Land Law Clarification

[malcolminthemiddle]

I think the question of impact on the local economy, on foreign relations or on other conjecture has never been considered by the Thai authorities.

It's all a question of Nationalism.

[SunbeltAsia]

Can you clarify though, whether or not the land offices are looking into the limited companies with a foreigner involved who purchased a small plot of land to have their 'office' on, but are not strictly operating a business yet in that 'office' ?

They are clearly not the developers and are not going to sub-divide as they only have say 100-200 square wa.

What is the business objective? Was it to import/export or was it to invest in real estate. The filter at this point is companies that have the objective of the business in real estate. The second filter is, are foreigners involved in this type of company? The third filter is if its active, is it a real company? These companies are being looked at, if something is wrong, they are letting the existing company clean up its act.

This is the goalpost today which of course can change. However, banks are continuing to lend money to Thai companies with foreigners to buy a office and land. For real trading companies, Thai limited companies and the current regulation has nothing to fear. Simply having a Thai limited company own land is not illegal, if it was, the Land dept would never register it in the first place. What is illegal is having nominees or having a inactive company holding land.

This is not the focus now if its trading or not by bering the only criteria, but with the current climate if your company is not trading, then a long term lease versus setting up a Thai Ltd company is the right way to go.

was buying it with the dual intetions of investment potential and future retirement. My contract is via the Thai LTD.

What if you try doing a personal 30 year lease with the builder, with the option to convert it to a sale if the ratio drops lower than 49% foreigners in the condo?

If this was for investment then, I would hold off for at least 90 days. IMHO, prices should come down. In the long term, condo prices should go up versus houses.

www.lawyer.th.com

[moose]

The only house you should ever buy/build in Thailand is the last one you intend to live in for the rest of your life.

As has been said plenty of times, the target of this crack-down is farang developers. There are too many powerful Thais who's interests would be hurt if they cracked down on farang that just wanted a house to live in. Not to mention the unemployment created if the construction industry was affected. Not just construction employees, but, builders merchants, transport companies, manufactures of building materials etc. the crack-down on private residences bought with a Ltd company, is just not going to happen. Think of the tax revenue the government will lose. It is in nobodies best interest. The shutting down of farang developers though, is definitely in the interests of powerful people.

[george]

Update (Phuket Gazette):

Land Office moves to allay property bust fears

PHUKET: -- The Chief of the Phuket Provincial Land Office (PPLO), Supot Suwannachote, has moved to reassure businesspeople that the closer inspection of companies wanting to register land titles, as ordered by the Ministry of Interior, does not mean that transfers of ownership will be refused.

He stressed that he did not want to see a slowdown in Phuket’s booming property industry. “If your company is genuinely 51% Thai-owned, then there is no problem.”

K. Supot denied that all applications by companies with foreign shareholders are being put on hold, or that applications are being sent to Bangkok for examination.

“The first thing we do is check with the Provincial Business Development Office (BDO) whether the company has been properly set up, with foreigners owning no more than 49%.

“Where the company has a Thai MD [Managing Director] or has both Thai and foreign MDs, there is no problem. But when a Thai-registered company has a foreigner as its Managing Director, we check more carefully. For example, we check with the BDO whether the shareholding has changed so that the foreign share exceeds 49%.

“So far, we have not sent a single case up to Bangkok,” he said. Details of some applicant companies with foreign shareholders might be sent to the BDO for further checks, he said, but these checks should not take more than a month to complete. Since the order was issued on May 15, however, no cases have been sent to the BDO for checking.

The PPLO receives between 100 and 120 applications for change of ownership of land every day, he said, though most of these are transfers from one Thai to another or people wanting to register loan or lease agreements.

Since the original uproar over the tightening of checks on land transfers, matters have gone rather quiet in the property community, with concern over the brakes being put on business having, apparently, abated. Stuart Reading, Assistant Vice-President of Finance at Laguna Resorts & Hotels (LRH), said that LRH was not particularly concerned as most of its sales were on a leasehold basis, and thus did not require a change in land ownership.

