Most disputes between an owner and a tenant in Phuket do not start with bad people; they start with a bad contract: a “standard” template from the internet, three pages in English, not a word about the deposit, repairs or early departure. Six months later the tenant leaves in the middle of high season, the air conditioner “broke by itself”, and the deposit turns out to be the only argument in the dispute. This guide is a practical walk through the rental contract for the owner who lets a condo or villa: what the law says, which clauses are essential, which fees and taxes attach to the document, where the traps hide, and when you do not need a lease at all because the unit runs through a management company. It complements our guide to long-term rent in Phuket and focuses on the legal side of the document.
Contents
- What a lease is and who it protects
- What the law says: the CCC, three years and 30 years
- Contract structure: the essential clauses
- Deposit, payments and rent indexation
- Term, renewal and early exit
- Subletting, daily lets and condo rules
- Stamp duty, registration and taxes
- Traps: where owners lose money
- Mini-case: two leases for one studio
- Lease or management company: conclusion and next step
1. What a lease is and who it protects
Under the Thai Civil and Commercial Code (CCC), a lease of property is a contract by which the lessor lets the lessee use property for a fixed period and the lessee pays rent (s. 537). For immovable property the law adds requirements on form and term, covered below. One thing to understand: Thai law has no residential-tenancy code with detailed tenant protection of the European kind. The framework is short, and everything else is what you wrote into the contract. The quality of the document therefore decides how much you earn and how much you lose.
A lease is needed in three situations:
- A long-term let of a condo or villa for 6–12 months to a private tenant — the most common scenario in Phuket, described in more detail in our tenant profile article.
- A let to a company or a corporate tenant, where payment goes through accounting and withholding tax at source applies.
- A lease of land or a building for a long term (leasehold), where it is not income but a form of tenure. Then the term is up to 30 years and registration and fees are on a different scale — see freehold vs leasehold.
For projects such as Layan Verde and Layan Green Park there is a fourth option: the unit works through a rental programme, and instead of a lease with a tenant the owner has a contract with the management company. We compare the two in the last section.
2. What the law says: the CCC, three years and 30 years
The core rules on leases sit in the CCC chapter on hire of property (ss. 537–571). Several provisions matter to a property owner. The code’s English text is available in public publications of Thai legislation, but the Thai version is the one with legal force.
| Provision | What it says | What it means for the owner |
|---|---|---|
| s. 538 | A lease of immovable property for more than three years must be in writing and registered with the competent official, otherwise it is enforceable for three years only | A one-year lease needs no registration; long deals do |
| s. 540 | A lease of immovable property cannot exceed 30 years; a longer term is reduced to 30 | A “90-year lease” is legally impossible as a single contract |
| s. 544 | The lessee may not transfer the lease or sublet without the lessor’s consent | Write the subletting ban out explicitly anyway |
| s. 569 | A transfer of ownership of the let property does not end the lease | If you sell the unit, the lease passes to the buyer |
The practical conclusion: a one-year lease can be signed without a notary and without the Land Department, and it is valid. But “valid” does not mean “safe”. The law does not set the deposit, the indexation procedure, repair rules or the penalty for early departure — you either write them yourself or you are left with general rules and a court. And a court in Thailand means months and the cost of a Thai lawyer, which for rent of $1,000 a month quickly eats the point of the dispute.
A word on language. If the tenant is a foreigner, the contract is almost always written in English. That is acceptable, but a Thai version will be needed for registration at the Land Department and for a court. It is better to draft a bilingual document straight away and state which version prevails if they differ.
