The Effect Of The New Company Rules On Real Estate

[Geppis72]

Thousands of Co. ltd I'm pretty sure.

I miss something in any case about the whole land / ownership story.

If we want address the basic "legal" options to normal average foreign investor

(not the ones who have Thai Wife or Thai GF) nowadays we have the following possibilities :

1) Leasehold

2) Condo

Leasehold = nobody (few) will invest under the current 30 years rules, investment

is investment only if it will give a Return of Investment (ROI). In this case

the house will be devaluated, less remain years = less money from the next buyers....very simple.

Condo = Mhummm thinking Condo in Samui (for example) ? NOOOO please !! you want protect

the environment and you can not allow to build condo which means big concrete monster

close to the beaches = Amazing Thailand....

Something must change because still thinking to Samui

(and law generally apply to all country)

looks that by law (area zoning) is not possible build higher then 6 Mt. (beach side)

(tks God otherwise we have a copy of Phuket) = no condo available

So let's say I want to INVEST (ROI) in Samui Property = no possibilities available legally =

no investments anymore.

All above let me think that new rules must be on their way.

Comments ?

[trajan]

Can't say everything is undisputable clear to me, but it's my understanding that the new amendment does nothing but redefine when a company counts as foreign and when it counts as Thai. Before it was Thai if more than 50% of the shares were on Thai hands. The one and only change given by the amendment is that now also more than 50% of voting rights must be on Thai hands for the company to count as Thai.

To this we can add that various politicians say that only about 1,300 Thai companies will be effected and that existing companies operating within list 3 are exempted from the amendment - meaning they don't have to give majority voting rights to Thais to remain Thai ...

There are quite a few posters who boldly (in this and in other threads) claim that the exemption has a different meaning and that list 3 co's also become foreign companies if they don't change their voting rights setup ... Frankly, that's exactly the situation for the 1,300 non-exempted companies (they are also free not to give majority voting rights to Thais, but will be deemed foreign if they don't) --- so, what else would there be for existing list 3 companies to be exempted from if not from the redefinition of Thai vs. foreign?

So - at first sight - the new draft doesn't change status quo for those landowning, non-performing, nominee, shelve companies. However there might be a big, big problem hidden in the requirement that companies on list 3 must register and obtain a certificate if they wish to remain Thai.

Any company (co., ltd.) have to either go and get that certificate or be deemed a foreign company ... The latter cannot own land and as for the former: be certain they'll require a lot of documentation before granting the certificate: list of shareholders, receipts for taxpayments, articles of associations and whatever they'll need to feel certain they're only granting the certificate to legal companies performing actual trading under list 3.

the new draft law (its not final yet) among other things, re-defines the word "alien" to include a reference to voting rights....BUT it only redefines "alien" as it applies to the Alien Business Act (with basically prohibits "aliens" from engaging in List 1, 2 and 3 business activities....

the new draft law does NOT redefine "alien" for purposes of the Land Law.....so it is INCORRECT to state that holding companies with Thai majority shareholdings (but with diluted voting rights) cannot own land because of the new draft law....

(the only danger is that the current government might get the bright idea to also amend the Land Law "alien" definition without any grandfathering exemption and then the sh*t will really hit the fan).

yes, under the new draft law, EXISTING companies who are re-classified as "aliens" and are engaged in List 3 business activities ARE deemed "foreign"/"alien" for purposes of the Alien Business Law BUT they are allowed to continue operating their List 3 business activities under a "grand-fathering" exemption...(if they send in a notice and get a certificate)...

[trajan]

Thousands of Co. ltd I'm pretty sure.

I miss something in any case about the whole land / ownership story.

If we want address the basic "legal" options to normal average foreign investor

(not the ones who have Thai Wife or Thai GF) nowadays we have the following possibilities :

1) Leasehold

2) Condo

Leasehold = nobody (few) will invest under the current 30 years rules, investment

is investment only if it will give a Return of Investment (ROI). In this case

the house will be devaluated, less remain years = less money from the next buyers....very simple.

Condo = Mhummm thinking Condo in Samui (for example) ? NOOOO please !! you want protect

the environment and you can not allow to build condo which means big concrete monster

close to the beaches = Amazing Thailand....

Something must change because still thinking to Samui

(and law generally apply to all country)

looks that by law (area zoning) is not possible build higher then 6 Mt. (beach side)

(tks God otherwise we have a copy of Phuket) = no condo available

So let's say I want to INVEST (ROI) in Samui Property = no possibilities available legally =

no investments anymore.

All above let me think that new rules must be on their way.

Comments ?

sorry, but your whole discussion above is not applicable (irrelevant) if we are talking about the new draft law (which amends the Alien Business Law)....

[Geppis72]

I really hope my post is irrelevant and that your explanation is correct,

still lots of doubts about...

And do agree with you :

"(the only danger is that the current government might get the bright idea to also amend the Land Law "alien" definition without any grandfathering exemption and then the sh*t will really hit the fan)."

Tks

[Alf Witt]

There are quite a few posters who boldly (in this and in other threads) claim that the exemption has a different meaning and that list 3 co's also become foreign companies if they don't change their voting rights setup ... Frankly, that's exactly the situation for the 1,300 non-exempted companies (they are also free not to give majority voting rights to Thais, but will be deemed foreign if they don't) --- so, what else would there be for existing list 3 companies to be exempted from if not from the redefinition of Thai vs. foreign?

Won't this depend upon the ultimate wording of the new legislation which nobody has yet seen?

