Houses In The "Company Name", Is It Safe?

[dagling]

Houses in the "company name", is it safe?

Are planning on buying a house in Pattaya area, and from what I understand it is the only legal way to "own"this in his own name is to create a company that will be the owner?

If so, this is something you can safely do? There is talk that this is in the "gray zone"and that with time the Thai authorities will put a stop to this.

If / when they put a stop to this, what will this mean for those who have already created one such company / ownership?

What would such a measure of the Thai authorities mean for the real estate market?

Will we get a huge housing crash, with prices falling over to almost nothing?

Edited May 9, 2011 by dagling

[Mario2008]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

[rgs2001uk]

Read answer number 115 on this link.

Would be interested to hear what the property experts in Pattaya have to say.

[johnnyk]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

[trogers]

Will we get a huge housing crash' date=' with prices falling over to almost nothing?

[/quote']

Look at the over 50% fall in prices of villas in Phuket...

Care to buy a company?

[stgrhe]

I sincerely suggest you read up on the matter and carefully read this:

http://www.thailandlawonline.com/article-blog/property-law-land-and-housing-tax-in-thailand.html

Thus, if you buy an existing property through the company route, and that company hasn't paid its 12.5% land and housing tax, you as the new owner will be responsible for that tax one day if you do purchase the company.

My recommendation is to stay clear of nominee ownership and go the safe lease route instead.

[steelepulse]

Will we get a huge housing crash' date=' with prices falling over to almost nothing?

[/quote']

Look at the over 50% fall in prices of villas in Phuket...

Care to buy a company?

Really? What price range are you referring to? Also strangely enough a non descript house on a small 600 sqm plot of land is called a "villa". I certainly would not classify this as a villa nor have I seen houses in the upper price range "falling by 50%". Care to share where these fire sale villas are?

[Langsuan Man]

It is a great big Ponzi scheme (and I own a house under a company)

So long as the Land Office allows these companies to purchase land, and the Commercial Department continues to certify these companies it will continue

I personally would take my chances using the company route versus buying property in a girl friend's name as some have done

And for those who tout the "lease" route, try and find someone that will give you a lease or just how valid is a lease given by a "nominee company"

If you want a house then you don't have a lot of options but even in Thailand there are laws that prevent any government agency from taking away your property. Worse case scenario they might force you to sell it, but then there would be massive lawsuits all over Thailand and a lot of lawyers will be explaining why they advised client to set up these companies

[thaiwanderer]

Many threads here on this issue.

Company ownership utilising nominee Thai shareholders is entirely illegal.

Essentially it comes down to appetite for risk for financial loss and possibly jail time.

No one can really say how likely a problem may arise for one individual unclear but it would be a mistake to assume a nationwide crackdown is necessary for that individual to come unstuck.

All it needs is an inquisitive official or jealous neighbour etc..

[Naam]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

[thaiwanderer]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

Not difficult at all after construction.

And what relevance the building permit and company payment issues you raise?

Edited May 10, 2011 by thaiwanderer

[trogers]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

I hate to think of the problems created from differing ownerships (house and land) when it is time to sell... and if you can find a buyer willing to go through the problems.

[trogers]

Will we get a huge housing crash' date=' with prices falling over to almost nothing?

[/quote']

Look at the over 50% fall in prices of villas in Phuket...

Care to buy a company?

Really? What price range are you referring to? Also strangely enough a non descript house on a small 600 sqm plot of land is called a "villa". I certainly would not classify this as a villa nor have I seen houses in the upper price range "falling by 50%". Care to share where these fire sale villas are?

These are advertised prices:

http://www.cbre.co.th/en/Phuket-Villa-PKS0493.asp

http://www.estatesalliance.com/th/thailand/phuket/surin-beach/%E0%B8%9A%E0%B9%89%E0%B8%B2%E0%B8%99-%E0%B8%AA%E0%B8%B3%E0%B8%AB%E0%B8%A3%E0%B8%B1%E0%B8%9A%E0%B8%82%E0%B8%B2%E0%B8%A2-42481.html

How much further prices would fall when transfers have to go through problems of ownership by a nominee company is anyone's guess.

[Langsuan Man]

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

It is my understanding that the Land Office will only issue the Building permit in the name of the entity (company) or individual on the chanote, and that prior to completion it can be changed so long as there is proof, via a building contract and payments, that an individual requesting the change in fact paid for the house, thus it can be re-issued in an individuals name

Not difficult at all after construction.

And what relevance the building permit and company payment issues you raise?

See my answer above

hate to think of the problems created from differing ownerships (house and land) when it is time to sell... and if you can find a buyer willing to go through the problems.

This is the Ponzi scheme aspect of what I first wrote. So long as everyone wants to continue the system it will continue. If you don't want to play the game, enjoy your fully legal cement box condominium and don't think about buying a house

[sfokevin]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

I hate to think of the problems created from differing ownerships (house and land) when it is time to sell... and if you can find a buyer willing to go through the problems.

