Land Crackdown Targets Thai Shareholders

[danone]

imjustagirl:

the current baht fluctuations are nothing unusual, mostly related to fluctuations of major currencies.

you cant devalue the baht anymore, because it is moving more or less freely.

I think it is a safe be though that it will slowly depreciate against major currencies, seeing the baht to the dollar at around 50 in 4-5 years.

if you have your live savings in baht and you plan to spend your life in thailand, I would not bother too much.

otherwise it is a wise decision to have money in property (convenience is king!!!) or hard currencies, as you will surely make gains over the years against the baht.

just have in thai baht what you need for the current living expenses. but dont have all your money on a baht savings account. you can as well burn money.

[taxexile]

this is from another expat forum where this topic is under discussion.

Have just received this news from my lawyer. We were due to sign the contract on our off-plan property this week and pay the first 20%.

´According to the Ministry of the Interior and the Department of Land have set up the rules and regulations, which have been into force on the 29th May 2006 since then, pertaining to the acquisition of land for the company with foreign shareholder (s) for the authorities to comply with.

The Department of Land will not allow us to have a purchase of property by a company in case that the company has foreign shareholders or foreign directors. Therefore, we strongly recommend, in order to solve the problem, that we will not put your name as a shareholder or a director as long as your company setup until the company take a receipt of the transfer of the property.

We are seeking your consent that your company will be set up with all 100% of Thai shareholder and a Thai director. In this regard, please you rest your assure that all Thais will be our staff that we will make change in respect of shareholders and director to what your intention is within 7 days after the day that the company takes a receipt of transfer of the property (or soonest as possible).´

They have attached a translation from the Ministry of the Interior and the Department of Land. If anyone is interested in seeing this email me and I will forward.

I for one will be pulling out of the purchase, I don´t need another warning sign. I know they are lawyers but I don´t know them personally and who knows what will happen next?

if that sleazy solution is the best that the lawyers and agents can come up with to offer a purchaser then things must be pretty desperate.

and if that is typical of the kind of advice being dispensed by agents , then the sooner they are put out of business the better.

i still maintain , as i have done from the beginning , that most agents and those in bed with them are the lowest of the low . in their business practice and in their greed , they only sow the seeds of disharmony between thai and falang.

the selling of land is always an emotive business , and especially in a country so fiercely patriotic and nationalistic as thailand , foriegners should never have been allowed to get involved in this business in the first place. but they were easy meat for equally greedy thais with land to sell to partner.

the sooner there is a halt on developments targeted purely at falangs the better for thailand and the better for the falang community here.

[ramidin]

The whole thing is TINK TONK! In this land of official xenephobia, investing, is like dropping a gold coin in the desert sands, the more you try to retreive it; the further it sinks!

Very well put,

I've always been inclined to rent instead of own, so it's a none issue to me, keeps my mobility unencumbered,

Knowlegeable men and women; how or does this pertain to me (a U.S. A citizen) under the treaty of amity with Thailand? I as a U.S. citizen can own a majority or all of the shares of a company. So my question is does this latest foray by the min. of interior remain irrelivent to me?

As far as I was led to believe Amity companies are not allowed to own land?

Maybe someone else can shed some light?

[stevieff]

Going back to the initial quote by George, I get the feeling the authorities are trying to stop the trend where company's, that are falang controled, are buying large plots of land then sub-dividing them, re-registering the plot's with the land office then selling on the individual plots at a greater profit.

I don't think they are so much targeting 'Pattaya Pete' who is living with or married to 'Nakon Nok' and just trying to keep his property should things got tit's up.

None of the government spokespeople were specific in who they were targeting. Any farang holding land thru a company where the thai nominees can't prove their source of capital is vulnerable, no matter how small or large the land holding. Could be a 4 million baht house or a 200 million baht resort, doesn't matter. Someone mentioned on this site that that foreign-owned hotels and resorts would be exempt, because they're engaging in trade. They are not exempt, because they own land and that is illegal, period, unless somehow or another they can prove the thai nominees source of capital. Many businesses, homes, etc, are at risk here, not just land speculators. Also, if this law is enforced, people who have land and house leasehold can expect to see their property values drop as well.

