The illegal practice of renting condo units on a daily basis has raised significant concerns among residents and co-owners, primarily regarding safety, irresponsible behavior, and noise disturbances caused by short-term guests. This situation also creates an unfair competitive disadvantage for legally operating hotels, raising questions about the legality of those offering short-term condo rentals and highlighting a lack of regulatory enforcement.
Recently, a number of cases involving foreign condo owners, especially Chinese nationals, have complicated the issue further. Policymakers face the challenge of balancing economic activity with community well-being, as many condo developers depend on foreign demand to bolster a market that has struggled with weak domestic interest for years.
How Did This Trend Develop?
The phenomenon of daily condo rentals in Bangkok is not entirely new; it began to gain momentum in 2016 and 2017, largely due to the rise of short-term rental platforms like Airbnb. Initially, most daily rentals were conducted by Thai owners who purchased units with the intention of renting them long-term, either monthly or annually. However, as Airbnb became more popular among global travelers, condo owners began to see the financial benefits of short-term rentals, especially in tourist-heavy locations.
For example, a one-bedroom condo in Sukhumvit Soi 50 could be rented monthly for around 14,000 baht, whereas renting it to tourists for 1,400 baht per day could yield 42,000 baht over the same month, substantially increasing income. This significant income disparity fueled the growth of daily rentals. Additionally, a booming tourism industry and an oversupply of newly constructed condos contributed to the initial surge in daily rentals.
The number of newly registered condos in Bangkok soared from an annual average of 23,800 units between 2005 and 2012 to peaks of over 55,000 units in 2018, coinciding with a spike in foreign tourist arrivals, which jumped from 29.9 million in 2015 to 39.9 million in 2019, as reported by the Tourism and Sports Ministry.
However, by 2017, concerns from residents and co-owners about security and the difficulties posed by the high turnover of short-term guests led to a decline in daily rentals. The Hotel Act mandates that foreign guests must be formally registered with the Immigration Bureau, a stipulation often overlooked in short-term rentals.
In addition, some short-term guests engaged in irresponsible behavior in shared areas, creating noise and leaving messes, while others allowed additional guests to use community facilities without adhering to the property’s rules. Damage caused by short-term visitors often fell under the costs covered by all owners through common area expenses. Consequently, many unit owners and residents pushed for legal actions against illegal daily rentals, leading to legal prohibitions on the practice. The trend faded further during the pandemic, which severely impacted the tourism industry.
Is Daily Condo Rental Illegal?
According to the Consumer Protection Board, offering condo units for daily rent violates several laws, including the Hotel Act and the Condominium Act. Daily-rented condos are not classified as hotels and thus lack the protections provided by the Hotel Act, leaving guests with no recourse if their property is lost or damaged. A revision of ministerial regulations in 2023 defined hotels as establishments with over eight rooms and more than 30 guests, requiring a hotel license for legal operation. The Condominium Act allows only the juristic person to manage common areas, though it can pursue defamation claims against owners engaging in illegal rentals that damage the project’s reputation.
Daily rentals may also breach the Immigration Act, which necessitates reporting foreign guests to immigration authorities within 24 hours, while failing to comply with applicable tax laws.
Why Did the Recent Rental Wave Start?
The trend resurfaced in 2023 as Thailand’s tourism industry rebounded strongly. This latest wave has been more pronounced than the initial one, with multiple units being rented out daily within the same project, leading to frustrating encounters among residents as travelers move through common areas with their luggage.
Residents are questioning the effectiveness of the juristic office in addressing these illegal practices. In many projects, owners illegally renting out over half of the units have gained the power to influence internal regulations through voting, hampering the juristic person’s ability to take action; in some cases, juristic persons have even assisted with daily rental services.
Unlike the first wave, this resurgence is predominantly driven by Chinese nationals who have strategically purchased multiple Bangkok condos, often in bulk from developers struggling to sell their inventory due to low domestic demand. In certain developments, these investors own more than 49% of the units, contravening regulations in the Condominium Act, and often have their excess shares held by nominees.
How Can the Country Address the Needs of Both Parties?
Since 2023, the share of condo transfers to foreign buyers in Thailand has increased, particularly as local demand has weakened due to various challenges that deter prospective local buyers. Many developers have shifted their strategy towards attracting foreign buyers, where demand remains robust, particularly in a thriving tourism sector that also serves as a potential market for property investment.
