New Property Law For Foreigners Spreads Confusion

[cclub75]

Still I don't believe that this "report" from the minister means a clear shift of policy, there might be an explanation for the paranoia-lovers (in which i classify myself...).

The government is trying to curb the too obvious property boom (Pattaya for instance, or Phuket), which is due to farang "owners" (no need to be a cop to find out this fact, it's obvious).

My theory : it was "free wheels" after 1997 in order to inject money into the system, to create inflation.

But now, the main aim of the government is to curb inflation (the fake one from the "CPI" (core price index)) and the real one (every day life), without (if possible) increase interest rate (next test the 7 of june, with the meeting of BOT, we will see).

On one hand they can't make a new law that would really forbid foreigners to "own" lands in Thailand. It would be "too mut", isn't it.

But they could try to cold down the market a little bit (with such a report, and if you judge the reactions on Thaivisa, it will be a success !).

So to summarize : create a little bubble-burst in the property market, to ease inflation, by attacking the top of the market (aka farang orientated), without increasing the interest rate (wich would dammage the whole economy, especially the "productive" economy, with the export industry).

At the end of the road, it would be a very rationnal way of thinking : between 2 evils, you choose the little one.

Oh non, I must be really paranoid. I need to drink another cup of tea. Sorry.

i think this whole issue is about the unavoidable and up-comming property crash, which i believe will be bigger that 1997/8, property has become way to overpriced, i mean selling a 2-bedroom condo for bt25m, which you would have to rent out at least for bt.150,000 a month, which is absolutly stupid considering i live two doors down in a similar condo for bt.12,000 a month.

[Jimbo551]

Upbeat

Ok I agree it is all a mess and worrying right now BUT

like anywhere lawyers will eventually find a way out of this for us purchasers. OK it may be less secure that before (it was always insecure) but we have a choice to make here if we really want to live in Thailand.

I am told by a laywer that changes to the company set up will be needed.

You pays yer money and you takes yer choice.

IGive it a few weeks and things will get sorted out, for sure they dont want to lose the foreign land purchaser although they may make it tighter legally for us.

I agree entirely and I still think this will end up more of a tax issue. As other posters have said this country is controlled by the Chinese society and they probably have the most to lose by taking this issue too far.

Yes, it can be argued that the law had been bent if not broken, but it has gone on for such a long time with the tacit acquiecence of the Thai authorities that to take action against all the companies set up to acquire property here would be a major undertaking probably beyond the facilities available to do it. In the meantime it would destroy confidence and significantly reduce inward investment. I do believe this will end up more of a tax issue and that the ever pragmatic Thai politicians will see a way to turn this to their advantage, raise some taxes but not cut off the flow of funds from overseas. We have to wait and see over the next few days what transpires.

The Thais I have spoken to are appalled that this is happening as they see it as potentially ruining their businesses which rely so much on the foreign market.

The suggestion has also been made that this will enhance the Condo market. I do not see how as foreigners can still only own 49% of a Condo building - the remainder must to be Thai and if you are seen to be chasing one sector of the property market out of Thailand, who is to say Condos will not be next!

[Gary A]

I think you may be surprised at the number of Thais who own condo units. The complex I bought in, Lalana on Soi Chaiyapruk in South Jomtien has less than 20 percent of the units owned by farangs. I would guess that the prices there are going to go up higher than they already are. The units there have appreciated at least 50 percent in the past two years.

[thestirfry]

I have land but have not yet started building,

Should i sell the land now?

What do you experts reckon?

[taxexile]

i have lifted this from another thai expat forum where this subject is also being discussed.

the poster lives in naklua

This thing may be moving along faster than thought? I have a neighbor here who has two single family houses. The main dwelling he bought under an LTD company. The second is a rental property in his Thai wife's name. They have been honest people as they pay regular taxes on the income they receive as rental income, in fact, the local tax person visits them quarterly, as it's a big house and rents for 75K Baht per month so the revenue is significant.