[fisherd3]

If it clears out the speculators I am all for it. Anyone who tries to circumvent the law should be punished.

That includes any foreigner who uses the company loophole 'to circumvent' the clearly stated Thai governments position (law) on foreigners owning land, and acquire control of land for their benefit whether defined as a speculator or not.

In fact it is part of the western phsyche to expect an increase in the value of property they purchase and so every one of them is a speculator , if they did not expect an increase in the value of their property it would clearly be an uneconomic proposition to invest in it. (With possible exception of smallholdings in the middle of nowhere).

[Martin]

All nations have some xenophobes (people with a deep dislike of foreigners) and some xenophones (people with a fondness for foreigners), but the majority will be a mixture.

That is, they like some aspects of foreigners and dislike other aspects of them.

From what, over the centuries, the people living in Siam and Thailand saw of foreigners, the dislike can be expected to have come out on top.

(Though those few who went to study in the West may have seen a better-balanced scene---to the extent that they may have become pro foreigners.)

I sense that there is a feeling among the more-educated Thais that Thailand is getting too many 'bad' foreigners and needs to curtail the activities of those Thais who are willing to 'sell out' Thailand in order to get dollars into their own pockets.

So this news doesn't surprise me.

Expect more on the same lines. Maybe an end to back-to-back 'tourist' visas.

(And, by the way, trust not the baht or the dollar. As a few of us said here last June (when it was at 420) put the bulk of your investment in gold. Even now, at 650, it is safer than US$-dependant currencies.)

[Levent]

So is there any lawyer or legal advisor out there who knows what is going on exactly with this new law? As a farang couple living here in a house owned through a company, this development is very concerning to us. We would like to get as detailed info as possible about what's best to do.

[Supachok]

Many here have been guessing at what has motivated the government to suddenly make such a profound policy change. Clearly this directive must have come from the top, so why rock the boat now?

One possible explanation is that the Thai government is attempting to devalue the Thai baht by putting a plug on certain types of foreign investments.

Recently, the Thai government has been very concerned about the strength of the Thai baht: a strong baht hurts exports and tourism which together make up a large part of the Thai economy. A high level banking report on the economy was summarized in an article in the Bangkok Post two months ago; the report concluded that large influxes of foreign investment capital were believed to be the root cause. If the policy makers believe foreign capital is the culprit than it stands to reason that they also believe curbing the inflow should arrest or even reverse the effect.

It is conceivable the government has chosen to target foreign property investments hoping this will lower the baht against other currencies and thus protect exports and tourism

Although nationalistic feelings, fears, racism, etc., are contributing factors, discovering the real source may be as simple as looking at which parties might benefit the most from such a significant policy change: the export and tourism industries certainly would benefit from a weaker baht. And it’s no coincidence the most powerful and influential groups in Thailand monopolize these industries. As for their enforcers, it’s an easy sell for the Thai authorities to claim they are just protecting the Thai people from evil foreign lawbreakers/land stealers. Ultimately, whether this policy sticks or not, will likely hinge on the Thai public accepting or rejecting this policy. And that will probably depend upon whether this policy directly affects them financially or not.

[Mobi]

If it clears out the speculators I am all for it. Anyone who tries to circumvent the law should be punished.

That includes any foreigner who uses the company loophole 'to circumvent' the clearly stated Thai governments position (law) on foreigners owning land, and acquire control of land for their benefit whether defined as a speculator or not.

In fact it is part of the western phsyche to expect an increase in the value of property they purchase and so every one of them is a speculator , if they did not expect an increase in the value of their property it would clearly be an uneconomic proposition to invest in it. (With possible exception of smallholdings in the middle of nowhere).

