Thailand Considers Law Revisions to Attract Foreign Real Estate Investment

[webfact]

Picture courtesy: Kapook

 

Thailand is actively considering changes to its real estate laws to encourage foreign investment, as outlined by Finance Minister Pichai Chunhavajira.

 

The potential amendments aim to revise the "rights over leasehold assets" laws, offering more attractive lease agreements that could bolster the nation's economy. This initiative is part of a broader strategy to draw foreign investors, improving Thailand's economic growth, which has been sluggish and hampered by increasing household debt.

 

The real estate industry is crucial to Thailand's economy, influencing various related sectors. As domestic purchasing power diminishes, the government led by Paetongtarn Shinawatra, aims to adopt ideas from previous administrations to allow foreigners to invest in Thai real estate.

 

Current Thai laws restrict foreign ownership of land, presenting a political challenge. Thaksin Shinawatra, a key figure in the governing party, previously suggested that land sold to foreigners should first transfer to state management under the Treasury Department.

This proposal would let foreigners lease the land for up to 99 years, keeping land ownership with the state after lease expiry. Implementing such measures would require amendments to existing state land laws.

 

To further entice foreign investment, there's a move to extend lease terms from the current maximum of 30 years to 99 years.

 

This extension could make investments more appealing. In April 2023, the cabinet directed ministries to explore these longer lease terms, and by June, tasked the Interior Ministry with advancing these proposals.

 

Thailand's 2019 Rights Over Leasehold Assets Act currently allows lease terms from 3 to 30 years. These rights enable the transfer and use of property as collateral, yet the law hasn't been fully utilised or integrated into the market as intended.

 

Revised laws could better define and expand these leasehold rights, aligning them more closely with international standards and encouraging real estate investment.

 

In comparison, countries like England, Wales, France, and Cambodia have their own special lease laws, allowing long-term leases and granting tenants greater rights.

 

These models provide insights for Thailand as it seeks to modernise its approach to leasehold real estate, making it a more competitive and attractive market for international investors, reported Bangkok Post.

 

-- 2024-11-16

 

 

[Enzian]

These reforms will be hampered by the government's reputation for setting new conditions and then changing then again in a few years. And how can any foreigner make investment plans in regard to RE until the tax situation is clarified and settled, which doesn't look to be happening any time soon?

[Nid_Noi]

It’s like a scratch on an old vinyl record which keeps playing the same groove over and over…and over…

[J Branche]

Regarding Leasing Land. Who is the land owner?  They can put terms in the lease like no architectural changes, changes require Owner approval.  The owner could also put terms like upon the death of the owner the lease is voided 1 year after death.  What are the terms for any changes or structures on the land?  I build a 10 million Baht house.  30 years later lease expires do I lose my 10 million Baht investment?

 

Been in Real Estate long enough.  Make very sure you fully understand the Land Lease terms, if it is transferable upon your death (Remaining years can be used by a benefactor)  What happens with the Investment into the land (business, farming, house) at lease termination.

 

Make sure your plans for use upon the land are detailed and clearly, legally written to hold up in court. 

 

Thailand should understand if experienced Real Estate Investors are few it can be the value, effort, uncertainty, or area does not meet their Profit Goals.

[doily19]

The tax area is certainly a little blurred. When capital gains is discussed in DTAs there doesn't appear to be a differentiation between investment RE versus the sale of one's own home. My Thai wife are looking to move to Thailand and navigating the tax aspects is a challenge. I need to sell my house here to buy a house, and other things such as a vehicle, new furniture etc. I can not afford to do this if I'm to pay a large tax on the money I get for my house in Australia (Australian tax laws do not require home owners to pay capital gains on the sale of their own homes). I will become a resident of Thailand for tax purposes as I plan to reside permanently in Thailand on a Marriage Visa. Understand, I'm not the typically rich westerner that most Thais envisage.

[Hardcastle P]

It will certainly make house prices increase, how will that help you average Thai ? 

