Airbnb Thailand – NOT The Best Way To Rent Out Your Property In Thailand
About six months ago I was speaking to someone who was thinking about buying a condominium in Pattaya, with the sole intention of renting it out on Airbnb Thailand.
We spoke at length about buying to rent in Thailand, specifically Pattaya. We discussed the usual topics such as location, price and what kind of return you can make on your money but what really stuck in mind after our conversation was the way he’d nonchalantly told me;
“I’ll just list it on Airbnb. You can make twice as much as on there rather than renting on long term contracts.”
I told him what I thought about that and decided I should write a post about it soon enough. I was reminded to do so today when a friend of mine sent me pictures showing just how serious residential condominiums in Bangkok are getting about people renting out their units on short term lets, and that it is in fact against the law. This might actually be ‘questionable’ but we’ll cover that in greater detail below.
As we know, what starts in Bangkok usually filters it’s way into other areas in due course. So be prepared if you are planning on buying a property to rent on Airbnb thinking that being able to offer daily and weekly rates is a means to increasing your rental income from it.
Before I go on I’d like preface what I am about to say with somewhat of a disclaimer;
I am well aware that there could be some loophole or grey area workaround to the imposed rules governing short term lets that landlords may well be using to get around them.
However, in the spirit of this website’s goal of trying to offer relevant news, advice and information on all things property related in Thailand, I’d like to keep things within the law.
More importantly as we are focusing on foreign property investment in Thailand, giving out questionable advice and tactics that could potentially get people in trouble, is not on the agenda.
Furthermore I have no issue with Airbnb or similar website platforms. People who already use them rent out their condos or houses on longer term contracts should carry on doing so if it’s working well for them.
My main point here, is that specifically buying a property with the sole intent of renting it out like a ‘hotel’ or thinking you’ll make more per month by offering daily rates may not be the best idea, both from the legal points we’ll get into and for a few other factors people often overlook.
Lastly, if you are unsure about anything that could possibly get you into legal troubles, always consult an independent local lawyer.
So before we get to it, take a look at first of those pictures I mentioned.
Firstly if you already own a property in Thailand and are using it out via Airbnb then I am sure, or at least hope you are aware of the restrictions in place. If not, I hope this will give you a better idea of what you can and can’t do when using Airbnb Thailand, to find a tenant for your property.
Airbnb have grown at an exponential rate since 2008. Their dominance has taken root and grown rapidly across the world. However the Thai authorities have taken issue with people renting out their properties for daily and weekly terms.
So What’s the problem with using Airbnb Thailand?
Well, by doing this as a landlord you may be unwittingly contravening a hotel licensing law know as The Hotel Act of 2004, furthermore, also avoiding paying taxes that licensed hotels are required to do so. Simply put, to offer short term rentals (short term being under 30 days) you must hold a valid hoteliers license and of course report and pay all eligible taxes on any income made from it. The penalty for violation of the hotel act, which is a criminal offence, is up to one year in jail or a THB 20,000 fine.
Due to the rise and dominance of websites like Airbnb several groups, most notably, the THA (Thailand Hotels Association) pushed for stricter regulation of said law. Condominiums are now coming under increased pressure from the authorities to ensure that owners are obeying the laws in this regard.
The knock on effect of this has also prompted Thailand’s Immigration Bureau to implement a stricter enforcement of another law which states that landlords need to register any foreign national staying in a property, to the nearest immigration office. Failure to even do this is an offence and carries fines for violation of it.
Illustrated quite graphically in this next picture taken at Trendy Condominium Bangkok:
However, as I hinted to above, this may not strictly be the case. A Ministerial Regulation of 2008, that governs the Hotel Act, actually excludes certain properties from requiring the license if they meet any of the following criteria;
1. Have less than four room
2. Can accommodate no more than 20 people
3. They create additional income
4. They promote tourism and local culture
5. The authorities have been notified
So looking at these caveats to the law. One & two make it seem like you should be ok right? Unless you owned over four condominiums in one building perhaps?
Well no, not quite. A recent ‘crackdown’ in Phuket saw authorities send out a notice to 234 registred condominiums totaling some 26,000 units, stating that daily renting by condominium owners was in violation of the Hotel Act 2004.
Even in light of the exclusions mentioned above the Phuket authorities concluded that because a the condominium’s had more than four rooms ‘total’, anyone renting out their units on daily and weekly rates would be in violation of the act.
Now as the wording of the law is a little ambiguous and as yet has not been redrafted to include peer-to-peer rental platforms like Airbnb, you very well may have a legal case to take before the courts but would you really want to?
So we seem to be at an impasse before we even address points three – five in the Ministerial Regulation. However, It is true that renting your room would bring in additional income. Presumably by renting out your room you are accommodating a traveler or tourist into the local area, which in turn helps local businesses.
Number Five – Notification of visitors staying in your condo or house.
No big deal I guess but depending on who is managing your room will mean more admin, especially if you have lots of daily guests. This leads me onto some of the other things that people often overlook when buying to rent in Thailand either on Airbnb or by any other means.
Other Things to Consider Before Renting Out Property on Airbnb Thailand
Even if the legal ramifications outlined above were not in place, I still think Airbnb and sites like it are not the best way to invest in property. Especially if your sole reason for buying a property is to rent it out for profit & income.
By offering shorter term lets on sites like Airbnb thailand, you obviously have a higher turnover rate of people staying in your property. Even if you’re lucky enough to get the most careful and respectful of renters your overall wear, tear and breakage rate will increase by a large margin, just by the nature of short term letting.
You will also have more admin fees, cleaning & laundry bills plus all the usual headaches that come with being a landlord but all the more frequently. Not exactly the passive income most people seek when it comes to property investing.
This is also ignoring the horror stories of renters trashing rooms, running up large bills or using the property for illegal activities, admittedly these are few and far between but as a property investor you only need it to happen once to wipe out a decent chunk of your perceived ROI.
Whether you want to use Airbnb Thailand to find tenants for your property is ultimately your decision. If you are already an owner of property in Thailand and have been using Airbnb then I’d like to hear your opinion and/or experiences with it.
If you are currently considering a first time property purchase as an investment then i’d considering some other options for making the most on your money rather than relying on Airbnb or other sites that facilitate daily-weekly rentals.
Here is another article briefly explaining the hidden costs when working out your ROI when investing in property in Thailand.