Not strictly true. I really don't care if the value of my house drops through the floor. I plan to stay there till I die, and then leave it to my wife. Presumably, by the time I die it will hold some value for her to use beneficaially, but it's not a big deal. In any case, most of the value in my house is in the building and fittings - not the land, so presumably when the market stabilises, the value of what I've built would be taken into consideration in the overall value of the property. But, as I said, its academic - unless these land office people throw me out, I'll be there for the duration, and I'm really not bothered what the house is worth, now or in the future.

I think us "land owners" should all stop panicking, and just wait for the dust to settle. I would transfer my 49 % holding to my wife tomorrow if i was sure that would solve the problem. But ,as yet, nothing is clear, so I think the best policy is to sit tight for a while and see which way the wind blows.

Edited June 1, 2006 by Mobi D'Ark

[stevieff]

If it clears out the speculators I am all for it. Anyone who tries to circumvent the law should be punished.

That includes any foreigner who uses the company loophole 'to circumvent' the clearly stated Thai governments position (law) on foreigners owning land, and acquire control of land for their benefit whether defined as a speculator or not.

In fact it is part of the western phsyche to expect an increase in the value of property they purchase and so every one of them is a speculator , if they did not expect an increase in the value of their property it would clearly be an uneconomic proposition to invest in it. (With possible exception of smallholdings in the middle of nowhere).

Not strictly true. I really don't care if the value of my house drops through the floor. I plan to stay

there till I die, and then leave it to my wife. Presumably, by the time I die it will hold some value for her to use beneficaially, but it's not a big deal. In any case, most of the value in my house is in the building and fittings - not the land, so presumably when the market stabilises, the value of wh

at I've built would be taken into consideration in the overall value of the property. But, as I said, its academic - unless these land office people throw me out, I'll be there for the duration, and I'm

really not bothered what the house is worth, now or in the future.

Perhaps we see things differently. I, too, hold land thru a company, but unlike you, I do care about my wife's financial future after I die, and so I am concerned about property values.

I think us "land owners" should all stop panicking, and just wait for the dust to settle. I would transfer my 49 % holding to my wife tomorrow if i was sure that would solve the problem. But ,as yet, nothing is clear, so I think the best policy is to sit tight for a while and see which way the wind blows.

[logbags]

The first thing to do is not panic or fall victim to false prophets. I doubt this law will be enforcable as it will open a can of worms

For example you may then have a case against your lawyer for setting you up a comapany that was ALWAYS technically illegal as the Thai shareholders were always just stooges.

Secondly it may increase interest in Thai owned companies and their shareholders. I doubt Thaksin and co will want any more scrutiny of their own personal dodgy dealings.

There are many ways to get around this. I doubt they will go after the retired farang or expat. I think they just want to slow the quick buck merchants down a little

Supachok may also be correct. The ramping of the baht and stocks seem to follow a sinister pattern according to the vsted interests of a few in power.

My friend who joined Thai Rak Thai was a lackey and worked closely with Thaksin, he has left Bangkok and moved to a quiet province to open a spa. I think he was a bit overwhelmed by the whole nasty scene of Thai politics.

p.s messages keep appearing on my screen and disappearing, how do you see them??

[Scott]

I find it interesting that people talk about "leaving their house to their Thai wife." In case you aren't aware of it, she probably already owns it!

I have never understood the fascination with having to own land here. Maybe because I've owned a couple of homes, my perspective is different, but it's a headache. It's not my country. If they want to boot me out eventually, they can. Owning land or a house would be an additional burden.

For those people who are married to a local and have children, the option of having the house in the spouses name is probably the best alternative, provided it's a reasonably long relationship with not a lot of chance of a break-up.

I think caution is the needed in any land deals here. Extreme caution.

[tim77]

Gazette News: Land crackdown targets Thai shareholders

BANGKOK: -- The Ministry of Interior has ordered a crackdown on property companies attempting to circumvent Section 74 of the Land Act in order to allow foreigners to control land ownership.