[Cabradelmar]

And have been mulling since the last time this was reported.

[patman30]

12 minutes ago, J Branche said:

Who is the land owner?

For what the propose above, it says the state will own the land
and 20 years down the road........
the state could also decide it made a mistake 20 years ago allowing a 99 year lease

they would do much better allowing foreigners to buy houses like they do condo's
for newly developed gated communities
or allow long stay foreigners up to 1 rai (or less even) for residence only, not a rental

[NanLaew]

9 minutes ago, patman30 said:

For what the propose above, it says the state will own the land
and 20 years down the road........
the state could also decide it made a mistake 20 years ago allowing a 99 year lease

 

You mean like the same way they could cancel the Thailand Elite program?

[CallumWK]

9 minutes ago, NanLaew said:

 

You mean like the same way they could cancel the Thailand Elite program?

 

Well for a starter, in the original Thailand elite program foreign land ownership was included...........until it wasn't

[topt]

36 minutes ago, doily19 said:

The tax area is certainly a little blurred.

At the moment I think with your circumstances it is fairly clear. 

Safest way is to both sell your Aus residence and remit the proceeds to Thailand in a year when you are not tax resident in Thailand - ie spend less than 180 days in a calendar year here. Job done 

[klauskunkel]

An open letter from the Thai government to Foreigners:

 

Dear Foreigners,

 

please rescue us from our household debt, which we have incurred because of our financial acumen. In return we let you buy our land, which will be held in stewardship for 99 years by the Thai government for you, because you may not own it. When you die at a zebra crossing all claims re that land revert to the State.

Your generous contribution may or may not be used to reduce the household debt, depending on the findings of relevant committees and what they had for lunch.

Keep in mind that any existing laws of ownership and their enforcement are subject to change by the government du jour and the whim of the police force.

To sweeten the deal we are offering a coupon for a one time beach chair rental in Pattaya, use at your own risk, sun exposure may cause skin cancer.

 

Yours insincerely,

All of the Shins and a bunch of Others

[bananafish]

Great idea, send rent through the roof, then have a crisis where ordinary working people can't afford rent. But who cares, the economy will be bigger.

[Espanol]

"land sold to foreigners should first transfer to state management under the Treasury Department.

This proposal would let foreigners lease the land for up to 99 years, keeping land ownership with the state after lease expiry."

 

🤣🤣🤣🤣🤣🤣

 

 

So I'm buying the land from a Thai and I'm giving it to the state.

 

Before, at least it returned to the Thai owner after the rental period.

Now, not only will foreigners not want to buy, but Thais will not want to sell either.

 

 

 

 

[hotchilli]

4 hours ago, webfact said:

Thailand is actively considering changes to its real estate laws to encourage foreign investment, as outlined by Finance Minister Pichai Chunhavajira.

Minus nominees of course.

[kwaussie]

1 hour ago, doily19 said:

The tax area is certainly a little blurred. When capital gains is discussed in DTAs there doesn't appear to be a differentiation between investment RE versus the sale of one's own home. My Thai wife are looking to move to Thailand and navigating the tax aspects is a challenge. I need to sell my house here to buy a house, and other things such as a vehicle, new furniture etc. I can not afford to do this if I'm to pay a large tax on the money I get for my house in Australia (Australian tax laws do not require home owners to pay capital gains on the sale of their own homes). I will become a resident of Thailand for tax purposes as I plan to reside permanently in Thailand on a Marriage Visa. Understand, I'm not the typically rich westerner that most Thais envisage.

Just be prepared to walk away from Thailand with nothing as so many have done before you.

[NedR69]

1 hour ago, Nid_Noi said:

It’s like a scratch on an old vinyl record which keeps playing the same groove over and over…and over…

Yes, it's called insanity.  Doing the same thing over and over again and expecting different results.

[Srikcir]

1 hour ago, Hardcastle P said:

how will that help you average Thai ?

Thai owner might make a significant capital gain on sale? Us the to help pay off Thai's household debt.