He told me this morning that when the tax woman showed up last week, she had all the facts that their primary dwelling was purchased under an LTD company. She has given them two weeks to supply her with: 1) The names, addresses, and phone numbers of all the Thai directors. 2) The salary records showing what these directors have been paid. 3) Proof of what the "core" business purpose of the LTD company is. 4) Tax payment receipts that the LTD company has paid on the revenue the "core" business has generated.

He and she are about ready to S&*t bricks as there is no way they can come up with this stuff unless they forge everything and, do it within 2 weeks. He said he doesn't think he has any alternative but to transfer ownership of house #1 to his wife immediately and disolve the LTD company. Then, be honest with the tax person and see where the chips fall. He's also thinking he could lose his visa and get blacklisted? Stay tuned for updates if he tells me.

these are indeed interesting times we live in.

[LoveDaBlues]

I have land but have not yet started building,

Should i sell the land now?

What do you experts reckon?

Unless you're Thai you can't sell land as you can't own land to start with......so this post is puzzling.

[LoveDaBlues]

i have lifted this from another thai expat forum where this subject is also being discussed.

the poster lives in naklua

This thing may be moving along faster than thought? I have a neighbor here who has two single family houses. The main dwelling he bought under an LTD company. The second is a rental property in his Thai wife's name. They have been honest people as they pay regular taxes on the income they receive as rental income, in fact, the local tax person visits them quarterly, as it's a big house and rents for 75K Baht per month so the revenue is significant.

He told me this morning that when the tax woman showed up last week, she had all the facts that their primary dwelling was purchased under an LTD company. She has given them two weeks to supply her with: 1) The names, addresses, and phone numbers of all the Thai directors. 2) The salary records showing what these directors have been paid. 3) Proof of what the "core" business purpose of the LTD company is. 4) Tax payment receipts that the LTD company has paid on the revenue the "core" business has generated.

He and she are about ready to S&*t bricks as there is no way they can come up with this stuff unless they forge everything and, do it within 2 weeks. He said he doesn't think he has any alternative but to transfer ownership of house #1 to his wife immediately and disolve the LTD company. Then, be honest with the tax person and see where the chips fall. He's also thinking he could lose his visa and get blacklisted? Stay tuned for updates if he tells me.

these are indeed interesting times we live in.

This is scary for anyone in the same boat.........

[thestirfry]

Yeah sure is confusing, so can my thai company partners sell it?

[LoveDaBlues]

Of course THEY can. Clears up the confusion. Thanks.

[veteran]

Again TIT

[boppia]

Confusing. Thailand is not a developed country so don't expect much from it. It's leaders and elite ride on the backs of the poor, weak, and exploitable. The violence that periodically shows its face in Southeast asia (Cambodia, Indonesia, communist movements, ect) is a result of the leaders and elite here just not giving a ###### about their countries people.

Other countries should have a reciprical policy against Thais. The Thai poor will not suffer; only the wealthy Thais who have land overseas.

[Noel]

In any case in regards to the effect on the condo market, uncertainty is not good for any market as the more nervous Nellies among us will tend to back away, perhaps for good. Also, in popular tourist areas, you do see lots of company owned condos for sale, so I suspect the percentage in some buildings is not so insignificant.

I actually doubt that, Thaiquila, but I do take your point.

The fundamental issue that some may overlook is the fact that any country can conceivably retrospectively change their laws at their whim, particularly laws concerning foreigners.

Food for thought for all...

[TJ xpat]

Thailand's new property law for foreigners spreads confusion

BANGKOK: -- Thailand's booming property sector has been thrown into confusion by a new regulation issued this month that requires all partly foreign-owned companies to prove the source of their funding before purchasing land, industry sources said Tuesday.

The new Interior Ministry regulation that went into effect on May 25 has already started to slow sales of housing estates in Thailand's popular seaside resorts, such as Pattaya, Phuket, Hua Hin and Samui Island, which have been specifically targeting well-to-do foreigners as vacation getaways or retirement homes.

Full story: (Bangkok Post)

Only last week I bought a section of land through my company name.

It can be done “BUT” you need to have everything correct.