Section 74 states (unofficial translation): “In the process of registering [land] possession rights and contracts between parties … officers have the power to investigate both parties and call them for questioning or have them send relevant documentary evidence as is necessary. Officers will proceed as is appropriate to the case.

“In cases where there is reason to believe that the request to register possession rights will evade the law or where there is reason to believe that land is being bought for the benefit of foreigners a request for an order from the Minister will be made. The Minister’s order will be final.”

The crackdown will target Thai partners in Thai-foreign ventures, examining their inco me, their professional qualifications or experience, and their credit history.

In an order dated May 15 and issued to all provincial governors, the Deputy Permanent Director of the Ministry, Sura-art Thongniramol, notes, “The Ministry of Interior has received reports that there are foreigners working with Thais or [engaging] Thais to register a company with the aim of buying and selling immovable property as a business venture.

“At the initial stage a house and land are purchased for residence or [for use as] an office and later [the aims are changed] to selling and subdividing for sale to foreigners … which is illegal.”

Provincial officials are ordered, “as protection against bypassing the law”, to examine limited companies, limited partnerships and general partnerships “having the aim of carrying out business in immovable property.”

The order continues, “If it appears that an alien holds shares or is a director, or if 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 been] in [their] current profession, and their income. The provision of necessary evidence is required.

“If a loan was taken [by the Thai] for the purchase [of shares] evidence of the loan is required.”

The order does not specify which officials will be responsible for investigating suspect companies, nor does it set out, except in the vaguest of terms, what will happen after the “investigation”.

All it says is, “If after due investigation it can conceivably be believed that the request for registration … is to bypass the law or [it can be believed] that [those involved are buying] land for the benefit of an alien as defined in Section 74 … the officers who undertook the investigation shall forward the findings to the Land Department to a wait the order of the Minister.”

No deadlines are set for how long an investigation will take, or how fast the Minister will be required to deliver a judgment.

Local reaction was hard to come by. The Phuket Provincial Land Office was not aware of the new order. However, one Thai involved in the property industry, who did not wish to be named, remarked that it seemed “like a good thing, as long as the application is fair”. He added that he worried that it might be used by some “for their [own] benefit”.

-- Phuket Gazette 2006-05-31

This topic originated from here.

[tim77]

It looks to me like the Ministry is targeting foreigners who are in the business of real estate development and not foreigners who are buy a house for their residence.

If the Ministry's actions were interpreted as preventing the sale of homes as residences to foreigners, this would be a real blow to the Thai construction industry. And such an interpretation would be contrary to Thai goal of promting Thailand as a vacation and retirement retreat.

[Napolean_Complex]

I find it interesting that people talk about "leaving their house to their Thai wife." In case you aren't aware of it, she probably already owns it!

I have never understood the fascination with having to own land here. Maybe because I've owned a couple of homes, my perspective is different, but it's a headache. It's not my country. If they want to boot me out eventually, they can. Owning land or a house would be an additional burden.

For those people who are married to a local and have children, the option of having the house in the spouses name is probably the best alternative, provided it's a reasonably long relationship with not a lot of chance of a break-up.

I think caution is the needed in any land deals here. Extreme caution.

Id like to agree on this statement. I was initially planning on purchasing land in thailand, but after reading this articvle I dont think ill be able to bgring myself to invest in LOS anymore. To much to lose, little to gain

[Mobi]

Perhaps we see things differently. I, too, hold land thru a company, but unlike you, I do care about my wife's financial future after I die, and so I am concerned about property values.

Hey there - of course I care about my wife's financial future. I do have a lot of other assets that will be going her way after I die, which will be substantially more than any house I happen to leave her in Thailand. Whatever happens she and her family will be extremely well off for the rest of their lives - I'm simply not relying on some dodgy house ownership in Thailand to provide for that security - that's why I'm not having sleepless nights about it, and not too bothered about the value going up or down. OK?