3. Contract structure: the essential clauses
A sound long-term lease runs to 6–10 pages with annexes. Shorter is a sign of a template with missing clauses; longer is a sign of a Thai form copied without adaptation. Here is the content to check, clause by clause.
| Block | What must be written | What to check |
|---|---|---|
| Parties | Names, passports, addresses, contacts; for a company, registration data and signatory | Does the lessor’s name match the name on the unit’s documents |
| Property | Address, unit number, area, title, list of furniture and appliances | Is an inventory with photographs attached |
| Term | Start date, end date, renewal terms | No automatic renewal “by default” |
| Payment | Amount in baht, date, method, bank details | Is the currency and rate fixed |
| Deposit | Amount, grounds for deduction, return period | Is there a return period in days |
| Utilities | Who pays electricity, water, internet, CAM fee | How to charge by meter and at what mark-up |
| Repairs | Minor — tenant, major — lessor | Threshold in baht below which the tenant pays |
| Exit | Notice period, penalty, fate of the deposit | Does the clause work both ways |
| Prohibitions | Subletting, daily lets, pets, smoking | Do they match the building rules |
| Disputes | Governing law, language, venue | Is a Thai court or arbitration named |
Three clauses are forgotten most often, and each costs money. The first is the inventory and handover report: a list of furniture and appliances, meter readings and photographs on the move-in date settle the large majority of deposit disputes. The second is the allocation of minor repairs: without a threshold (“up to 3,000 THB at the tenant’s cost”) every light bulb becomes correspondence. The third is the local contact: who takes a request if you live in another country, and how fast they respond. If you manage remotely, see buying and managing property from a distance.
4. Deposit, payments and rent indexation
Thai law sets no deposit amount. Market practice in Phuket is one to two months’ rent as a deposit plus the first month in advance; for villas with a pool and for expensive units the deposit is often higher. You agree the amount with the tenant, but the deduction procedure must be written down.
| Deposit option | Pros | Cons |
|---|---|---|
| 1 month | Easier to find a tenant, faster move-in | Does not cover serious damage or unpaid utilities |
| 2 months | The usual market balance | Some tenants negotiate |
| 3 months or more | Protection for a villa, furniture, appliances | Deters some tenants; rate and term suffer |
| Deposit plus prepaid last month | Insurance against a “disappearance” at the end of the term | You must state separately which is which |
Rules worth writing out literally:
- What can be deducted from the deposit: unpaid rent and utilities, damage beyond normal wear, uncompleted cleaning if agreed.
- Return period: usually 14–30 days after move-out and signing of the handover report. “After inspection” with no deadline is a gap for disputes on both sides.
- The deposit is not set against the last month at the tenant’s initiative. One line closes this classic trick.
- Currency. Name the rent in baht. If you tie it to the dollar, state the rate and the date of conversion, otherwise USD/THB swings make a dispute inevitable.
- Late-payment penalty: a fixed sum or a percentage per day, of reasonable size so the clause does not look punitive.
Indexation is a separate question. A one-year lease usually does not need it: you fix the rate for 12 months. If the lease is renewed, write down the review rule: a fixed percentage, or a new rate agreed by the parties no later than 60 days before expiry. Without it a “silent renewal” leaves the rate unchanged and the chance of raising it without conflict close to zero. Which rates actually occur by area is in our overview of rent prices in Thailand.
5. Term, renewal and early exit
The most common market pairing in Phuket is 6 or 12 months. In high season (November–April) it pays to fix a higher rate for a longer term; in low season tenants negotiate and ask for flexibility. How seasonality affects occupancy and rates is explained in the article on seasons and occupancy.
Renewal. Best practice is a written addendum with a new end date and rate. A verbal “stay another year on the same terms” creates risk: six months later each side remembers its own version. If the lease is not renewed and the tenant stays, they effectively live on the terms of the old document with no clear term, and removing them without notice is harder than it looks.
Early exit. The contract should set symmetrical terms:
- tenant notice of 30–60 days;
- deposit forfeiture or a fixed penalty (for example, one month’s rent) for leaving before the end of the term;
- the lessor’s right to terminate for late payment after written notice with a reasonable period to cure.
A simple test applies here: if the contract does not make clear what happens when the tenant stops paying in month three, the contract is incomplete. The law gives the lessor a right to terminate for non-payment after a warning, but getting a tenant out without their agreement is not quick, and what most reliably resolves the matter is the deposit, not the court. So the size of the deposit is not an accounting detail but a risk tool.