If they can find fault it can cause you a long delay at the land office.

Normally it only takes around 2 hours to complete the process but because of a typing era in one of my papers it took 3.5 hours to complete with a thank you, wink wink.

Make sure as an xpat you have the paper work to prove where the money has come from to buy the property then you should not have a problem, good luck.

[sinkorswim]

I have land owned through a company. can the company sell the land to my wife and then I can lease from her for 30 years and then close the company.

My company might start trading in the next few months. If this is the case will I be ok to keep the land in the company name?

any sensible replies appreciated

Edited May 31, 2006 by sinkorswim

[stiggy]

Some interesting reading.

More paniky in hear than the ballroom on a sinking Titanic.

I have been advised my recent property purchase via company is fine,However any future purchase will be tricky as real traceable money from my official"Thai partners" will have to be proven to the land office (shock horror)

Personally Im out of property market for a while with the hope of cornering the money laundering market and makeing a huge sum of money,in order to buy that million dollar hilltop palace for a bargin in the coming months.

Im confident it will work out over time,

PS I bet the bars are busy tonight.

[Pakboong]

This is basically the wealthly elite saying we have had enough of foreign real estate developers and there excellient salesmenship and building standards. They need to be done with, and in will step the Thai (and yes probably Chinese-Thai developers) to copy the business models of all the foreigners in Phuket, Pattaya, Samui and the rest.

They don't mind that foreigners are being overcharged for housing, but they are mighty pissed that they are not the ones doing the overcharging.

And if they do - who will they sell to? If they destroy confidence in the market no one will come here. I know that TIT and "logic" does not translate here, but given that the foreign real estate investors have brought so much money into the country and there should be so much more to follow, what will be the conesequences of these actions?

I cannot accept that this is being instigated by Thai developers as that would be killing the Goose that laid the Golden Egg and most Thai developers I have met are well aware that their market is the foreigner with money, not their fellow Thais.

This must be coming from Politicians who did not buy vast tracts of land in the most popular locations and who cannot get their snouts in the trough. It comes from jealousy - someone has done what they were not capable of.

The guys at the top do not want our mone. They ran the Americans out of Thailand in 1975 thereby giving up billions of dollars. Our purpose with regard to helping Thailand recover from the late 90's financial crisis has been served. I am quite sure this is no accident that we are faced with these rule enforcements.

[Rudyruns]

I appreciate your input and I have been concerned about the upcoming changes that will complicate future purchases.

I guess when you look at the overall picture one must feel good enough to live here or find another place to lay his hat.

I only own a small condo in BKK, but rest of the time I rent, knowing the future can become more difficult in making a real estate purchase.

I guess just like America, if you don't hire a lawyer (not that this would be full proof) to get the pertinent information you could find yourself short changed.

Regards,

Rudy

This is basically the wealthly elite saying we have had enough of foreign real estate developers and there excellient salesmenship and building standards. They need to be done with, and in will step the Thai (and yes probably Chinese-Thai developers) to copy the business models of all the foreigners in Phuket, Pattaya, Samui and the rest.

They don't mind that foreigners are being overcharged for housing, but they are mighty pissed that they are not the ones doing the overcharging.

And if they do - who will they sell to? If they destroy confidence in the market no one will come here. I know that TIT and "logic" does not translate here, but given that the foreign real estate investors have brought so much money into the country and there should be so much more to follow, what will be the conesequences of these actions?

I cannot accept that this is being instigated by Thai developers as that would be killing the Goose that laid the Golden Egg and most Thai developers I have met are well aware that their market is the foreigner with money, not their fellow Thais.

This must be coming from Politicians who did not buy vast tracts of land in the most popular locations and who cannot get their snouts in the trough. It comes from jealousy - someone has done what they were not capable of.

The guys at the top do not want our mone. They ran the Americans out of Thailand in 1975 thereby giving up billions of dollars. Our purpose with regard to helping Thailand recover from the late 90's financial crisis has been served. I am quite sure this is no accident that we are faced with these rule enforcements.

