New Property Law Stuns Foreigners

[highdiver]

The following was on the bangkok post todat and was also discussed in other forums.

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New property law stuns foreigners

Bangkok (dpa) - 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.

"The property boom ended on May 25," said Ronachai Krisadaolarn, managing director of Bangkok International Associates, a Bangkok-based legal consultancy firm that caters to foreign clients.

Thailand has strict laws prohibiting foreigners from directly purchasing property themselves although loopholes in the law allow them to own land and their houses through long leases or a "nominee company," providing the company is majority Thai-owned.

It is common practice for such "shell companies" to include Thai nationals who have been paid to act as nominees to facilitate the deal and who have invested nothing in the purchase.

The new regulation, signed by Suraart Thoingniramol, deputy permanent secretary of the Interior Ministry, is designed to halt the use of such companies for property purchases in the future.

"If it appears that an alien holds shares or is a director or it is reasonable to believe that a Thai holds shares as a representative of an alien, the officers shall investigate the income of Thais holding shares, delving into the number of years [they have spent] in the current profession and monthly salary," reads a translation of the law. "The provision of necessary evidence is required."

The new regulation is actually an enforcement of Thailand's existing laws, legal experts said.

"It's not a radical change. It's a radical implementation," Ronachai said.

The regulation has already started to stall home sales to foreigners, sources said.

"There's a lot of confusion," said Simon Landy, managing director of the Primo Co, a property-development firm. "Some land offices don't know what to do with it, and many have simply stopped transferring land."

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To shed further light on the situation the following was posted on a nothere forum.

In the New Alien Business Act (March 3, 2000) is stipulated that "Any Thai national or Thai juristic person who provides assistance or holding shares on behalf of the alien, including an alien who allows Thai nationals or juristic person to conduct such act shall be subject to not more than 3 years imprisonment or fine of Thai Baht 100.000,--. to Thai Baht 1.000.000,--. or both imprisonment and fine.

These nominees are provided by Thai Lawyers and through "legal" or lawyer companys run by foreigners all over Thailand. All this lawyers and "legal" companys now that establishing a company to hold property (land and/or house) where as the 51% Thai owners are formed by office staff, maids, drivers, girlfriends and other persons (there salary most of the time not more than a few thousand a month and there bankaccounts close to zero) is illegal in Thailand. But it is al about greed and most of them are not up to provide legal security for there clients.

a further post I think exreses the outcome of the above:

the wonderful upside to all this is that hopefully there will be a mass exodus from these shores of those paragons of truthfulness and good business practice , the british land agent and seller of bali fusion infinity pooled dreams , along with a good number of swaggering loudmouthed jumped up brit brickies and builders and a whole lot of bottom feeding chinless hangers on who have turned beautiful landscapes into tawdry and third rate falang ghetto ghost towns.

there should also be plenty of tarted up toyota fortuners flooding the second hand car market soon.

the enforcing of these old laws is long overdue and very welcome.

thais (and after all it is their country) without land have never been happy with the way land prices have escalated in many areas , putting even the smallest plot well out of reach to them.

increases in land prices and the ridiculous prices asked for and obtained for poorly built homes have contributed greatly to the atmosphere of greed and dishonesty that has been spreading like a filthy pox in so many areas of thailand .

an undercurrent of resentment towards falangs is also a byproduct of the uncontrolled expansion of these "dream homes" that are now turning into nightmare homes.

hopefully those who have paid for the title to their houses wont be dispossessed , but if this crackdown slows down the pace of development , then it will be a blessing.

They are only now putting the burden of proof on the company to show the source of the income, and the integrity of the shareholders before registering any NEW property. If you can not provide this proof, they will not register.

So what do you People of Samui think will happen ??

Will all the over priced developers post a "dont worry... all is same response"???

[Prakanong2005]

Deafening silence from the Property Sellers who usually rush to defend themselves on this Samui board

It is posted on another board that a guy went into an estate agent on Samui yesterday armed with the knowledge of the recent changes to test the reaction of the agent.

He was met with the response that the company ownership was no problem and the Govt actually encourage it - ROFL.

Now if this agent did not know of the recent changes he is a subnormal imbecile or a total bare faced liar as the situation stands today.

[Thaipwriter]

Now if this agent did not know of the recent changes he is a subnormal imbecile or a total bare faced liar as the situation stands today.

I think your being a bit generous with the "or"

"and" is more like it

[cdnvic]

This is being discussed extensively in the news section.