A sale during the lease. Section 569 CCC means the buyer of the unit takes over the lease. If you plan a resale, a long lease at a fixed rate can reduce buyer interest, or conversely can prove the income. Write in a right of early termination on sale (with 60 days’ notice) if you want to keep flexibility.
6. Subletting, daily lets and condo rules
For a condo owner in Thailand the lease does not work alone but together with two other layers of rules: the Hotel Act and the internal rules of the building’s juristic person.
The Hotel Act. Short-term letting (under 30 days) falls under hotel regulation and in a condo requires a licence. This is covered in detail in our articles on the legality of Airbnb in Phuket and the hotel licence. The consequence for the contract is simple: the minimum term of your lease is 30 days or more, and it should be written out literally.
Building rules. The condo’s juristic person may set house rules: pet restrictions, quiet hours, use of the pool and lifts, guest registration. A tenant’s breach becomes a fine for the owner. Give the tenant the rules as an annex to the lease and write in the right to deduct the fine from the deposit.
Subletting. Section 544 CCC requires the lessor’s consent to a transfer of the lease, but in practice it is better to state the ban directly: “the tenant may not sublet the unit, list it on daily-rental platforms or pass keys to third parties”. This is exactly how owners lose control of a unit: the tenant lets the studio to tourists, neighbours complain, and the building fines the owner.
Tenant registration. Foreign nationals staying in Thailand are subject to a notification of their place of stay to the immigration authorities (form TM.30), which the owner or the person in charge of the residence must file. Check the current requirements and filing method with the Immigration Bureau before move-in, and in the lease oblige the tenant to provide passport details.
7. Stamp duty, registration and taxes
Three kinds of cost and tax attach to a lease: stamp duty, registration and income tax. All figures below are guides that must be checked on the signing date with the Revenue Department or a tax adviser.
| Charge | When it arises | Guide | Who usually pays |
|---|---|---|---|
| Stamp duty | On any lease | 1 baht per 1,000 baht of total rent for the term | The parties by agreement, often the lessor |
| Registration fee | Lease over 3 years | About 1% of total rent for the term (about 1.1% with stamp duty) | By agreement |
| Income tax on rent | Annually on the lessor’s income | Category 40(5), actual or standard deduction | The lessor |
| Withholding at source | If the tenant is a company | 5% of the payment | Withheld by the tenant |
For a one-year lease at 360,000 THB, stamp duty on this guide comes to around 360 THB — a trivial sum, but a missing stamp can become a problem if the contract is needed in court. In practice many private lessors skip the stamp and do not notice the risk until a dispute arises.
Income tax is a separate topic: income category, the standard 30% deduction or actual expenses, the 5% withholding, the return and deadlines. All of it is covered in our article on rental income tax in Thailand, and the general picture of rates for foreigners in the piece on income tax rates. If you are a tax resident of another country, add a check of the double tax treaty.
For the contract itself the tax conclusion is one: the rent in the contract must match the real payments. Understating the figure “for tax” creates a contradiction between the document and the bank statements, and statements are read by both the bank and the tax office.
This material is for information only and is not legal advice. Before signing a contract of significant value or term, consult a licensed Thai lawyer.
8. Traps: where owners lose money
- An unadapted template from the internet. A copy of a European contract cites rules that do not exist in Thailand and says nothing about what decides everything here: the deposit, the handover report, the building rules.
- No inventory or photos. Any deposit dispute becomes word against word. A dated, signed inventory is the cheapest document on the market.
- An expensive villa with no deposit. A pool, garden, furniture and appliances worth hundreds of thousands of baht call for a deposit of at least two months and an inspection once a quarter agreed in the contract.
- Verbal renewal. “Another year” without a letter is the cause of most rent disputes.
- Daily subletting by the tenant. Without an explicit ban the tenant lets the studio to tourists, and the owner receives the fines and complaints.
- Dollar rent with no conversion mechanism. Exchange-rate swings turn the arithmetic into an argument about which rate is fair.