[simon43]

I lost a 250K house in the UK to my wife. I renovated it, paid for everything in there and lost it all.

[\quote]

OK, to make you feel happier, I built a 800k pound house in 5 acres of land in the UK and lost it to my ex, plus 3k every month :)

Simon

[rexall]

One thing no one seems to be discussing is what this means, if anything, for the rental and lease markets. Assuming that this is serious, and assuming that it doesn't blow over in a few months, will rentals become scarcer and more costly?

Aloha,

Rex

[Mobi]

I think its far too early to see exactly how this enforcement of the law will end up in practice.

Please correct me if I'm wrong, but I'm almost positive that when they changed the law forbidding Thai wives of foreigners from owning land, didn't they also have a similar rule whereby the wife was required to prove that the money had not come directly from her husband and that she was not his "nominee"? in other words, it has to be money that she has earned or acquired in her own right? If I'm correct, it is similar to the Thai shareholder rule. Now, has anyone heard about wives being examined to check the source of their money before getting the land registered?

It would be interesting to know what the agents, property developers and lawyers are saying about this, across the highways and bi ways of Pukhet, Koh Samui, Pattaya and eleswhere. Maybe members could let us know what the "word is on the street".

Personally, I am very interested in two aspects of this crack down.

1. Will the authorities come after farangs/farang 49% companies who have "illegally" acquired land? If so, what will happen? Will they confiscate the land? Will they order it sold by public auction? Or what? It seems to me very unlikely that any of this may happen, but who knows?

2. Can existing companies that already own land, transfer the farang held shares to Thais? What sort of cost would this involve - I am thinking here of tax.

It would be nice to hear what the "experts"out there are saying, and how they think the whole thing will pan out in the long run.

BTW - if the farangs do lose their houses, there's a lot of potential law suits out there against all the local "Somchais the lawyer" and maybe even some bigger fish who have given bad advice.

But... I wouldn't like to bet on the outcome.....TIT

[GuestHouse]

It would seem from a recent poll here on TV that this issue only affects 14% of us.

MEANWHILE

Those property salesmen have gone a bit quiet all of a sudden - It would seem that is at least one blessing to be taken from all of this.

[taxexile]

again , a posting lifted from another expat forum where this topic is also being discussed , there was a meeting between a spokesman from the local land department office and local farang business people .

If you had been at the meeting today this would have been made clear to you and the rest of us.

The gentleman from the land office made it clear that Thailand wants farangs here and of course he went to great lenghs to explain the condo route.

As for the company route this has nothing to do with profits/salarys/or loans.

It was an axplaination of the fact that a farang can not own land and that the company route will be looked into. if it is found that a company was formed only for the purpose of buying land then they can seize the property pending a court case. It will then be for the courts to decide if and how much you may recieve from the sale of your land.

Someone at the meeting asked if they could sue their lawyer through the law society for giving bad advice, I will let others tell of the response that got.

For me, I worry about the older people who may lose their life savings due to these changes.

if these laws are actually rigourously and fully enforced then it is within the bounds of possibility that thousands of rai of prime phuket , samui , pattaya etc. land could be back on the market ,to be quickly snapped up by canny thais waiting in the wings with thick wads of cash.

Edited May 31, 2006 by taxexile

[monty]

It's more like 23% if you add up all the different companies used to hold land.

It does not seem to make a difference if the company is trading or not, big or small, Land and House is just ordered to vet all the Thai shareholders as actually contributing financially into the company, and with llegal money...

Mobi, a lawyer working at land and house told us it's only affecting new registrations at the moment, they themselves sincerely hope it's not going to get to checking older companies holding land, as it is them who cleared and approved those land transactions...

Do note that there is a law giving land and house the right to very closely check out companies with more then 40% Foreign shareholders, hence many lawyers advising on a 39-61% company for land ownership purposes.

However AFAIK in Pattaya, none of these checks ever happened on the 49-51% companies...

Pretty soon we'll get reports how things are being handled at the commerce department where the companies are registered. As long as they don't get any letters from the Ministry of interior, chances are nothing much changes for existing companies currently holding land.