[Srikcir]

Overlooked and I believe must be addressed for foreign acquisition of Thai real estate.

That is the inheritance of foreign owned Thai real estate.

While the 30-99 year foreign purchase has not expired, my vague understanding is that a foreign inheritor (family relative, etc. foreign friend) has time restrictions and potential financial obligations (pay value of the real estate) to take possession of the real estate or lose the real estate in a mandatory public auction that may favor Thais.

 

 

[Polaky]

Keep mulling, won't make an ounce of difference,  allow foreigners to buy land outright without silly leases.

[norsurin]

24 minutes ago, kwaussie said:

Just be prepared to walk away from Thailand with nothing as so many have done before you.

Rigth.And get taxed in ur county of origin before Thailand take it.

[JimHuaHin]

All this negativity!!

 

But, let us consider a few "facts".

 

The current Thai government needs more cash to fulfill its election promises.  Foreign cash?

 

The politicians and bureaucrats need more cash to fund their retirements.  Foreign cash?

 

Many foreigners overseas want to buy land in Thailand; and recent articles on AN have highlighted that Burmese, Chinese, Indian and Russian buyers have recently been very active in the market.  Foreign cash!

 

All positives, right?

 

However, as we have seen with the recent small maritime "dispute" with Cambodia, Thai ultra-nationalists are against any "Thai" lands going into foreign "hands".

 

Thus, no sale, as Thailand is not for sale.

[khunPer]

I seem to remember that Thaksin hac proposed the same several years ago. Lease is not investment, it's renting the land, but  instead of private rent, it's from the government...

[kiwikeith]

3 hours ago, J Branche said:

Regarding Leasing Land. Who is the land owner?  They can put terms in the lease like no architectural changes, changes require Owner approval.  The owner could also put terms like upon the death of the owner the lease is voided 1 year after death.  What are the terms for any changes or structures on the land?  I build a 10 million Baht house.  30 years later lease expires do I lose my 10 million Baht investment?

 

Been in Real Estate long enough.  Make very sure you fully understand the Land Lease terms, if it is transferable upon your death (Remaining years can be used by a benefactor)  What happens with the Investment into the land (business, farming, house) at lease termination.

 

Make sure your plans for use upon the land are detailed and clearly, legally written to hold up in court. 

 

Thailand should understand if experienced Real Estate Investors are few it can be the value, effort, uncertainty, or area does not meet their Profit Goals.

Lot's of land in NZ are 999 years to Maori, so you don't have to worry about sale and purchase unless you buy in when the lease is 950 years old. 

[kingstonkid]

3 hours ago, Hardcastle P said:

It will certainly make house prices increase, how will that help you average Thai ? 

The challenge ynot that it wit increase prices but that more of the empty units will get purchased.  

Companies in lam lukka are lowering their prices to try to sell.  Then I go to phrom pong and see a new building advertising 70 mil

[ModdaPunk]

Real estate in Thailand will be interesting the day they stop producing such a huge amount of garbage condos. Most places on offer these days are just total junk with a luxury veneer.

[digger70]

Thailand Considers Law Revisions to Attract Foreign Real Estate Investment.

 

Doesn't sound  very promising.

It will only be a lease one Never own the property  no matter how they sugar coat  it and one lose all the improvements made in the time of the lease.

Win win for the state.

 

[newnative]

4 hours ago, Hardcastle P said:

It will certainly make house prices increase, how will that help you average Thai ? 

     I doubt it.  I certainly wouldn't be interested in it at all--and my Thai spouse and I have bought about 20 properties in Thailand, a mix of condos and houses.  

[Krabi King]

As long as the word "lease" comes up, instead of "ownership" nothing  much will change.

[BritScot]

When I was building my house in Thailand I did a lot of research and one thing I found interesting was that US citizens were allowed to own land in Thailand to build a house on due to an agreement they had to make with America. However, upto that date 2010 no land office in Thailand had granted said right of ownership of land to an American!!!