But, he added, “I’m not aware of any transfers we’ve done in the past week that have [run into problems]. From what I understood this was mainly aimed at foreign developers. We’re a Thai company, so we are legally able to acquire and develop land, because we are a public company.”

BDO Chief Veerachai Tantiwathanavallop denied that checks on companies would take a month, as suggested by K. Supot. “It will take only a minute or so,” he said. “Just give me the name of the company and its registration number and I can tell you.” He confirmed that he had, to date, received no queries from the PPLO.

He noted that when people apply to set up companies, he explains to them that in order to register a Thai company the foreign shareholding must be no more than 49%.

He said that, theoretically, a company could increase its foreign shareholding to more than 49% but that it would then have to be re-registered as a foreign company, which would limit it to just 49 areas of business, all effectively in exports. “I have never had a single application of this nature,” he added.

The registration of new companies in Phuket continues apace. A total of 157 new limited-liability companies were registered in May. Of these, 50% were registered to do property business, and of those, 70% had foreign investors.

--Phuket Gazette 2006-06-07

[pepi1]

So whats changed? THai Gov have just confirmed what we know already. They are going to crack down on sham cos. So many many Cos have non -Thai directors in control. They are not legal! Just watch many developers and agents run and go to the wall. Feel sorry for innocent people who have puchased homes via ltd co that may turn out to be a sham co. all in my opinion

[onlooker]

Simply having a Thai limited company own land is not illegal, if it was, the Land dept would never register it in the first place. What is illegal is having nominees or having a inactive company holding land.

So where does that leave farangs who have used Sunbelt - in the very recent past - to set up a company specifically to buy land - something that was mentioned to the advisor during the fist meeting? Also mentioned was the fact that the farang, not being resident of Thailand, had no Thai friends/family etc and so needed help with finding nominees. Not a problem, said the friendly Sunbelt advisor - we can help.

Sunbelt is just one of may law firms who have been happy to do this and are now coming across s preaching to the masses and being moralistic when nothing could be further from the truth.

[SunbeltAsia]

Also mentioned was the fact that the farang, not being resident of Thailand, had no Thai friends/family etc and so needed help with finding nominees. Not a problem, said the friendly Sunbelt advisor - we can help.

Relax and take a deep breath, if you have used our service, then you know we don't use nominees and would tell you not to use a "nominee" either. In any meetings, we always stress that nominees are illegal. In fact, its like a broken record we say that it can be three years in prison if you use nominees. That is what separates us from other firms and whatever you do, even if you don't use us, don't go that route. It is dangerous as it gives you zero protection. Clients that have used our service, can verified this. If you ever wrote to us by e-mail, we would of stated this as well.

We would go on to state we strongly oppose nominees but will help our clients structure the company so its not in violation of the law at that point. If you remember, if you had used our service, if you don’t have Thai shareholders( individual or juristic person) to invest in your firm. We are aware of Thai individials or juristic persons that would be interested in investing but may not have the funds at that point in time. However you can loan them the money to buy the shares in the company and they then could invest in it. They would need a certain time period to pay back the loan. You of course yourself as the director would make the biggest loan to the company to buy land. This was in the minutes of the meeting and approved by the Land Dept.

This now is simply being checked by the Land Office that these Thai shareholders have the financial wherewithal to be able to pay back the loan. If they do not have the financial wherewithal, the Thai government is allowing it to be changed to Thai shareholders that do. The key is the Thai shareholders and how the company is set up. A big difference between “nominees” simply signing a share transfer and a Thai shareholder that entered into a legal binding contract with you.

http://www.lawyer.th.com/company-registration.asp will show if Thai investors did not have the funds at that time to invest, we had charged you 3,000 Baht for this agreement.

www.lawyer.th.com

[taxexile]

We are aware of Thai individials or juristic persons that would be interested in investing but may not have the funds at that point in time.

what is the difference in law between one of the above and a nominee ?