It seems like a land owner could very easily differentiate the two with a bulldozer :jap:

[doggie888888]

I sincerely suggest you read up on the matter and carefully read this:

http://www.thailandl...n-thailand.html

Thus, if you buy an existing property through the company route, and that company hasn't paid its 12.5% land and housing tax, you as the new owner will be responsible for that tax one day if you do purchase the company.

My recommendation is to stay clear of nominee ownership and go the safe lease route instead.

Don't buy the company! Use a new company to purchase the property....does this solve that 12.5% problem?

[meatboy]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

quite right johnnyk as long as the house is built on freshair.

[thaiwanderer]

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

It is my understanding that the Land Office will only issue the Building permit in the name of the entity (company) or individual on the chanote, and that prior to completion it can be changed so long as there is proof, via a building contract and payments, that an individual requesting the change in fact paid for the house, thus it can be re-issued in an individuals name

Not difficult at all after construction.

And what relevance the building permit and company payment issues you raise?

See my answer above

hate to think of the problems created from differing ownerships (house and land) when it is time to sell... and if you can find a buyer willing to go through the problems.

This is the Ponzi scheme aspect of what I first wrote. So long as everyone wants to continue the system it will continue. If you don't want to play the game, enjoy your fully legal cement box condominium and don't think about buying a house

Since it's unnecessary I don't understand the concern over the inability to change the name on the building permit after completion.

Separation of the land and house after completion is not anymore difficult than before.

[LivinLOS]

Will we get a huge housing crash' date=' with prices falling over to almost nothing?

[/quote']

Look at the over 50% fall in prices of villas in Phuket...

Care to buy a company?

Really? What price range are you referring to? Also strangely enough a non descript house on a small 600 sqm plot of land is called a "villa". I certainly would not classify this as a villa nor have I seen houses in the upper price range "falling by 50%". Care to share where these fire sale villas are?

Phuket.. architect designed mega house.. on a golf course.. from mid 30m's to 12m bought by a bangkok Thai to just sit on.

[stgrhe]

I sincerely suggest you read up on the matter and carefully read this:

http://www.thailandl...n-thailand.html

Thus, if you buy an existing property through the company route, and that company hasn't paid its 12.5% land and housing tax, you as the new owner will be responsible for that tax one day if you do purchase the company.

My recommendation is to stay clear of nominee ownership and go the safe lease route instead.

Don't buy the company! Use a new company to purchase the property....does this solve that 12.5% problem?

No, the 12.5% tax applies because it is only owner-occupied homes that are exempt from this tax..

[Naam]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

correct. but it is extremely difficult to separate ownership of house and land if not done before construction. the latter requires that building permit is in the name of the Farang and payment for the construction must not originate from company accounts.

Not difficult at all after construction.

And what relevance the building permit and company payment issues you raise?

i don't discuss the paintstroke of an old master and his selection of colours with a blind man.

[Naam]

Langsuan Man, on 2011-05-11 09:50:51, said:

It is my understanding that the Land Office will only issue the Building permit in the name of the entity (company) or individual on the chanote, and that prior to completion it can be changed so long as there is proof, via a building contract and payments, that an individual requesting the change in fact paid for the house, thus it can be re-issued in an individuals name.

the Land Office will issue the building permit in the name of an individual Farang if he/she has obtained a lease agreement with the owner of the land (whether company or natural person) and relevant taxes have been paid. i am not aware of the situation "prior to completion" but referred to the discussed topic "buying a house in a company's name", id est construction is completed, house exists, both house and land are owned by a company.

in this context it is worthwhile to mention that "nominees, illegal structure to own land, etc." does not apply to all companies as legal companies, which were established by shareholders to own land and lease that land to achieve top profits, do exist!

[thaiwanderer]

i don't discuss the paintstroke of an old master and his selection of colours with a blind man.

Nice but irrelevant dig.

What's the difficulty, oh master?

(and since we are being picky how many building permits have you obtained from the Land Office rather than the Or Bor Tor?)

[johnnyk]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

quite right johnnyk as long as the house is built on freshair.

Equally true when the house is built on land. Just another loveable thing about Thailand.

[KornerWilliam]

Owning a house by a proxy is illegal, whether it is another person or a juristic person.

Not true. Falangs can own a house, no problem. Owning LAND is not permitted by falangs in their own name. Many posts on this, just have a look.

quite right johnnyk as long as the house is built on freshair.

Equally true when the house is built on land. Just another loveable thing about Thailand.

Yes, as a foreigner it's safer than the other method to own a land of house. u can check more at Link to commercial website removed

[Darrel]

If I walk for 5 minutes in Pattaya I can see at least 100 breaches of various laws. Any day, any time of day. And there are probably at least 100 more that I dont even notice or know about. I suspect the same applies elsewhere.

Every now and again there is a "clamp-down" and some or all of the infringing parties may or may not be dealt with, in whatever fashion seems appropriate to those in charge.

