The illegal rental of condo units on a daily basis has sparked serious concerns among residents and co-owners over safety, irresponsible behaviour, and noise disturbances caused by short-term guests.
This practice also creates an unfair disadvantage for hotels conducting their operations legally, leading to questions regarding those offering short-term condo rentals in terms of legal residents, as well as the lack of enforcement of regulations.
In recent weeks, a spate of cases involving foreign owners of condo units, particularly Chinese nationals, added a layer of complexity to the situation.
Policymakers are expected to strike a balance between economic activity and community well-being, especially as many condo developers rely on foreign demand to revive a market posting weak domestic demand for years.
Q: How did the trend develop?
The practice of renting out condo units on a daily basis in Bangkok is not new, emerging in 2016 and 2017 thanks to the popularity of short-term rental platforms such as Airbnb.
During this initial wave, most daily rentals via these platforms were Thais who bought their units expecting to rent them out long-term, either on a monthly or annual basis.
However, as Airbnb gained traction among travellers worldwide, condo owners recognised the potential for higher returns with daily rentals compared with traditional long-term leases, particularly in high-demand tourist areas.
The practice of daily rental of condo units soon became widespread in Bangkok and other major tourist destinations.
For instance, a one-bedroom condo unit around Sukhumvit Soi 50 could typically be rented for 14,000 baht a month, whereas the owner could rent out the same unit to a tourist for 1,400 baht a day. Over 30 days, the owner would receive 42,000 baht a month for the daily rental, generating three times as much income than the long-term lease.
This stark income difference drove the surge in daily condo rentals.
Two other factors ignited the initial wave: a booming tourism industry and a glut of newly completed condos.
According to the Lands Department, the number of newly registered condos in Bangkok skyrocketed from an annual average of 23,800 units between 2005 and 2012 to 50,602 units in 2013, 44,208 units in 2014, 41,186 units in 2015 and 41,859 units in 2016. Although new units fell to 34,490 in 2017, they peaked in 2018 with 55,325 units registered.
Meanwhile, the number of foreign tourist arrivals sharply increased over a five-year period, rising from 29.9 million in 2015 to a peak of 39.9 million in 2019, according to the Tourism and Sports Ministry.
However, the initial wave of daily condo rentals subsided in 2017 after concerns were raised by residents and co-owners who opposed the practice.
The frequent turnover of visitors checking in and out of a unit made it difficult to ensure security, particularly if the short-term residents were foreign nationals.
In addition, the Hotel Act requires foreign guests be formally registered to report their presence to the Immigration Bureau during each stay -- a practice that is often neglected.
As short-term guests do not own the property, some acted irresponsibly in the common areas of a property, making loud noises or creating a mess in common areas, or allowing guests to use the facilities without adhering to the property's rules. Daily rental guests may only be at the property for a day or two, and many simply do not know the rules.
When these properties are damaged by short-term visitors, the cost of repairs was typically covered by expenses for common areas, which are paid on an annual basis by all unit owners.
This led unit owners and residents to call for legal action against illegal daily rentals, prompting juristic persons to strictly prohibit the practice.
Daily condo rentals started to fade during 2018-2019, then ended with the pandemic, which stunted the tourism sector for several years.
Q: Is daily condo rental illegal?
According to the Consumer Protection Board, renting out a condo on a daily basis violates at least two laws: the Hotel Act and the Condominium Act.
As condos rented out on a daily basis are not registered as hotels, the units are not covered by the Hotel Act.
This means if a guest's property was lost or damaged in a common area, no legal party would be liable to pay compensation.
In addition, a revision of ministerial regulations in 2023 defines what constitutes a hotel. Establishments with more than eight rooms and more than 30 guests are considered hotels, and such properties must obtain a hotel licence in order to operate legally.
The Condominium Act requires the juristic person to oversee only the common areas. However, the juristic person can file a defamation lawsuit against an owner renting a unit or units on a daily basis, if it harms the reputation of the project.
Daily condo rentals may also violate the Immigration Act, which requires a foreign guest's name to be reported to the Immigration Bureau within 24 hours. This rule does not include applicable tax laws.
Q: Why did the recent rental wave commence?
The trend re-emerged in 2023, coinciding with a strong recovery in the country's tourism industry.
However, the latest wave has been more intense than the initial one, with numerous units within the same project being rented out on a daily basis.
This situation made it impossible to ignore the practice, as numerous travellers drag their luggage through common areas, causing frustration among other unit owners and residents.
Upset residents are questioning whether the juristic office is properly addressing the practice.
However, in some projects the owners illegally rent more than half of the units on a daily basis, giving these owners the power to set internal regulations through a vote.
As a result, the juristic person is unable to take appropriate action, and in some cases the juristic person even facilitates owners with daily rental service or assisting guests.
Unlike the initial wave, the recent wave emerged among Chinese nationals who bought Bangkok condo units for this very purpose.
Many purchased units in bulk, acquiring large lots directly from developers who had significant unsold completed units as the market slowed, attributed to weak domestic demand.
In some projects, such investors actually own more than 49% of the units, exceeding a regulation in the Condominium Act. However, the excess portion is held by nominees on their behalf.
Q: How can the country serve the needs of both parties?
Since 2023, the proportion of condo transfers nationwide to foreign buyers has increased, particularly after domestic demand slowed due to a variety of negative factors that made it difficult for prospective local buyers to purchase condo units.
Many developers shifted their focus to foreign buyers, where demand remains strong, while Thailand's booming tourism industry attracted tourists who became prospective property buyers.
In the past year, several developers reported robust condo sales to foreign buyers, particularly from China.
This led the Thai Condominium Association to urge the government to increase the quota for foreign ownership beyond the current 49% limit.
The proposal suggests increasing the quota in areas with greater demand among foreigners than Thai buyers, particularly in major tourist destinations such as Phuket and Pattaya, in the Eastern Economic Corridor, and in certain parts of Bangkok.
To prevent foreign buyers from manipulating the ability to adjust regulations enforced through the juristic person, the association proposed limiting the voting rights for foreign nationals related to the management of the juristic person to no more than 49%.
Foreign buyers not included in this requirement would be required to forfeit their voting rights.
This proposal may help address the problem of daily condo rentals owned by foreign nationals to some extent, according to the association.
However, people who rent out daily condo units are likely to find other methods to continue with the practice, acknowledged the association.
Ultimately buyers who plan to live in a condo need to check which projects have a foreign quota exceeding 49% -- should the proposal be approved -- or identify projects that have made bulk sales to foreign nationals, noted the association.
This practice should help condo buyers enjoy a more stable and comfortable living environment, minimising the potential impact of daily condo rentals.