[SunbeltAsia]

We are aware of Thai individials or juristic persons that would be interested in investing but may not have the funds at that point in time.

what is the difference in law between one of the above and a nominee ?

Giving someone a loan is not illegal. If it was, many people in the World would be in trouble. :-) It is not illegal for people to borrow funds to invest in a business.

Having a nominee simply sign a share transfer and give their proxy vote is illegal. This is in the Foreign Business Act and is a clear violation. It is illegal for both parties.

Even if a person was not in a share structure, and lent funds to a Thai to buy land, a foreign entity( not located in Thailand) with the business objective of lending money can have a mortgage on the Land title deed in Thailand.

www.lawyer.th.com

[taxexile]

thanks.

[pepi1]

Simply having a Thai limited company own land is not illegal, if it was, the Land dept would never register it in the first place. What is illegal is having nominees or having a inactive company holding land.

So where does that leave farangs who have used Sunbelt - in the very recent past - to set up a company specifically to buy land - something that was mentioned to the advisor during the fist meeting? Also mentioned was the fact that the farang, not being resident of Thailand, had no Thai friends/family etc and so needed help with finding nominees. Not a problem, said the friendly Sunbelt advisor - we can help.

Sunbelt is just one of may law firms who have been happy to do this and are now coming across s preaching to the masses and being moralistic when nothing could be further from the truth.

[pepi1]

Simply having a Thai limited company own land is not illegal, if it was, the Land dept would never register it in the first place. What is illegal is having nominees or having a inactive company holding land.

So where does that leave farangs who have used Sunbelt - in the very recent past - to set up a company specifically to buy land - something that was mentioned to the advisor during the fist meeting? Also mentioned was the fact that the farang, not being resident of Thailand, had no Thai friends/family etc and so needed help with finding nominees. Not a problem, said the friendly Sunbelt advisor - we can help.

Sunbelt is just one of may law firms who have been happy to do this and are now coming across s preaching to the masses and being moralistic when nothing could be further from the truth.

You hit the nail on the HEAD ONLOOKER. Cos. were set with the specific view for foreigners to buy land in Thailand!! That is illegal! Only you know what Sunbelt told you. If you have a Witness or 2 who can testify what was said you may a have a good claim against them. Maybe others similar you in same boat!

[SunbeltAsia]

Sunbelt is just one of may law firms who have been happy to do this and are now coming across s preaching to the masses and being moralistic.

Anyone that use our service knows, we were preaching long before this, not to use nominees. Nothing has changed. We have never provided nominees and never will or recommend someone to do so.

In service, there is a correct way to advise and a wrong way. The wrong way is just stupid and can mean very bad consequences for our clients. This poster I'm 100% positive will review his notes and remember the converstion that he was told nominees were a very bad way to go. A Thai person willing to invest, was the correct way with the foreigners rights being protected.

You hit the nail on the HEAD ONLOOKER. Cos. were set with the specific view for foreigners to buy land in Thailand!! That is illegal! Only you know what Sunbelt told you. If you have a Witness or 2 who can testify what was said you may a have a good claim against them. Maybe others similar you in same boat!

Sure if he was told that his company did not need to be active. That it must not pay taxes. That if he wanted to buy this land for investment purposes only and not a office, he could do so. Impossible to have a claim as this would never ever happen.

However if he was told the company had to be active, file a audit and estimated tax every year and the house and land must either serve as a office or the home for the MD, then this would be proper advice for the client. The Land Dept is accepting land being registered today that fits this objective.

A fine line between good and bad advice but it makes all the difference in the World. Don't throw the baby out with the bath water. Not all Thai companies owning land are illegal or bad. The Land Dept is weeding out the good companies owning land/building for a office or factory and the bad ones.

www.lawyer.th.com

[Schooner]

I'm not hearing anyone say what we should do if we happen to have an illegal company that was established for the sole purpose of buying and owning land. If I fall into that catagory what can I do to correct this without loosing my ass.

