stevieff

This is what one of Bangkok's best known law firms has been telling clients who have purchased land through a company specifically set up to allow a foreigner to do so:

Comments from Dragonman / Nadia2 are welcome. . .

The Thai government did recently change the laws on acquiring land with a

foreign company. Fortunately you were able to purchase and register the land

before this came about. The main problem people have now is forming a

company and trying to register the land. The land department wont do it.

There has been no indication that existing companies holding land will have

problems. Actually, as it stands now, your property purchase has appreciated

substantially as you can sell your land to another farang by simply

selling the shares in the company.

Your company has not actually done anything “illegal” by purchasing the

land. We simply slipped through an open loophole. You can still register

land with a company of your type, the only difference is now you must show

proof that the Thai shareholders have the ability to pay for their shares.

Its easy for them to implement “from now on”, but it would be impossible for

them to go back and investigate the shareholders in every land purchase.

What’s the worst case scenario? They could investigate your company and find

you in violation of land registration laws. In this case you would have 1

year to sell the property.

The guy's talking out of both sides of his mouth. On one point, he says you've done nothing illegal. On another point, he says you've done something illegal and it's possibe the Land Office can force you to sell the property. So which is it? The second one, of course. He says it's impossible to investigate all the shareholders in every land purchase. Not really impossible at all. Most attorneys use the same set of thai nominees in every land purchase. Any investigator could go to an attorney's office, ask for the papers on various companies, and quickly ascertain that there were the same nominees in every land purchase. A no-brainer. I'm really tired of these Thai attorneys defending this practice, because their interests are not what's best for the client, it's what's best for them. Their interest lies in doing a perpetual administrative, legal, and accounting service for the company. Screw them, I'm tired of their hack practices and I'm shutting my company down.

I just transferred land from my company to my wife, I figure it's not worth the sleepless nights worrying about the knock on the door.

I registered a Sitthigapgintalordsheevit as the same time. For those unfamiliar with that, it's like a lifetime (some say 30 year) lease but does not require any tax be paid.

I certainly do trust my wife more that I trust my lawyer/the government and if things go tits up with the marriage, I have control of the land until I die.

Mods, the multiple treads on this subject are annoying, maybe fold them into one and close the others?

Hi Steve,

I assume that you transferred the land from your company to your wife as a person - i.e no company involved on your wife's side. Stupid question, but just want to be clear on this.

One of the earlier posts stated that the land office would not transfer land with 49% farang shareholder, either IN or OUT. In other words he said that you couldn't even transfer (or sell?) the land to a Thai if the company still had a farang on the books as the 49% shareholder.

Has your transfer been completed? Was there any problem with transferring the land out of your company in which you were a shareholder?

Thanks

i transfered it to my wife the human, not a company.

interesting, i forgot to mension this in the original post, when we went in to the amphur with the NS3, the land officer mistakenly thought she was selling it to me. he gave her a photocopies piece of paper, presumably from head office which said they are not allowed to register land in company names until all the shareholders have been review by the revenue department to verify they are real investors (or something like that, my wife isn't a lawyer but she's very smart).

anyhow, she explained it was from my company to her and he signed off on everything in 10 mins.

steve

Thanks Steve, at least we know that thger appears to be no problem in transferring land owned by a company with afarang shareholder.

One of my options is to simply transfer my shares to my wife, and not involve the land office, but it would seem that your way would be better -once its in the wife's name , there shouldn't be any further worries.

Think I'll just sit tight for a bit longer and see which way the wind blows.

At the risk of being a bore, I am interested in this business of farangs transferring their shares to other farangs when selling their houses, and effectively circumventing the new crackdown. I know it may only affect a small number of people, but it could be a way out for farangs who wish to sell their house and still retain a reasonable value, if they were able to sell to another farang via this route.

Do any of our "experts" out there have any views on this? Will it stand up to scrutiny? Will the companies registry office (or whatever it is called) raise any queries when the share transfers are lodged with the appropriate authorities?

Still doesn't circumvent he possibility of the Land Office investigating the thai nominees of the company. It could also lead to further problems in the future, as now farangs are avoiding transfer taxes, etc. on land by simply transferring shares. If the company route is to survive, they will have to have wealthy thai nominees who can withstand the scrutiny of the Land Office. Just my 2 cents. This is just my opinion, but I think, until a more air-tight company structure is provided, land values will fall in Thailand, at least in the tourist areas. In the non-tourist areas, not really, because the market is not driven by farang capital.

