Legal Issues when Renting in Phuket

The largest island of Thailand attracts many foreigners because of its lush geography and world-class beaches. It's known for its hospitable locals, rich culture, and lively festivals.

Most international tourists opt to stay and rent because owning land isn't generally allowed. Under present laws, a residential lease may have a range of 30-50 years for commercial purposes. However, when planning to lease in Phuket, you should be mindful of some legal issues:

• Key money

This is like a premium, an additional payment on top of the rent as gratuity. The lower the price is, the higher the key money is and vice versa. Ask the landlord first if the price already includes this because most buyers readily agree to purchase a property when they're told of a cheap amount. But in truth, this still excludes the key money. In Thai law, there is no definite calculation for this; the landowners can simply demand it as part of the overall transaction. They are taxed just below market value; however, they can justify what they're asking by referring to the location of their property and assuring that it's a good area for business or personal use. Thus make sure to ask if the advance payment will be again given during the renewal of terms so that you won't expect to get any reimbursement. Request a receipt to document your deal. However, you should understand that they are not by law given the right to demand such amounts and can be contractually agreed by both parties.

• Registration of Lease

Every long term transaction (longer than 3 years) needs to be documented with the land department in order to be enforceable in the event that a third party is involved during transfer. Also, you should be aware that once you sign that contract, there is no guarantee that there will be a renewal; the owner reserves the right to refuse to register a new agreement even if it's just an extension.

Remember, a long term rental is subject to advance payments and should be checked for just termination conditions, unrestricted assignment, transfer rights for the lessee, protected rights of renewals, and inheritance privileges and circumstances.