Since I came to Thailand I have tried to learn the rules and to do things correctly. I suffered through several expensive and frustrating process's to obtain a drivers licence, retirement visa, ect. Most frustrating of all is hiring a Thai lawyer and paying him 25,000 baht to look over my home purchase and make sure it was ok. He never said a word about any potential problems. I suspect my company may have a problem, but I will be suspect of hiring another Thai lawyer to sort it out.

When I bought my place I was obviously pretty green. OK, so now I have learned something, but how can I correct this? Apparently signing the place over to my girlfriend is not an option. How about getting the developer that sold the place to enter into some sort of partnership. Frankly, at this point I would be happy to unload the place and return home where the rule of law is clearer. Thailand seems to have modern laws on the books, but so many of ignored and that has become accepted practice that even the lawyers seem to advise based on what is being enforced today. What a system.

It seems impossible to get a straight answer from anyone in this place.

[rockytimeshere]

Sunbelt,

Is it ok then for the foreign shareholder and MD to make the loans to the incoming Thai shareholders ? Someone mentioned to me that they did not think the foreigner could make the loans ?

Do the loan agreements have to specify when loan payments have to start being made back to the lender, ie: does this have to be recorded on company documents, or can it be private payments that are not auditable ?

Cheers,

[Gary A]

I would advise anyone wanting to own land and a house to wait until you can own it freehold and legally.

In the meantime buy a condo freehold because you will NEVER be able own land in Thailand.

As an afterthought, other than a freehold condo, the taxes, contracts, accountants and filings will pay a good portion of your annual rent.

Edited June 9, 2006 by Gary A

[SunbeltAsia]

I'm not hearing anyone say what we should do if we happen to have an illegal company that was established for the sole purpose of buying and owning land. If I fall into that catagory what can I do to correct this without loosing my ass.?"

As was pointed in the post several pages back...

http://www.thaivisa.com/forum/index.php?s=...ndpost&p=771971

In reference to our question to the Land Dept " is this new policy for companies buying land now or will it affect as well existing companies?"

The Land Dept has stated they have already started checking companies that were set up previously. If they find that it was formed solely to purchase land with the objective of buying land and the Thai shareholders not having paid for their shares, the Land Dept. will give the Foreign MD time to find real Thai investors or transfer the land.

Companies that are using the premises for a office and are legitimate, are not being targetted. Land developers are. Land for Thai Limited Companies continue to being registered after a number of questions asked and they feel its a real company. One thing is for clear, Foreign Land Developers beware, your business is not wanted in Thailand.

When I bought my place I was obviously pretty green. OK, so now I have learned something, but how can I correct this?

1. It does not sound you are are in the business of subdividing your plot and building another house on it. These are who they are going after. Don't panic.

2. The next step is easy, ask your GF to be a Managing Director as per the Bangkok post article which Chief of the Phuket Provincial Land Office (PPLO), Supot Suwannachote stated

Where the company has a Thai MD [Managing Director] or has both Thai and foreign MDs, there is no problem. But when a Thai-registered company has a foreigner as its Managing Director, we check more carefully. For example, we check with the BDO whether the shareholding has changed so that the foreign share exceeds 49%.

Your GF could be the MD( if she accepts) have limited signing powers such as signing for a work permit, signing the audit. She is not the share register or able to increase the capital, decrease the capital, etc. She does not need to be a shareholder to be a MD.

3. Depending on how your company is formed, simple or even more advanced strategies would need to be employed to clean it up. The key would be having Thai shareholders and not nominees. If the register capital was 1 million Baht, you only need all of the Thai shareholders to be able to have income to pay for 51% or 61% of 250,000 Baht ( max 150,000 Baht) When a company is formed within 60 days, 25% of the shares are to be paid in cash or even non cash items can be, if it was stated in the by-laws. A Thai shareholder does not qualify, either have them holding 1 share worth 10 Baht which they pay for or exchange them with the person that does have income and wants to be a shareholder.

