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Confusion as condo owners told they must have a work permit to rent out units

Just over a week after condo owners were told they face jail and hefty fines if they rent out their units for less than 30 days, one condominium in Phuket has taken the step of informing its condo owners they need a work permit if they want to rent out their units.

condo 1Following consultation with lawyers, juristic staff at the Phuket Palace Condominium in Patong claim the Ministry of Labour has confirmed that condo owners who rent out their units require a work permit. They say this is because money is exchanged for the rental of the unit. They also claim that the proper taxation must be paid to Patong municipality.

The notice reads: “the Ministry of Labour confirmed that the owner must have a work permit because there is money in exchange for rentals and proper taxation must be paid to Patong municipality too.”

We must stress that Thaivisa has been unable to verify the claims made in the notice which is dated June 29.

It comes at time when many foreign condo owners in Phuket and throughout Thailand are confused and concerned regarding the legality of them being able to rent out their condos for periods of 30 days or less.

On Saturday July 2nd, the Phuket News reported that Phuket’s Provincial Land Office issued a formal warning to condo owners, developers and managers that renting out their properties on a daily basis was in breach of Thailand’s Hotel Act and that they could be fined or even spend up to one year in jail.

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).

condo 2“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.”

The crackdown on condo owners renting out their properties was then confirmed by Phuket Vice Governor Chokdee Amornwat, the Phuket Gazette reported on Tuesday.

It is not only the authorities in Phuket which have issued warnings to property owners about renting out their condos illegally.

In May, local government officials raided residential villas and condos in Pranburi, south of Hua Hin, which were suspected of renting out rooms and operating without a hotel license.

According to local business operators, it was part of a crackdown on illegal hotel accommodation properties, reported Bill Barnett from C9 Hotelworks.

Thaivisa also understands that a similar warning about renting out rooms for less than 30 days and, as far as the authorities are concerned operating illegally as a hotel, have started to be issued to condo owners, developers and managers in Bangkok.

The move to get tough on people renting out condos follows complaints from hoteliers across Thailand who claim that many condo rooms are actually being used illegally as resorts and hotels.

Despite a record 30 million tourists visiting Thailand in 2015, occupancy rates in hotels across Thailand have been in decline for a number of years.

A report published in 2015 by hospitality consultants Horwath HTL in collaboration with the Thai Hotels Association revealed that hotel occupancy rates in Thailand had declined by 15 percent.

More recent data from C9 Hotelworks also revealed that hotel occupancy across Phuket continues to decline.

It is thought the emergence of sites such as airbnb, which enables people to rent out their properties as vacation homes could be pose a major threat to hotels not only in Thailand but globally.

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