Why does anyone imagine that the situation with farangs owning land via illegal nominee company structures is in any way different? Just like begging, playing the guitar without a permit, gambling, yaba-taking and driving a motorbike without a helmet or licence, it is illegal and one day those doing it will probably be looked into. The only real question is "when?". Just because many people do something doesnt make it legal de facto.

Personally I would rather my money was not invested in any sort of structure that isnt 100% legal. Property here is a dodgy enough game without having to worry about whether you legally own something, or whether your nominees will steal it from you, or whether the government will decide to sequester it or punitively tax you on it because you shouldnt be owning it in the first place.

As such I would never consider buying any property in Thailand in anything other than foreign name. And that name will be mine alone. And if the Thai government decides that this limits me to buying only condos, so be it. At least I know where I stand, and that if one day I want to sell (and can find a buyer ), at least I will be able to legally sell my unit on without any extra bother.

[craigt3365]

Will we get a huge housing crash' date=' with prices falling over to almost nothing?

[/quote']

Look at the over 50% fall in prices of villas in Phuket...

Care to buy a company?

Really? What price range are you referring to? Also strangely enough a non descript house on a small 600 sqm plot of land is called a "villa". I certainly would not classify this as a villa nor have I seen houses in the upper price range "falling by 50%". Care to share where these fire sale villas are?

Phuket.. architect designed mega house.. on a golf course.. from mid 30m's to 12m bought by a bangkok Thai to just sit on.

So what does that have to do with a company? Housing prices are crashing all over the world. Nothing unique to Thailand.

[Penkoprod]

If I walk for 5 minutes in Pattaya I can see at least 100 breaches of various laws. Any day, any time of day. And there are probably at least 100 more that I dont even notice or know about. I suspect the same applies elsewhere.

Every now and again there is a "clamp-down" and some or all of the infringing parties may or may not be dealt with, in whatever fashion seems appropriate to those in charge.

Why does anyone imagine that the situation with farangs owning land via illegal nominee company structures is in any way different? Just like begging, playing the guitar without a permit, gambling, yaba-taking and driving a motorbike without a helmet or licence, it is illegal and one day those doing it will probably be looked into. The only real question is "when?". Just because many people do something doesnt make it legal de facto.

Personally I would rather my money was not invested in any sort of structure that isnt 100% legal. Property here is a dodgy enough game without having to worry about whether you legally own something, or whether your nominees will steal it from you, or whether the government will decide to sequester it or punitively tax you on it because you shouldnt be owning it in the first place.

As such I would never consider buying any property in Thailand in anything other than foreign name. And that name will be mine alone. And if the Thai government decides that this limits me to buying only condos, so be it. At least I know where I stand, and that if one day I want to sell (and can find a buyer ), at least I will be able to legally sell my unit on without any extra bother.

You are NOT supposed to make perfect sense on here. Go get the dunces cap and stand facing the wall !!!!

EXCELLENT post, really. I doff my cap to you, sir :clap2:

Penkoprod

[MAJIC]

Just a question or two on this house purchase in the Company name.

And so I can understand the Company Ownership system in Thailand,and the Safety issue as per the OPs Question?

Q,1 Is it true that in order to purchase your Company as a Farang,you need six Thai Directors?

Q,2 Is it also true,you can only own 49% of your said Company?

Q.3 Is "Your House" Purchased through the Company "Yours" or a Company Asset?

Depending on the answers to the Questions above,Does your House stand alone,as "Yours alone",If the Company goes into Liquidation,or is it part of the Company Assets?

And finally,should Liquidation happen,are the Company Directors entitled to a share of the remaining assets,after Company creditors have been paid?

Edited May 21, 2011 by MAJIC

[Darrel]

You really dont need to worry about the questions relating to liquidation because the simple answer is that a foreigner cannot legally own land in Thailand, even by subterfuge.

The closest that farangs get to owning land is to create/buy a company of which they can only own 49%. This company owns the land (and house) as a company asset. 51% of the company must be owned by Thai persons, and in order to retain control the farangs often create preference shares with majority voting rights. There are also techniques like collecting pre-signed sales contracts from the Thai persons, which can be used to keep control of the value, or getting loan notes (IOUs) from them. None of these are legal as the law is quite specific that the Thai persons have to put their own money into the venture, and not be using money from the farang, and that they should not be nominees.

The only safe way to own a house in Thailand is to lease some land and build a house with the correct building permissions in your name. You then own the house and have a secure tenancy on the land for 30 years, and possibly a second 30 years if you live that long. As a farang you will NEVER own the land yourself and anyone who tells you that you can is a liar.

The only thing that I dont understand is why the government doesnt just introduce 99 year leases (and tax them accordingly). This would cover nearly all buyers' needs, even those with young families who want to be sure to pass something on. I suppose the assumption is that a new Thai house will not last more than 30 years anyway, so there is no need to plan further ahead.