Thai Property Reforms: A Boon or Burden for Foreign Buyers?

[webfact]

Picture courtesy: Thai Rath

 

Thailand is currently at a crossroads, deliberating potential reforms to its property laws that could significantly alter the landscape for foreign buyers. Prominent figures, including Thaksin Shinawatra, an unofficial adviser to the government, are advocating for changes to bolster foreign investment in the country’s real estate market, hoping to invigorate economic growth that has remained sluggish in recent years.

 

At present, Thailand’s property laws are quite restrictive to foreign ownership. Foreigners can own a maximum of 49% of condominium units in any building, ensuring that Thai citizens maintain majority control. Land leases, on the other hand, are typically capped at 30 years, a policy designed to prevent permanent foreign ownership over what is deemed a national asset.

 

However, the proposed reforms seek to extend these limits significantly. Suggestions include allowing foreigners to own up to 75% of condo units and extending leaseholds on land to 90 years. Proponents argue these changes would stimulate the property market by attracting foreign capital, providing a much-needed revenue stream, reported Barry Kenyon for Pattaya Mail

 

Yet, this move isn’t without contention. Critics suggest that easing restrictions could jeopardise national sovereignty, allowing foreign entities to gain undue influence over Thai property markets. Concerns have been raised about inflated property prices and the possibility of foreign interests encroaching on residential spaces, echoing issues previously seen in markets like Canada.

The Housing Business Association (HBA) acknowledges the complexity of such reforms. Suggestions have surfaced that any increase in the foreign quota for condominiums might come with stipulations, such as a minimum sale price of about 10 million Thai Baht (approximately £222,000), and targeted only in areas already favoured by expatriates.

 

Additionally, potential reform measures could involve increasing taxes on properties owned by foreigners and restricting their roles in property management committees to ensure Thais remain in control. Proposed changes to land lease laws could also include stringent regulations to eliminate nominee shareholders and carefully manage land use to prevent large-scale foreign acquisitions.

 

This isn't the first time property reforms have been proposed in Thailand. Following a coup in 2014, a regulation was introduced to allow foreigners investing 40 million Thai Baht (about £887,000) to purchase land, but it was quickly rescinded due to public backlash.

 

Now, as Thailand contemplates new legislative proposals, the outcome remains uncertain, aside from one clear reality: the details will be critical. How these proposals are crafted and implemented could make the difference between unlocking economic potential or igniting national controversy.

 

-- 2024-11-30

 

 

[Rampant Rabbit]

Quietly ignoring Nellie in the room that johnny foreigner will have to pay 35% more for his "investment"

Yeah that's gonna  work alright.

Of course a  simple "any money invested in condos" will be exempt would fix  that in a second, but thats too easy.

[Polaky]

If they were to follow Australia, then the price of realestate would sky-rocket to unbelievable heights, allow foreigners to buy land without restriction, and watch how steep prices will soar, but no with their backward policy of foreigners can only lease land it will remain stagnant.

[mokwit]

Basically they overbuilt in expectation of Chinese buyers that didn't materialise with Covid and post covid travel restrictions, and once the backlog is cleared they will renege or repeal.

[BarBoy]

Thailand can only remain protectionist for so long. There are a lot of people out there with a lot of money to spend, especially on property, but if Thailand chooses to adopt the attitude of 'Thailand for Thais' then they are going to lose billions from potential investors. 

 

Open up Thailand, or forever remain a 'developing nation.'

[Jack Hammer]

Batboy please note 
 

Thailand belongs to the Thai people. If the Thai government allows, land sales to foreigners, prices will escalate and the Thai people will not be able to buy land in their own country. That is what happened in Australia.  When I say land, I’m referring to vacant land and established homes.  I think a condominium ratio of 60./40 would not affect the market too much

Edited 1 hour ago by Jack Hammer
Replying to BarBoy

[INANIMATECARBONROD]

42 minutes ago, Polaky said:

If they were to follow Australia, then the price of realestate would sky-rocket to unbelievable heights, allow foreigners to buy land without restriction, and watch how steep prices will soar, but no with their backward policy of foreigners can only lease land it will remain stagnant.

Are you advocating for this? The housing market is a nightmare for all working class non-owners in Australia and will hurt the country for generations if nothing changes. 

 

Thailand should look at places like Australia and Canada as example of what NOT to do. 