- An unreturned deposit on sale. If you sell the unit, the deposit formally stays with you: hand it to the buyer by a signed note or return it to the tenant.
- Ignoring taxes. An undocumented let deprives you of the right to count expenses and creates a risk of penalties, as the rent tax section explains.
- An English-only contract. A court and the Land Department need Thai text; a mismatch of meaning is not resolved in your favour.
- Mixing roles. If you let a unit through a management company and to a tenant directly at the same time, you breach obligations under both contracts. Check the programme’s terms before posting an advertisement.
9. Mini-case: two leases for one studio
A hypothetical example for illustration, without real market figures. Two owners let identical studios in the same building for 12 months at 30,000 THB a month.
Owner A uses a three-page template: a one-month deposit, repairs not allocated, no inventory, verbal renewal. Eight months in, the tenant gets another offer and leaves 10 days before the end of the paid month. It turns out that the air-conditioner compressor is broken, and the inventory does not say whether it worked at move-in. The 30,000 THB deposit covers neither the repair nor the vacancy, and the owner writes it off entirely with no compensation.
Owner B spent a day on a proper document: a two-month deposit (60,000 THB), an inventory with photos at move-in, a 3,000 THB threshold for minor repairs on the tenant, 30 days’ notice of departure and a penalty of one month’s rent, a written ban on subletting, the building rules as an annex. Eight months in, the same scenario: the tenant leaves, a technician comes, the report is compared with the photographs — the dispute is closed in a day and the deposit is returned less the documented damage.
The difference between the owners is not luck but a few pages of text. And where vacancy cannot be avoided, it helps to have a scenario in which the unit does not depend on one tenant: that is the next section, together with the comparison of short-term and long-term rental.
10. Lease or management company: conclusion and next step
A lease is a tool for an owner ready to deal with a tenant: finding, vetting, renewing, settling disputes, paying tax on every payment. For some investors, especially those living abroad, that workload is the main cost of the yield. The alternative is the hotel model.
| Parameter | Long-term lease (your own contract) | Rental pool (contract with the management company) |
|---|---|---|
| Who finds guests | You | The management company |
| Vacancy between tenants | The owner’s risk | Spread inside the pool |
| Income split | 100% of rent less your costs | 60% of the pool’s net profit to the owner, 40% to the management company |
| Personal use | Unrestricted when there is no tenant | 30 days a year (May–October) |
| Paperwork | Lease, inventory, tax | Management contract, pool reports |
| Net yield guide | Depends on rent and vacancy | ~8–10% net a year (programme target, not a guarantee) |
Neither option is universally better. A long-term lease pays off with a high rent and a reliable tenant, especially in a villa where control matters. The pool suits those who want passivity and accept hotel rules: 30 days of personal use a year and 40% to the management company. To calculate for your budget, use the yield calculator: the entry points for projects by Layan beach are studios in Layan Verde $235,995 (handover 2028, instalments during construction) or resale studios in Layan Green Park $142,602 with full payment. If you need a rental for yourself while you search, compare areas first: Layan and Bang Tao differ noticeably in tenant mix and rates.
Owner’s final checklist before signing:
- Confirm you are entitled to let the unit: title, building rules, management programme permission.
- Draft a bilingual 6–12 month lease banning subletting and daily lets.
- Fix the deposit, its return period and the grounds for deduction.
- Attach an inventory with photos and meter readings.
- Set repairs with a baht threshold, notice of departure and a penalty.
- Pay stamp duty and account for tax on the rent.
- Keep scans of documents, the passport and the data for TM.30.
If you are choosing a unit specifically for letting, I will send a calculation for your budget: your own lease against the rental pool, the current price list by project, and partnership terms — a market commission, terms discussed at a meeting. Leave a request or learn more about the agency.
This material is for information only and is not legal or tax advice. Check rules and rates on the transaction date with a licensed Thai lawyer or tax adviser. Project prices are per the developer’s price list on the publication date.