It seems like this whole thing is devised to curb the very big amount of property development and speculation being done by foreigners using front companies... Guess it's working. Some of them in our beloved area are very close to crying at the moment...

Edited May 31, 2006 by monty

[logbags]

It is one thing to set up laws to prevent money laundering and farangs from running clandestine empires in the realm. It is another to persecute the honest investor who wants a quiet retirement in Thailand with his Thai wife and family.

It is a bit rich given the whole sordid Shin Corp sale and the tax avoidance by the beloved Thai Prime Minister. Flogging condos at inflated prices as long as it is one of the rich elites off-spring or cronies doing it is pretty much acceptable. Heaven forbid a farang doing it.

It is no secret there is a lot of dirty money in invested in Thailands tourist and hotel industry. Checking where offshore money comes from is not so bad if handled seriously. Unfortunately it will just be another excuse to solicit a pay off like most of the current laws.

Many of the current rulers seem to conveniently forget their own parents or grandparents were also immigrants not that long ago. All too often very little thought is put into these things.

[taxexile]

Some of them in our beloved area are very close to crying at the moment...

best news i've heard all day.

you would have thought that some of these glorified salesgirls would have posted some thoughts or advice today for the benefit of all their wonderful customers (round the clock support , call us anytime , we make your dreams come true) , they post quickly enough when they have an agenda to promote.

[monty]

It doesn't have anything to do with money laundering...

It is the Thai shareholders who now have to prove that they actually put money into the company, and that the money is theirs, and not the foreigners. Meaning that the company is really a Thai majority, both legally and financially.

No mention at all is made that the funds the foreigner brings in has to be checked for legality...

[monty]

Tax,

Not exactly talking about the sales girls, more like about those foreigners who are stuck in the middle of their half finished / sold development...

They gambled when they started doing this business, as I'm pretty sure they did know the legal side was not very clear (I guess most did realize land speculation is by law restricted to Thai nationals!)

Yet crying they are doing...

[chatters]

Tax,

Not exactly talking about the sales girls, more like about those foreigners who are stuck in the middle of their half finished / sold development...

They gambled when they started doing this business, as I'm pretty sure they did know the legal side was not very clear (I guess most did realize land speculation is by law restricted to Thai nationals!)

Yet crying they are doing...

I get tired of men saying MY LADY IS DIFFERENT??? BUll SHit they are all the same they will get you in the end.?? A bloody lot of farlang here are so bloody ugly, I dont think they could get a nice women in there own country????????????? but they will certainly get one here, so best of luck

[Lazy Sod]

I've asked this many times, on this forum, and also to others, but no answer to date. It's more relevant now than ever so I'll ask it again. . .

The main problem with the Company route is that the 51% nominees used by law firms do not have a real stake in the Company, and do not contribute anything to the purchase.

But what if the Company is structured 49% Foreigner, 51% Thai spouse? It would be difficult for the authorities to say that the Thai spouse in purely a nominee, and the money used to purchase the house can be claimed to be joint marital property or cash gifted to the spouse.

OK, the Company may or may not be trading, that's another issue, but the latest clampdown is based upon the use of nominees. Is the Thai spouse considered a nominee or not?

[taxexile]

Not exactly talking about the sales girls, more like about those foreigners who are stuck in the middle of their half finished / sold development...

i feel very sorry for those people , but we will have to wait and see how this pans out.

it would be very bad publicity for thailand if thousands of investors went home crying to their local press about how they were "cheated" out of their savings by a thai government that allowed laws to be flaunted and then started enforcing those laws when they saw that there was some profit in it.

land sellers and project developers have also been economical with the realities of the law here and should take part of the blame too if things go really sour. but they will do what land agents and lawyers have always done , they will take the money and run.

their greed over the past few years has led to this inevitable conclusion.

hopefully , the authorities will be pragmatic about enforcement and "innocent" buyers ( although incredibly naive and somewhat stupid) will not suffer .

the land agents and lawyers should be held accountable , but we all know they wont be.