Stevieff

It was me who thought

"Someone mentioned on this site that that foreign-owned hotels and resorts would be exempt, because they're engaging in trade"

and as I have no experience in this area it was a view taking from reading this and other boards so am willing to stand corrected.

However sunbelt Asia has said other lanholdings are going through such as a purchase of an office building as the main business is not the land ownership.

Would this then not be the case with a hotel or resort?

I hope this can be clarified.

I suppose it depends how you read the law. In a strick interpetation of the Land Code, I would think yes. But there are other commerce laws that may conflict with that. I have a friend in Chaweng Beach that has a bungalow operation, with 3 rai, acquired thru a company, with phony thai nominees, runs it profitably, pays taxes, etc. Could the government investigate and say it's just a front to own land? Possibly. I only mentioned this as something that might be possible. I mean certainly if he were to sell, he would have to transfer the land, yes?

Perhaps we see things differently. I, too, hold land thru a company, but unlike you, I do care about my wife's financial future after I die, and so I am concerned about property values.

Hey there - of course I care about my wife's financial future. I dao have a lot of other assets that will be going her way after I die, which will be substantially more than any house I happen to leave her in Thailand. Whatever happens she and her family will be extremely well off for the rest of their lives - I'm simply not relying on some dodgy house ownership in Thailand to provide for that security - that's why I'm not having sleepless nights about it, and not too bothered about the value going up or down. OK?

Not exactly how you presented yourself in your original comment. This is a thread to discuss what is happening with regards to the new directive from the Land Office. If you're not interested in the financial impact of this upon your family, perhaps you might be better off commenting in the photography or bird-watching forums.

Look here - don't turn this into a f..cking pissing contest.

I have made many posts on what is now a combined thread, discussing the serious aspects of being deprived of the ownership of my property. I have already stated that the financial future of my Thai family is well taken care of and is not an issue - therefor it is of little interest to me if the short to medium term value of my house drops. I have, God willing, at least another 20 years on this earth, and by that time I can only imagine the house will be worth a reasonable amount. If not - it's simply not a big deal. Ok? Got it??

In any case, I wasn't aware that the sole purpose of this thread was to discuss the financial impact on families.

I would never have bought property here as a "nest egg" for my family, as I was aware of the risks and knew there was a chance I might lose it. I only invest in Thailand what I can afford to lose, as many have already advised - on this thread! How about you?

But that doesn't stop me discussing the current situation, and whether or not I can retain my current ownership.

Maybe you had better apply for a postion as a moderator as you seem keen on telling people which threads they should post on.?

Back to the subject in hand..

I have just been told through the "grapevine" that certain developers are planning to circumvent the new crackdown by simply transferring their shareholding in their companies rather than transferring the land to a new company.

Apparently, one particular developer has separate companies for each house he has built and he says he will transfer the 49% shareholding to the buyers when he sells the houses. No need to go to the land office, just transfer the shares in the existing companies, and thus solve the problem.

Seems too easy to be true

Any comments?

I wish to apologize for my earlier comments. You seem like a pretty good guy. I suppose I was angry at the government for this decision and writing things out of frustration. That does not excuse my behaviour, however. I doubt I'll ever meet you in person, but if I do, I'll buy the first round. As to the government, my anger is this. For years, they have let these companies exist, and then only after billions of foreign capital has flowed in, do they start to enforce the law. It's the ultimate bait and switch. People here say "well, its the law", well, it was the law many years ago as well. No one can honestly tell me the government is just now discovering this. If people here want to talk about the law, let's talk about the millions of dollars worth of pirated DVD's and software sold on the streets of Thailand everyday, most of which originates from my country, the USA. That's against the law as well. I don't see the great Thai government doing much about. So much for the sanctity of their "laws".

Perhaps we see things differently. I, too, hold land thru a company, but unlike you, I do care about my wife's financial future after I die, and so I am concerned about property values.

Hey there - of course I care about my wife's financial future. I dao have a lot of other assets that will be going her way after I die, which will be substantially more than any house I happen to leave her in Thailand. Whatever happens she and her family will be extremely well off for the rest of their lives - I'm simply not relying on some dodgy house ownership in Thailand to provide for that security - that's why I'm not having sleepless nights about it, and not too bothered about the value going up or down. OK?

Not exactly how you presented yourself in your original comment. This is a thread to discuss what is happening with regards to the new directive from the Land Office. If you're not interested in the financial impact of this upon your family, perhaps you might be better off commenting in the photography or bird-watching forums.