[Napolean_Complex]

All nations have some xenophobes (people with a deep dislike of foreigners) and some xenophones (people with a fondness for foreigners), but the majority will be a mixture.

That is, they like some aspects of foreigners and dislike other aspects of them.

From what, over the centuries, the people living in Siam and Thailand saw of foreigners, the dislike can be expected to have come out on top.

(Though those few who went to study in the West may have seen a better-balanced scene---to the extent that they may have become pro foreigners.)

I sense that there is a feeling among the more-educated Thais that Thailand is getting too many 'bad' foreigners and needs to curtail the activities of those Thais who are willing to 'sell out' Thailand in order to get dollars into their own pockets.

So this news doesn't surprise me.

Expect more on the same lines. Maybe an end to back-to-back 'tourist' visas.

(And, by the way, trust not the baht or the dollar. As a few of us said here last June (when it was at 420) put the bulk of your investment in gold. Even now, at 650, it is safer than US$-dependant currencies.)

Being from Canada where anyone can buy anything here depending on if you have the money, this type of treatment is unfamiliar to me. You can come to my country and buy anything you want, but I cant go to LOS and buy what I want. Extremely aggravating. Well at least I know where they stand. Im never gonna have money in a thai bank...Who know whats next

[grtaylor]

People with a fondness foreigners would be "xenophiles". Xenophones would be people who sound like foreigners!

All nations have some xenophobes (people with a deep dislike of foreigners) and some xenophones (people with a fondness for foreigners), but the majority will be a mixture.

[grtaylor]

I don't know if its only me, but I do get a bit fed up with the advice which usually goes something like "simple - buy in the name of the Thai wife". Some of us are not married, have no intention of ever getting married, enjoy being "khon deeow", and live/work here because Thailand, despite everything, is a great place to be!

I say this as I contemplate having to go back to the UK soon for a month's holiday (filial duty!). I'm usually screaming to get back here after one week there!

[Dragonman]

A couple of remarks regarding queries on this and the previous thread.

With regard to the question raised by Mr BJ and others. The Land Office originally interpreted the Constitutional Court ruling as meaning that the money to purchase had to be the wife's. This is still the case, but it has been acknowledged that it can previously have been the husband's money and the husband may provide as a"gift". All gifts in law are outside 50% divorce regulations. Hence there is no need to worry about checks on where the money came from.

Others have asked about transferring to your wife from the Company name. Other than the financial aspects there is no reason why this cannot be done. In fact it may be well to line up a Thai National for transfer and lease in case someone comes knocking. But no real need to do anything until then.

[Mobi]

I don't know if its only me, but I do get a bit fed up with the advice which usually goes something like "simple - buy in the name of the Thai wife". Some of us are not married, have no intention of ever getting married, enjoy being "khon deeow", and live/work here because Thailand, despite everything, is a great place to be!

I say this as I contemplate having to go back to the UK soon for a month's holiday (filial duty!). I'm usually screaming to get back here after one week there!

I'm not sure what there is to get fed up about. Your options are simple:

Rent a house, condo or apartment.

Buy a condo

Find a Thai you can trust (wife or whoever) and buy a house in his/her name. then arrange a 30 year lease, or maybe even 30 plus 30.

That's the options on the table at present. Take it or leave it.

(if there are any other options I'd be pleased to hear about them.)

Edited June 1, 2006 by Mobi D'Ark

[LivinLOS]

If businesses that own land are the focus now, whose to say that any business with a minority farang shareholder (but really owner operator) is not to be looked at next..

I mean basically that is the rule that has been broken is it not ?? So why not ALL companies that farangs have an interest in.

So glad I dont work or own anything I cant walk away from here.

[donx]

As I mentioned before, TORNADO advised against "company" ownership three and a half years ago ........... and yet this guy is banned ........... go figure. Lads ; if you want me off the forum please PM.

Cheers

Chris from Nai Harn

You may be happy to hear that Tornado is no longer banned. Glad to hear you received good advice.

