Phuket condo owners warned ‘holiday rentals’ less than 30 days risks ﬁnes, jail time
02 July 2016
The notice, issued to all 234 registered condo projects in Phuket –
hence affecting all 26,071 legally registered condo units on the island
– was signed and issued by by Phuket Land Office Acting Chief Wisith
Chokchai on June 9.
The notice read:
To managers/developers of condominiums,
“Today, there is a lot of news about condominium developers/owners
renting out rooms or buildings that they have ownership of to
foreigners or tourists on a daily basis (daily rental) rate that
generate income as if they were a hotel (under the Hotel Act 2004).
“This type of operation is causes a public nuisance for renters in the
same complex and creates unsafe places for tourists, which may lead to
loss of life and property. It is inacceptable to operate an illegal
hotel. The penalty for this is up to one year in jail or a fine of up
to B20,000, or both.”
Mr Wisith told The Phuket News this week, “We want to let developers
and owners know that renting out condos on a daily basis is against the
Hotel Act and that they must operate their condos in accordance with
how their properties are registered in order to avoid legal action.
“This issue may not be easy to tackle because sometimes it is not the
developer that provides daily rentals, but the individual condo owners.
Regardless, it is for the condo managers and developers to remind
owners about this law and tell them that if officials find out (about
illegal renting of condos) the owners will face legal action,” he said.
The public warning follows Phuket Vice Governor Chokdee Amornwat on
June 3 dispatching the Phuket Land Office a specific order to combat
the problem of illegal condo rentals, Mr Wisith explained.
“We were ordered to enforce regulations regarding condominiums across
Phuket – owned or operated by Thais and foreigners – and not allow any
rentals on a daily basis because it is against the Hotel Act 2004,” he
“The order came from Ministry of Interior and the Phuket Provincial
Office in an effort to tackle illegal hotels (sic) on the island,” he
In a report sent to the provincial office, Mr Wisith explained, “The
Land Office is in charge of condo registration. Every condo built in
Phuket must be registered as such with the Land Office.
“There are more than 200 condo units in the Phuket Town area that are
registered with us which we have sent the notice out to. The Land
Office in Thalang has also sent out notices to all the condo units
registered their area,” he wrote.
“All developers and the management operators of condominium projects in
Phuket Town in Kathu have been warned that renting out rooms on daily
basis is considered operating as a hotel.”
Mr Wisith explained to The Phuket News that the problem lies in that if
a property is registered with the Land Department as a condo, then it
cannot be registered as a hotel.
“And a condo must be operated as a condo, which can be rented out for
periods of 30 days or longer – but cannot be rented out on a daily
basis,” he said.
Dr Kritsada Tonsakul, who heads the Phuket-based Southern Thailand
chapter of the Thai Hotels Association, this week voiced his support
for the crackdown.
“These places that rent out on a daily basis without a hotel
registration are operating illegally and it is great that officials are
starting tackling them now,” he told The Phuket News on Wednesday (June
“If we strictly enforce the Hotel Act and rid the island of all illegal
hotel rooms, it will benefit not only the legal hotel businesses, but
also greatly benefit Thailand’s, and Phuket’s, tourism industry as
In December, Dr Kritsada led a delegation of tourism and hospitality
leaders in filing a petition calling for the government to take action
against an estimated 92,000 illegal hotel rooms in Phuket.
“At least 70 per cent of hotel rooms offered in Phuket are illegal. To
make them all legal can take time and some of them simply cannot be
registered as a hotel simply because structurally they are not hotels,
so they must operate according to their registration,” he said this
“If Phuket has only legal hotel rooms available to tourists, rental
prices will compete better, maybe even on par with international rates
as charged by hotels in other countries. Look at places like Singapore
or Bali, their rates and reservations for hotels are increasing because
their hotel rooms are legal – they don’t have to compete with illegal
hotel rooms rates.”
Bhuritt Maswongssa, Bhuritt Maswongssa, President of the Phuket chapter
of the Tourism Council of Thailand (TCT), strongly agreed, and even
warned that a tourist-accommodation price war could have a dire effect
on Phuket’s tourism industry on the whole.
“If officials who have the power to stop this from happening neglect
their duty and allow illegal hotels to exist, then there will be a
rental rates issue among the hotel businesses. Competition over rental
rates will create a domino effect. Hotels have to cut costs, and this
could easily result job losses, a fall in the quality of service and
trust in Phuket hotel standards. This would be a disaster for our
tourism industry,” he said.
“Phuket has 2,090 hotels offering about 120,000 rooms. Our supply
already exceeds demand, putting pressure on hotel prices. If this
continues, we are already heading for a disaster,” he added.
Phuket property guru Bill Barnett, Managing Director of hospitality
consultancy C9 Hotelworks, also condemned the practice of condos being
rented out at daily rates.