If it clears out the speculators I am all for it. Anyone who tries to circumvent the law should be punished.

That includes any foreigner who uses the company loophole 'to circumvent' the clearly stated Thai governments position (law) on foreigners owning land, and acquire control of land for their benefit whether defined as a speculator or not.

In fact it is part of the western phsyche to expect an increase in the value of property they purchase and so every one of them is a speculator , if they did not expect an increase in the value of their property it would clearly be an uneconomic proposition to invest in it. (With possible exception of smallholdings in the middle of nowhere).

Not strictly true. I really don't care if the value of my house drops through the floor. I plan to stay

there till I die, and then leave it to my wife. Presumably, by the time I die it will hold some value for her to use beneficaially, but it's not a big deal. In any case, most of the value in my house is in the building and fittings - not the land, so presumably when the market stabilises, the value of wh

at I've built would be taken into consideration in the overall value of the property. But, as I said, its academic - unless these land office people throw me out, I'll be there for the duration, and I'm

really not bothered what the house is worth, now or in the future.

Perhaps we see things differently. I, too, hold land thru a company, but unlike you, I do care about my wife's financial future after I die, and so I am concerned about property values.

I think us "land owners" should all stop panicking, and just wait for the dust to settle. I would transfer my 49 % holding to my wife tomorrow if i was sure that would solve the problem. But ,as yet, nothing is clear, so I think the best policy is to sit tight for a while and see which way the wind blows.

Going back to the initial quote by George, I get the feeling the authorities are trying to stop the trend where company's, that are falang controled, are buying large plots of land then sub-dividing them, re-registering the plot's with the land office then selling on the individual plots at a greater profit.

I don't think they are so much targeting 'Pattaya Pete' who is living with or married to 'Nakon Nok' and just trying to keep his property should things got tit's up.

None of the government spokespeople were specific in who they were targeting. Any farang holding land thru a company where the thai nominees can't prove their source of capital is vulnerable, no matter how small or large the land holding. Could be a 4 million baht house or a 200 million baht resort, doesn't matter. Someone mentioned on this site that that foreign-owned hotels and resorts would be exempt, because they're engaging in trade. They are not exempt, because they own land and that is illegal, period, unless somehow or another they can prove the thai nominees source of capital. Many businesses, homes, etc, are at risk here, not just land speculators. Also, if this law is enforced, people who have land and house leasehold can expect to see their property values drop as well.

i wonder if the next step is to target business ie a business made up of falung & made up share holders so falung can own 100% business...?????????????

Eh exactly my thought. Why not?

I have quite a bit of friends who wouldn't be too happy if that happens

Read the previous comment and I'll think you'll see that any business, land, or house ownership is vulnerable, as long as they have used thai nominees with no capital. Doesn't mean they will investigate, but they.

Thailand is actually no different from many countries in the respect that it has laws that good lawyers make ways of getting round them to the benefit of the economy...its called business and any clever business person would be nowhere if he had not practiced that himself/herself.

There is no loophole or way around the foreign ownership laws, your lawyer/ foreign legal consultant knows this and believe me they (as most of the real estate agents) are not that stupid to own property via the company route… Yep, it is called business, though a dirty business, making a profit at the expense of misinformed foreigners who pay the price.

It is waiting for the Commercial Registration department to step in and making it difficult to keep your company in the first place..…

I do not agree that these landholding companies help the economy, as they hardly pay any taxes. It’s back to leasehold, the property market will cool down, nothing wrong with that, and foreigners wishing to own a house will build again on leasehold land.

I believe you're mistaken about that. The market will not simple cool down, it will depress. When thousands upon thousands of people lose value, market perception will then be to dump. It's the same in stocks, real estate, whatever. As far as your point about landholding companies not helping local economies, you're simply mistaken, a farang that owns a 60 million baht villa in Phuket thru a company probably drops about 2 million baht annually into the local economy. Why would he stay in Thailand, when he can go to Costa Rica or someplace that actually allows freehold property?

Stevieff might have a point about the high end developments but resorts and hotels would not be affected as they are operating properly as a business and not just to own a single house which is what the law is about really.