4. Is to have some type of activity in the company.

Nothing to have sleepless nights over. From what Chief of the Phuket Provincial Land Office (PPLO), Supot Suwannachote states, Thailand is not interested in kicking you off your property.

Is it ok then for the foreign shareholder and MD to make the loans to the incoming Thai shareholders ? Someone mentioned to me that they did not think the foreigner could make the loans ?

Before this was never a issue. Now however if it’s a loan directly to the shareholder, it is not illegal but at some Land Departments, it is being looked into, does the shareholder have income to pay for the loan or are they a “nominee”? If the register capital is low of course the shareholders do not need to have a substantial income to pay for the shares.

The company itself can accept a loan.

By the way, Banks are continuing to lend money for the house and land for the companies office.

Do the loan agreements have to specify when loan payments have to start being made back to the lender, ie: does this have to be recorded on company documents, or can it be private payments that are not auditable ?

Must be recorded in the agreement with the shareholder. If it’s a loan with the company, it should be a agreement but my understanding at most Land Dept offices they only look at the minutes of the meeting authorizing the loan.

www.lawyer.th.com

[thaigene2]

For those of you who are blaming the Thai Govt and Thai people for this situation you should take a look in the rear view mirror.

First, the Thai govt went on the record a year or two ago - maybe the moderators can find the TNA report - and said they were aware that companies were being formed to buy property and this was not in compliance with Thai Law that says FOREIGNERS CANNOT OWN LAND.

So we were all warned. If you chose to ignore that, then tough luck. For those of you who believed the sellers and the agents then apparently you've never heard the expression 'there's a sucker born every minute.'

But hey I agree with the posts about the beautiful girls - yes..you're right..it's their fault!! he..he..

[fisherd3]

I agree that it is too early to panic over this change. I read on line that one option might be to give my home to my future Thai wife and put it in her name. As I understand it I would have to relinquish any claim to the asset however I can restore my claim through a well written prenuptual agreement in case something should go wrong.

I would be interested in any opinions anyone may have on this approach.

It is difficult to see how a prenuptial agreement could allow you to retain any potential control over a property bought with money that you will have had to have declared at the land office in writing, was entirely your wifes property that you had/have no claim on. ( her prenuptial agreement courtesey of Thai government).

[thaigene2]

I agree it's hard to see how a prenup helps. A lawyer could clarify, but my understanding is that what you woned BEFORE is yours..and what she owned before is hers. The clock starts ticking (I think - again a lawyer would help here) the moment you're married. So signing that this is HERS means just that - it's hers - and doesn't form part of the matrimonial assets.

As someone else said, you could land in jail by essentially lying on the Land Registry declaration that she bought with all her own money.

Here's another thought though...why should the husband need to sign any flipping form? What's it got to do with him anyway?? Another insult to Thai women who only begrugingly were recently allowed to own property if married to a foreigner (and they mean farang..let's be honest..how did all those chinese migrants manage to own property? They sure own a lot of it don't they? Were they all citizens when this happened? Second generation no problem of course..but makes me wonder..)

[SunbeltAsia]

Thai national who has a foreign spouse or ex- spouse and wants to own land.

A Thai national who has an foreign spouse applies for permission to purchase land and the applicant and the foreign spouse have given a joint written confirmation that the money which that Thai national will use to purchase the land is the separate estate of that Thai national and is not community property or jointly acquired property of that Thai national with the foreign spouse.

Thai national who has a foreign spouse intends to purchase land, but cannot give a joint written confirmation to the competent official due to the foreign spouse being abroad, the foreign spouse can make the declaration in writing at the Thai Embassy or Thai Consulate. The official shall declare that the foreigner is the actual spouse of the Thai national and then submit such declaration to the land official who will proceed with the registration.