“The current situation of real estate developers offering guaranteed
returns in the absence of obtaining hotel licenses is a blatant abuse
of Thailand’s Hotel Act. Government scrutiny in this sector is urgently
needed as it undermines trading of legal hospitality operations and
goes further into the issues of tax and tourist safety.”
However, while noting that the key issue driving government
intervention is the current mandate to increase tax revenues, he added,
“That said, the Hotel Act needs to be updated to allow condominiums
that do wish to obtain hotel license and villa estates or properties a
clearer pathway,as there are a many who are willing to obtain the
Phuket Governor Chamroen Tipayapongtada, when announcing earlier this
year that “illegal hotels” would be coming under scrutiny, said, “There
are so many businesses that provide rooms and board in Phuket operating
illegally in contravention of the Hotel Act 2004.
“Businesses such as condominiums, apartments, flats, mansions,
guesthouses, homes for rent, rooms for rent, commercial buildings –
most of which have been altered or developed into accommodation and
rented on a daily basis – are considered a hotel business and hence as
“Illegal hotels are damaging legally registered hotel operators who
have their hotel license. We are also concerned how these affect
tourists’ safety, because we don’t have enough security to cover all
Gov Chamroen added, “We understand that some of these operators are
unaware that their business operation contravenes the Hotel Act and
they cannot register their business as hotels because they are not
“A hotel business involves many laws, so solving this issue is not
easy. The Ministry of Interior is working on this issue. I know the
ministry is considering a proposal to allow other types of building to
operate as hotel, which is now being considered by their policy
“While we are waiting for the ministry to decide on this, we have to
regulate hotel businesses in Phuket by allowing only the legal hotels
to operate, and places that did not have a permit to operate as a hotel
will have to wait until they are legally registered.
“People operating such illegal hotel businesses with the intention
avoiding registering their business will be punished according to the
law,” he said.
Phuket Law: Restrictions eased on short-term rentals
The Phuket News
20 November 2016
PHUKET: Earlier this year it came to light that most villa or
condominium unit owners who are renting out their property on a
short-term basis – that is, for periods of less than 30 days – are most
likely violating the Hotel Act (2004) if they do so without having
received a hotel license.
The potential punishment for such violation includes significant fines, or imprisonment, or both.
Historically however, obtaining a hotel license for most such owners
has been very difficult – if not impossible. A major reason for this is
that in order to obtain a hotel license the property must comply with
the requirements for certification for use of the property as a hotel
under the “BCA” – the Building Control Act (1979).
Tourism is one the most significant contributors to the Thai economy,
and many people are tempted to, and currently do, invest in properties
to take advantage of this lucrative market without a requisite hotel
This has created a tension between the need to enforce the law and the
desire to maintain a robust tourism industry and investment market. As
we have pointed out previously, one way to accommodate both of these
very legitimate and currently competing concerns would be to liberalise
restrictions that apply to a variety of such properties. Thus, we are
pleased to see that the current government has recently taken one such
On August 19, Thailand’s Ministry of Interior Ministerial Regulation
Prescribing Descriptions of Other Types of Building Used for a Hotel
Business Operation 2016 under the Building Control Act (1979) became
This Ministerial Regulation (“MR”) should make it easier for more property owners to obtain a hotel license.
The MR will remain in effect for five years.
However, it applies only to buildings that existed before it came into
force and whose owners desire to use the property as “Hotel” (as
defined by the Hotel Act) with either:
(a) rooms only; or
(b) rooms and food service/restaurant facilities.
The three categories of buildings that are eligible for this re-classification are as follows:
Coast Beach Club
||a building with not more than two floors and not more than 10 rooms;
||a building that is not a Type 1 building and which does not have more than 20 rooms; and
||a building that is not a Type 1 building and which does have more than 20 rooms.
The MR liberalizes the various Hotel usage-building requirements under
the BCA for these types of buildings. (For example, see table.)
An application to change the usage a building to a hotel under the BCA
must be completed within five years from the date the MR came into
However, if the building requires structural modification before
applying to change its usage to a hotel, that application – or
notification under Section 39(bis) of the BCA – must be filed within
It also should be noted that the building must still comply with other
BCA regulations regarding hotel usage in force at the time the building
was originally constructed (or altered), regarding such matters as the
building’s height, setback and parking.
In closing, it should be noted that the MR does not mean that all
owners who want to rent their properties on a short-term basis and
whose properties do or can comply with the MR will now be able to
legally do so.
There are other laws that need to be considered and which may restrict
such use – particularly with regard to condominiums, and all the more
so with regard to foreigners. Thus, caution and clarity are advisable
before taking steps to take advantage of the MR.
That said, the MR is a very welcome step in the right direction for the tourism and real estate investment markets in Thailand.
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