As for me, if I invest in any future land in Thailand, I will have my wife buy it. We have three kids that can inherit it and I don't plan on having more than a small part of my savings tied up in Thai real estate. My wife already has several rai of farm land which may be all we ever need.

[donx]

If businesses that own land are the focus now, whose to say that any business with a minority farang shareholder (but really owner operator) is not to be looked at next..

I mean basically that is the rule that has been broken is it not ?? So why not ALL companies that farangs have an interest in.

So glad I dont work or own anything I cant walk away from here.

Based on the land office refusals that have recently been reported, I believe that the focus is on farangs owing land that is being reviewed. I remember reading something about a year ago that stated that the government was going to be making sure that companies were not being formed as a front for foreigners to gain land ownership.

[rcav8r]

So is there any lawyer or legal advisor out there who knows what is going on exactly with this new law? As a farang couple living here in a house owned through a company, this development is very concerning to us. We would like to get as detailed info as possible about what's best to do.

Yes, Levent, and when you get any ninformation, would you kindly keep us informed too. Thank you.

BTW - nice avatar.

MalcolmL

[VanZam]

I find it highly amusing that the suggestion of transfering total ownership to your thai wife is the answer... Given the stability of thai-farang marriages, I would think that's the last thing you should be doing.

[slimdog]

A couple of remarks regarding queries on this and the previous thread.

With regard to the question raised by Mr BJ and others. The Land Office originally interpreted the Constitutional Court ruling as meaning that the money to purchase had to be the wife's. This is still the case, but it has been acknowledged that it can previously have been the husband's money and the husband may provide as a"gift". All gifts in law are outside 50% divorce regulations. Hence there is no need to worry about checks on where the money came from.

Others have asked about transferring to your wife from the Company name. Other than the financial aspects there is no reason why this cannot be done. In fact it may be well to line up a Thai National for transfer and lease in case someone comes knocking. But no real need to do anything until then.

The one exception to this is that the "gift" must not be part of a Sin Sot

[Dragonman]

A couple of remarks regarding queries on this and the previous thread.

With regard to the question raised by Mr BJ and others. The Land Office originally interpreted the Constitutional Court ruling as meaning that the money to purchase had to be the wife's. This is still the case, but it has been acknowledged that it can previously have been the husband's money and the husband may provide as a"gift". All gifts in law are outside 50% divorce regulations. Hence there is no need to worry about checks on where the money came from.

Others have asked about transferring to your wife from the Company name. Other than the financial aspects there is no reason why this cannot be done. In fact it may be well to line up a Thai National for transfer and lease in case someone comes knocking. But no real need to do anything until then.

The one exception to this is that the "gift" must not be part of a Sin Sot

[/quote

Why? As "sin sot" is paid to parents and not the wife, if they decided to give to wife it would be a gift from them, not the husband. Did the Land Office come up with this "gem"?

[slimdog]

Why? As "sin sot" is paid to parents and not the wife, if they decided to give to wife it would be a gift from them, not the husband. Did the Land Office come up with this "gem"?

Not sure about the why, but the form which a foreigner has to sign allowing a wife to own property clearly states that the Money must not be part of a Sin Sot

[stevieff]

Perhaps we see things differently. I, too, hold land thru a company, but unlike you, I do care about my wife's financial future after I die, and so I am concerned about property values.

Hey there - of course I care about my wife's financial future. I dao have a lot of other assets that will be going her way after I die, which will be substantially more than any house I happen to leave her in Thailand. Whatever happens she and her family will be extremely well off for the rest of their lives - I'm simply not relying on some dodgy house ownership in Thailand to provide for that security - that's why I'm not having sleepless nights about it, and not too bothered about the value going up or down. OK?

Not exactly how you presented yourself in your original comment. This is a thread to discuss what is happening with regards to the new directive from the Land Office. If you're not interested in the financial impact of this upon your family, perhaps you might be better off commenting in the photography or bird-watching forums.