As for the high end developments I once saw the ownership structure of one and with the Thai entity and offshore entity they owned more than 1 property and anyone buying a 1 million + USD house will more thn likely have had his lawyers lok into this and not Somchai the local lawyer or ken the ex-roofer now estate agent in Pattaya

I agree with you to an extent, but what is the difference, say, between a company owning a small freehold hotel renting out rooms for a profit, paying taxes,etc and a company owning a rental house making a profit, paying taxes, etc.? Nothing really, as both are engaged in trade,both make a profit and both pay taxes. The size of the business is irrelevant. The fact is, all of these companies own land, and according to many commenters here, that is illegal, regardless of the business enterprise, for which I will not argue with, because it is a circumvention of the law. All I'm saying is it will be a black day for the Thai economy if this law is enforced. I saw a poll on this website that said 23 percent of all land transsaction were performed thru companies. I spoke with 3 prominent real estate agencies in Samui this morning and all 3 said over 85 percent of their transsactions in the last 2 years were done thru companies. I'm talking thousands of transsactions here. Think about it.

My wife (thai) and I own land in Samui through a company. Not sure what we are going to do. I think we may try to transfer my shares to her brother and then sell the land to her mother, who can then lease back to us. Anyone's thoughts on that? On another note, I think this decision will have a profound effect on the real estate market. There are a number of potential farang buyers who simply will not go the lease route. Think of all the thai's in the construction industry who will be hurt by this, as well as real estate agents, building suppliers, etc. and also the lost local income from future farang homeowners. And what about property values? It's a proven fact that freehold property is worth more than leasehold property, at least on Samui. That's why the company vehicle was created in the first place. Anyway, I'll be consulting with my attorney this morning to find the best avenue.

Let us know how you get on. I will not be too bothered provided I can transfer my shareholding to a Thai - preferably with a 30 year lease back, but even without it I won't be too bothered.

The big worry is if they start declaring all houses purchased through farang controlled companies as illegal. What will happen then?

Doesn't seem too likely though - that will depress the market even further and create chaos. But who knows?

I think this government decision will create chaos anyway. Think of all the high-end villas in Phuket, Samui, and other places, not to mention resorts, hotels, etc. purchased thru companies now rendered useless, or at least essentially, since they are not re-saleable. Economically, it's an asinine decision by the government. Foreign capital is what drives Thailand, otherwise it would just be Cambodia or Myanmar. One things for sure, there will probably be a cottage-industry of thai nominees to take-over companies and lease back.

My wife (thai) and I own land in Samui through a company. Not sure what we are going to do. I think we may try to transfer my shares to her brother and then sell the land to her mother, who can then lease back to us. Anyone's thoughts on that? On another note, I think this decision will have a profound effect on the real estate market. There are a number of potential farang buyers who simply will not go the lease route. Think of all the thai's in the construction industry who will be hurt by this, as well as real estate agents, building suppliers, etc. and also the lost local income from future farang homeowners. And what about property values? It's a proven fact that freehold property is worth more than leasehold property, at least on Samui. That's why the company vehicle was created in the first place. Anyway, I'll be consulting with my attorney this morning to find the best avenue.

Excuse me, I meant Highdiver.

I've just checked on Phuket real estate websites and it appears that the 80 meter height regulation is being enforced there. I think Highlander is correct in all of this.

Longview in Chaweng is good, too. Good beach there, about 1200 baht for a good bungalow, turn left before Tropical Murphy's. I like Samui Mermaid in Bangrak, too, nice room for 900 baht, seaview, swimming pool and direct beach front.

Hi,

Anyone know a good cvil engineering firm on the island? I want to terrace and berm some land going up a hill. Thanks

Does anyone know about a samui attorney named Manit Tajew, used to have a firm called Manit and associates? Good or bad reputation?

Thanks, Dragonman. I think the hard and fast rule of Thailand should be "The more you know, the more you will be confused".

Thanks for the response. I'll be a little broader. Is she responsible for any tax on any profit she has owned and lived in for a period of more than one year?

Hi,

My thai wife is selling our house which we have lived in for more than one year. The house and land are in her name. We should see a small profit. My question is, is she liable to pay capital gains on the profit even though we have lived in the house for more than one year?

Thank you, rooo.

Hello everyone, I am new to the forum, my first post. I am an American, 53 years old, married to a lovely thai woman (at least lovely to me), and have been going to Samui two times a year since 1999. We own some property in the Choengmon area, so we have something of a vested interest in Samui. My question is: Is there a bar or place where American residents (no tourists) hang-out on a regular basis? Something laid-back, no girlie or techno bars. I am, of course, interested in meeting people from all nationalities, but always there is a special kinship with people from your own country. Anybody know? Thanks