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Making room for Airbnb

      In Thailand and around the world, accommodating the disrupter of accommodation is proving to be a major challenge.

      The Phuket Provincial Land Office sent a notice to all 234 registered condominium projects in the province, totaling more than 26,000 units. It said that daily renting by condominium owners was a violation of the Hotel Act of 2004, and also caused a public nuisance, affecting tourist safety and possibly leading to loss of life and property. The penalty for such a criminal offence is up to one year in jail or a fine of 20,000 baht.

      The Hotel Act requires properties offering commercial accommodation on a less than monthly basis to have a hotel licence. However, the 2008 ministerial regulation that governs hotel operations specifically excludes properties for temporary accommodation from being considered hotels if: they have four rooms or less; they can accommodate no more than 20 people at once; they create additional income for owners; they promote tourism or local culture and; the authorities have been notified.  This exemption is designed to excuse guesthouses and homestays from the requirements of the Hotel Act, and can be viewed as generally supportive of Airbnb-style short-term rentals.

       The official attempt to close down the Phuket short-term rental market indicates a different school of thought. As the Phuket controversy focused on the daily renting of condominium properties, the assumption was that such rentals constituted a breach of the Hotel Act. It is certainly true that very few condominium buildings have hotel licences. However, the fact that there are few with licences indicates that hotel licensing is not impossible for a condominium. Applying for a licence retrospectively once a condominium is up and running is extremely hard because it would require the co-owners to agree on a change of use and then for significant modifications to the building, which may not be physically or economically feasible. According to a recent study by BHMAsia, the main areas where condominiums tend to fall short as hotels are in the provision of car parking and lifts. However, if the use and building requirements are built in from the start, condominiums could in theory obtain hotel licences.

       But even if a condominium doesn't have a hotel licence, is it possible for a co-owner to rent out his or her unit on a short-term basis providing it has no more than four rooms? Many would argue (as Phuket authorities appear to think) that the answer is no, on the basis that the entire building has more than four rooms. Again, if that is the case, it is not clear where liability would lie: is it with the co-owner or the juristic person -- or even the management committee?  Alternatively, can an individual condominium with no more than four rooms be said to be exempt from the licensing requirement altogether? In that case, would an owner with multiple units totaling more than four rooms in the same condominium lose eligibility for the exemption?

       Clarity is also lacking on the rights and duties of housing estate and condominium committees in regard to co-owners who rent out their properties on a short-term basis. Some co-owners unhappy with the constant traffic of short-stay tourists have threatened to sue their management committees. But what powers does the management committee have to stop the practice, other than issuing rules and writing letters of complaint? If proof of short-term rental activity could be obtained (which in itself is a challenge), can access for guests be denied or fines imposed?

       Despite these legal uncertainties, the Phuket authorities' claims do have some merit. To qualify for the Hotel Act waiver, landlords would need to have registered with the authorities and, presumably, show evidence of paying household tax on the rental income. It is safe to assume that not many have done this. Furthermore, foreign landlords may also need to show official permits allowing them to undertake such activity, which would be extremely hard to come by.

       Governments around the world have devised a wide range of responses to control Airbnb. They range from generally supportive measures that aim to bring Airbnb into the regulatory and taxation system, to measures whose rationale appears to be the total eradication of Airbnb from the market. Most authorities sit somewhere in the middle, but with a bias to offering some protection to market incumbents. Most places already have laws that require owners or operators of commercial accommodation to be licensed. Often, this requirement is waived for long-term rentals, which may be defined as at least one month as in Thailand or can be as high as six months, as in Paris and Miami. This waiver provides space for the private rented sector while protecting hotels.

Projects from this area

Oasis Samui, Koh Samui, Thailand

Oasis Samui is a private estate of luxury pool villas, located in the lush tropical surroundings of coconut palms with views over the turquoise blue seas of Lamai Koh Samui has evolved from a magnet for adventurers and backpackers to one of the top boutique island destinations in Asia. Many consider it an ideal time to invest in a vacation property and here are several considerations for investors:

• First direct flights to China schedule for August 2016;

• New “City Status” means more funds for local government and increased spending on infrastructure;

• Higher rental yields and longer rental season;

• Increasing demand and limited supply of high-end villas;

• High density of branded luxury hotels, with Sofitel and Ritz Carlton under construction;

• Ranked 3rd by the New York times “41 Places to Go in2011”.

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Anamaya Samui, Koh Samui, Thailand

A beautiful tropical island sheltered in the crystal clear waters of the Gulf of Thailand with secluded coves and white sandy beaches fringed with palm trees - beaches that holidaymakers dream about. Inland the island boasts lush green rolling hillsides and coconut groves, picturesque waterfalls and magnificent ocean views.

Anamaya is set on the north east peninsula of Samui island, with unequaled panoramic 270° views over the headland, the nearby island of Koh Phangan and the turquoise blue waters of the Gulf of Thailand. Rising to the peak of two hillsides facing both east and west, Anamaya is distinguished by its naturally beautiful setting, striking architecture and dramatic ocean views. Ancient banyan trees, giant boulders and remnant coastal rain forest give the site its special character.

A wide range of villa designs have been created to take full advantage of this exceptional setting, all sharing a contemporary, organic style and approach to tropical living. All villas have between three and seven guest bedrooms and offer expansive living and entertaining areas; generous ceilings give a sense of space and maximize the views while the interiors flow seamlessly to the terraces and infinity pool.

Smart technologies are built into each villa allowing energy efficient control over all aspects of water treatment, ventilation and cooling.

Anamya also features an exclusive private clubhouse, wedding piazza, sports centre, spa and children’s playground, which together with the estate’s five-star management will rival the best hotels - allowing owners and guests to enjoy a luxurious island lifestyle.

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