shift, and will restructure the existing hotel regulatory regime by repealing (and replacing) the Hotel Act in its entirety.

The current draft distinguishes between hotels and other accommodation establishments by adding the definitions below

Unlike the Draft Hotel and Non-Hotel Accommodation Act, this draft does not specify the type of Accommodation Establishments that are deemed to have “a business purpose.” Therefore, it may include condominium units and housing units with residential purposes. In particular, Section 15 (1)(b), (2)(b), and (3) (b) of this draft specifically include Accommodation Establishments with residential purposes as types of accommodation regulated by the draft Act. This approach will reduce regulatory burdens and operational costs significantly for small scale investors and operators.

Another notable development is found in Section 26^*7 of the draft, which adopts a new structure for accommodating investors and operators who have obtained an accommodation establishment license, who will be deemed to have given notice, registered, or received other licenses under the laws governing related businesses or businesses connected with the operation of accommodation establishments (e.g., swimming pool and gym licenses under business hazardous to health regulations, licenses under the Public Heath Act, and alcohol and tobacco licenses under the law on excise taxes). A certain procedure will be required to benefit from this section of the law. However, this section greatly reduces the burden on operators of hotels and accommodation establishments, by minimizing the administrative burden of dealing with multiple government agencies.

Moreover, this draft adds a regulatory compliance measure for matching businesses and platforms, which have gained huge popularity among customers over the past decades. The draft law helps to protect customers who make reservations through online platforms against wrongful advertising or cancellations, making it easier for customers to claims damage or obtain refunds from the relevant hotels or accommodation establishments.

Though it will take some time for this draft to be approved and enter into force, it contains many changes to the current legal structure governing hotel operations and offers insights into how the government intends to regulate the hotel business in the future.

Implications for Residents and Condominium Developments

While the Draft Laws may support economic growth and the tourism sector, they also raise concerns regarding the long-term functioning of condominiums as private residential spaces. Increased turnover of short-term occupants may result in higher levels of congestion, heightened security concerns, and accelerated wear and tear on common areas.

In response, real estate developers may begin to design projects that cater specifically to investors, for example, by designating separate buildings or floors for short-term rentals, as opposed to those intended for long-term residential use. These trends could reshape Thailand’s condominium market significantly in the years ahead.

Investor Considerations and Regulatory Sensitivities

The legalization of short-term condominium rentals is likely to attract additional investors, including foreign investors who currently hold condominium units. A more relaxed regulatory environment may accelerate this trend, making careful government oversight essential to prevent adverse impacts on property ownership and to safeguard the long-term interests of Thai citizens.

In addition, if the Draft Laws enter into force in a manner that allows residential units to be used in a manner similar to hotel establishments, the law on buildings will need to be amended. Currently, all buildings being used as hotels are categorized as building under use control in the Building Control Act, which also prohibits the use of buildings in other categories or other controlled categories to be used as hotels. Violation of this law may subject the user of the relevant building(s) to penalties under the Building Control Act. However, the Draft Laws do not contain provisions to address this issue. It may be necessary to consider and amend related laws and regulations before any residential units can be used as hotels or accommodation business units.

Conclusion

The Draft Laws clearly signal Thailand’s intent to legalize and regulate short-term residential units. Investors and stakeholders should monitor legislative developments closely, as the proposed changes present opportunities to generate new income streams and adopt more flexible investment strategies. At the same time, potential risks relating to property management, regulatory compliance, and coordination with developers must be managed carefully, to ensure sustainable and responsible investments.

1. “Non-Hotel Accommodation” means an accommodation establishment not regarded as a hotel, characterized as a lodging, room, shared room, house, building, or any place established with a business purpose to provide temporary accommodation services with necessary amenities for travelers or any other persons in exchange for remuneration. This shall not include accommodation establishments that charge service fees on a monthly or yearly basis.
2. “Immovable Accommodation” means an accommodation of a permanent nature or constituting an integral part of any location which cannot be moved.
3. “Movable Accommodation” means an accommodation of a non-permanent nature or constituting an integral part of any location which is separable from its site or is capable of being moved.
4. “Hostel” means a place of accommodation not regarded as a Type 1 Hotel, comprised of common areas and necessary amenities to support guests. A non-hotel accommodation business operator may provide accommodation to guests in the nature of shared rooms (dormitory-style) charged on a per-person basis, and may provide private rooms for guests, provided that those private rooms constitute a smaller proportion than the shared rooms.
5. “Guesthouse” means a place of accommodation not regarded as a Type 1 Hotel, comprised of accommodation with necessary amenities to support guests. This type of accommodation is characterized as a reception house that the non-hotel accommodation business operator has renovated, modified, or newly constructed to provide overnight lodging services to guests.
6. “Homestay” means a place of accommodation not regarded as a Type 1 Hotel, comprised of accommodation with necessary amenities to support guests, wherein the provision of the accommodation is intended to allow guests to learn and experience a way of life.
7. Section 26 of the Draft Accommodation Establishments Act
   A person applying for a Category 3 Accommodation Establishment Business License and receiving such a license under this Act, which is the Principal License, shall be deemed to have given notice, registered, or received other licenses under the laws governing related businesses or businesses connected with the operation of the accommodation establishment, which are Secondary Licenses, as follows, without the necessity for further notification, registration, or application for a license under those respective laws:
   1. A license to operate a business detrimental to health, Hotel category, under the law on public health;
   2. A license or a certificate of notification for the establishment of a food sale place or a food storage place under the law on public health;
   3. A license to operate a health establishment business under the law on health establishments;
   4. A license to operate a business detrimental to health, Swimming Pool category, under the law on public health;
   5. A license to operate a business detrimental to health, Exercise Venue category, under the law on public health;
   6. A license or a continuously valid receipt of notification for the operation of a Liquid Petroleum Gas (LPG) storage place, Use Type, under the law on fuel control;
   7. A license to operate a service place under the law on service places;
   8. A license to sell liquor under the law on excise tax;
   9. A license to sell tobacco under the law on excise tax;
   10. A license, a receipt of registration, or a receipt of notification for the operation of other businesses as prescribed in the Royal Decree.
   The receipt of any Secondary License under paragraph one shall be in accordance with the intention specified by the applicant in the application. That application must expressly specify the Secondary Licenses that the applicant may receive together with the Accommodation Establishment Business License. When the Registrar issues the Principal License, the Secondary Licenses for which the business operator is deemed to have given notice, registered, or received permission, shall be clearly specified in a separate section within the Principal License. The Registrar shall notify the licensor under the respective laws, and the licensee shall pay the relevant fees and comply with the requirements under those laws.
   The criteria and methods for the consideration of permission, including the participation in the consideration by officials under the relevant laws, and the payment of fees or any other monies, shall be as set forth in the Ministerial Regulation.
   The supervision and inspection of the business operations requiring the Secondary Licenses under paragraph one shall be in accordance with the provisions of the respective laws. In such supervision and inspection, the relevant agencies may agree to integrate the inspections.

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