In my view, the wording (in the announcement) means that all companies with over 49% shareholding and/or voting rights are to be classified as "alien". The difference is that companies operating in lists 1 or 2 MUST cease operating these businesses if they do not change their structure / control. It looks like companies in list 3 will also be considered foreign but will be permitted to continue in business. That is the nature of the exemption as I read it, so there is a very significant difference between lists 1 and 2 and list 3 (unless of course the ultimate wording turns out to be different).

[thaigene2]

Foreign investors who hold more than 50 per cent of voting rights must also reduce their voting rights within two years,"he added

If this is the case,the Thai share holders rule the company,they can even kick you out,or sell your proporty ?

So,lets forget the company thing ?

Put your property on a thai lady ,is this the only (also unsafe) thing to do?

Well as for holiding nominees, kicking farang partners out of the country, selling your property and putting your assets in your Thai wife's name...I seem to recall the previous Fearless Leader did all of the above!

[thaigene2]

I really hope my post is irrelevant and that your explanation is correct,

still lots of doubts about...

And do agree with you :

"(the only danger is that the current government might get the bright idea to also amend the Land Law "alien" definition without any grandfathering exemption and then the sh*t will really hit the fan)."

Tks

Yes. Absolutely.

Once bitten twice shy in my case. I don't care what they do now - short of giving foreigners permanent residency if they buy a condo - which of course they won't. My money shall stay overseas - and property purchase (here) will have to wait until retirement age - but I doubt even then that I would be that naive.

The whole xenophobic thing needs to be tackled. I don't see any sign of that happening in the near-to-mid future, do you? 'Every inch of Thailand for Thai' - Chai-yo.

[bkkandrew]

If you bought more than 3 years ago and sold it last week, a 51% loss would still leave you with more than you started with as prices have doubled in that time.

Your point being.

Why not make a useful comment in regard to this.

My house cost 1.1 million in 2001. So divide this by 72 (months since I bought it) and what you have 15,277 baht. So I have lived in a 4 bedroom house with swimming pool on one rai of land for 15,277 baht per month.

Any renters should tot up what they have LOST in rent over the years and look back to when they first arrived here to see what they could have bought. Also you (renters) pay a fortune for electric as the landlords top up their profits by billing you extortionate amounts per unit for it. Its only 2.4 baht per unit, yet when you rent its usually 2 or 3 times that amount and often more! If you have been here more than 5 years you have lost a fortune continue to do so as you should be living rent free by now.

What I am pointing out to the told you so brigade is that I could lose the house outright and still have made a smarter move than them. This house would rent for at least 50k a month.

On top of this, we still own it and the worst that could happen is that I lose 51% of its current value. If my wife and company shareholders shafted me, I'd walk off with over 3 million baht! which is nearly 200% more money than I started with.

My thrust on these threads is against the type of poster who is posting through ignorance of others situations. The "trendy" opinion prevalent on here is that anybody that bought through any route is a mug that has lost everything and is crying into his beer contemplating going back to Enland skint with his tail between his legs.

You have overlooked the fact that the capital could have been used to generate similar returns without the risk. Example, I rent in LoS, but own 2 properties in UK. Have seen a 300000GBP increase in asset value in UK in 6-years and the rental income from UK exceeds my Thai rent by a factor of 12!!

Best of all, I do not have to study over the details of the latest crank "minister's" outpourings, where my assets are held, on a daily basis, to work out if I still own 100%, 49% or 0% of my assets...

Edited January 14, 2007 by bkkandrew

[Dupont]

If you bought more than 3 years ago and sold it last week, a 51% loss would still leave you with more than you started with as prices have doubled in that time.

Your point being.

Why not make a useful comment in regard to this.

My house cost 1.1 million in 2001. So divide this by 72 (months since I bought it) and what you have 15,277 baht. So I have lived in a 4 bedroom house with swimming pool on one rai of land for 15,277 baht per month.

Any renters should tot up what they have LOST in rent over the years and look back to when they first arrived here to see what they could have bought. Also you (renters) pay a fortune for electric as the landlords top up their profits by billing you extortionate amounts per unit for it. Its only 2.4 baht per unit, yet when you rent its usually 2 or 3 times that amount and often more! If you have been here more than 5 years you have lost a fortune continue to do so as you should be living rent free by now.

What I am pointing out to the told you so brigade is that I could lose the house outright and still have made a smarter move than them. This house would rent for at least 50k a month.

On top of this, we still own it and the worst that could happen is that I lose 51% of its current value. If my wife and company shareholders shafted me, I'd walk off with over 3 million baht! which is nearly 200% more money than I started with.

My thrust on these threads is against the type of poster who is posting through ignorance of others situations. The "trendy" opinion prevalent on here is that anybody that bought through any route is a mug that has lost everything and is crying into his beer contemplating going back to Enland skint with his tail between his legs.

You have overlooked the fact that the capital could have been used to generate similar returns without the risk. Example, I rent in LoS, but own 2 properties in UK. Have seen a 300000GBP increase in asset value in UK in 6-years and the rental income from UK exceeds my Thai rent by a factor of 12!!

Best of all, I do not have to study over the details of the latest crank "minister's" outpourings, where my assets are held, on a daily basis, to work out if I still own 100%, 49% or 0% of my assets...

Give you that one Andrew, as I did well by keeping a 2nd house in the UK until 2004.

Think its exceptional having two houses in the uk though, so I still think a lot of my points would be valid.

I'll leave this thread alone now.... unless you call me a muppet again!