[bradiston]

I was wondering if allowing a maximum ownership of 1 rai (1600 sq m) of land might appeal to overseas investors. Enough to build a decent sized pool villa, for instance. Thailand contains 375,000,000 rai, though of course only a tiny fraction of that would be available. For overseas investors, retirees, or second home seekers, the options aren't currently that appealing. A 30 year lease or a nominee company, which is now under intense scrutiny, or a condo. Or, putting everything in a Thai partner's name, which could then become subject to divorce/separation proceedings. Outright ownership would offer a much more secure way forward.

 

There might be complications. A blue book for instance can't be issued to a foreigner. And no doubt some would try buying multiple plots around the country. But that could all be looked at.

 

Just my ¢2 worth.

[CallumWK]

30 minutes ago, Jack Hammer said:

Thailand belongs to the Thai people. If the Thai government allows, land sales to foreigners, prices will escalate and the Thai people will not be able to buy land in their own country. That is what happened in Australia.  

 

Yes that happened in Australia, and also in the UK, but it isn't the case in most other EU countries, where also everyone can buy land.

It also seems to be the case in Canada. By coincidence, all these countries were part of the British Empire.

 

So I guess it only has to do with greed mentality of the inhabitants.

Edited 37 minutes ago by CallumWK

[bradiston]

27 minutes ago, Jack Hammer said:

Batboy please note 
 

Thailand belongs to the Thai people. If the Thai government allows, land sales to foreigners, prices will escalate and the Thai people will not be able to buy land in their own country. That is what happened in Australia.  When I say land, I’m referring to vacant land and established homes.  I think a condominium ratio of 60./40 would not affect the market too much

Thai land doesn't all belong to the Thai people though, does it? No idea what the figures are for land ownership in Thailand. Who owns what? In the big cities, Thai farmers for instance, probably own nothing. Even in the sticks, they'll rent paddy from the local bigwig. Land is used as collateral for borrowing, and subsequently lost to the lender. How much of Thailand is already owned by big corporations and the government? It's a knotty problem.

[rocksniffer]

I believe that house prices in Australia, and elsewhere,  rocketed because of supply and demand. More buyers, but no government permission to build new houses. Deliberate policy for the government to get more tax from the "high priced" houses. Land in Bangkok is already more expensive than London. So maybe the prices would not skyrocket. Outside of the big cities, allow houses / condos to be built. Supply and demand to keep the prices down. The problem will  be. You buy your reasonably priced property in Thailand. Live in it, and after 180 days you become liable for Thai tax. 

[hotchilli]

50 minutes ago, BarBoy said:

Thailand can only remain protectionist for so long. There are a lot of people out there with a lot of money to spend, especially on property, but if Thailand chooses to adopt the attitude of 'Thailand for Thais' then they are going to lose billions from potential investors. 

 

Open up Thailand, or forever remain a 'developing nation.'

They cannot open up... prices would rocket and natives won't have a hope in hell.

That's why it's like it is and will stay that way.

[BarBoy]

1 minute ago, hotchilli said:

prices would rocket and natives won't have a hope in hell.

It's the way of the world.

 

Either study harder, get a better paying job, start your own business and COMPETE on a level playing field. Foreigners are also part of the equation. Thai's need to up their game if they don't want to be priced out of their own country. 

[quake]

15 minutes ago, bradiston said:

I was wondering if allowing a maximum ownership of 1 rai (1600 sq m) of land might appeal to overseas investors.

 

You need 3 rai for descent house with  garden / pool / car port and so on.

 

 

Edited 26 minutes ago by quake

[hotchilli]

17 minutes ago, BarBoy said:

It's the way of the world.

 

Either study harder, get a better paying job, start your own business and COMPETE on a level playing field. Foreigners are also part of the equation. Thai's need to up their game if they don't want to be priced out of their own country. 

Or just keep foreigners out as they do now.

[Liverpool Lou]

1 hour ago, Jack Hammer said:

Thailand belongs to the Thai people. If the Thai government allows, land sales to foreigners

Something that has not even been proposed.

[Srikcir]

8 hours ago, webfact said:

advocating for changes to bolster foreign investment in the country’s real estate market, hoping to invigorate economic growth that has remained sluggish in recent years.

This is a one dimensional view of a multi-dimensional economic market. But there's a broader economic impact. I suggest:

• Thai sellers gain significant economic gains that can be further invested and/or exploited to raise standard of living, including education and business opportunities.
• For a segment of Thais who choose to down size their lives subsequently to sale of real estate to foreigners, it becomes a net live time gain.
• Foreigners buying Thai real estate are likely to have significant economic excess beyond real estate acquisition to continue to add to the Thai economy over their lives in Thailand.
• More foreigners buying residences likely become permanent residents as defined by the Thailand Department of Revenue with the potential for additional income taxes.