Thai national who has an foreign spouse, applies for permission to accept a gift of land during marriage or cohabitation as husband and wife, if the inquiry reveals that the acceptance of the gift is made with the intention that the land will become the separate property or personal property of the Thai national without resulting in the foreign spouse having co-ownership in the land, the official will proceed with the registration.

Thai national with an foreign ex-spouse who is divorced or has ceased to cohabit applies for the acquisition of land, if an inquiry reveals no avoidance of the law, the competent official will proceed with the registration. The issue of inquiry will be where the land is coming from and where the money to purchase the land is coming from.

The Thai National and foreigner may enter into the the “Ante-Nuptial Agreement,” and this agreement must be registered at the registrar when they marry, for the legal arrangement of the properties.

The wife and husband are the same person with the same purse under Thai laws, whereby they will have common ownership of all properties acquired during the marriage. By signing the joint written confirmation that the money which that Thai national will use to purchase the land is the separate estate of that Thai national before the marriage, this is why a “Ante-Nuptial Agreement,” will not work in refrence to the land. The land will become her private property not marital or common property. In case of separation, you have already signed the land away.

In terms of inheritance and your wife had made a will for you to own the land, you must get approval from the Minister of Interior to be able to own not more than 1 Rai in total area.

You as the foreigner can own a house separate from the land. If a foreigner buys the empty plot of land under his Thai wife name( Her Dowry) and she then registers the 30-year right of habitation for her foreign husband. He then can apply for a construction permit under his name. With these documents, the foreign husband will have the ownership of a house and will be able to apply for the House Registration Certificate “Yellow Book”. He will have right of way for 30 years to the house even if they separate.

If you buy land with a completed house from a Housing Estate Project, you should instruct the seller to put the house under your name and the land under his Thai wife name.

www.lawyer.th.com

[Ollie]

So, the bottom line is that Thailand will welcome you with a smile, take your money, give nothing back and bid you goodbye, leaving your money and/or investment behind, without any legal recourse to what would be acceptably yours in the west.

Thats a hel_l of a way of encouraging the farang with their pots of gold to stay.

Thailands neighbours must be laughing at such stupidity!

So what happens next - even more half built developments left to rot? A loss of income to the Govt. and local community?

If the plan is, as stated by Sunbelt, to tell foriegn developers that they are not welcome, whoever picks up the mantle is going to face such a lack of confidence, its hard to see how the market will ever recover.

Probably over-reacting to say that this will damage any confidence anyone may have in investing here, but it would be interesting to get some feedback on the impact?

The message from officials in Phuket fell just short of panic?

Whats the story elsewhere?

[thaigene2]

Ollie

Yes we all feel that way. But tough luck for us. It's not our country. If we really wanted to move to malaysia or wherever (where condos are one-third the price) then I guess we could. But Kuala Lumpur, as green as it is, ain't Bangkok.

But your point is valid - yes there are lots of warm places with cheap property that will let foreigners own freeholds. This is a setback for Sunbelt and these other businesses, but I doubt they'll be moving their businesses to Kuala Lumpur of Phnom Penh anytime soon.

I'd like someone to investigate how all the chinese-thais here managed to snap up so much freehold property, especially those who's parents weren't born in Thailand. If the authorities are going to investigate 'foreigners' owning property..then let's go back over the last 50 years and have a good luck at property transfers to those families who are now well and truly land-LORDS..

[Lazy Sod]

From today's dailyreckoning.com. . .

Forty percent of the property in central London sold last year was bought by foreigners. And last week’s news reported that 45% of the City (equivalent to Wall Street in New York) is now owned by foreigners. Now, rich Persians sit while Englishmen shine their shoes. Rich Indians drive around in new Lamborghinis sold to them by middle-class Brits. Rich Russians rent storefronts to English real estate agents, who sell their best properties to foreigners.

And many Thai policians own property there. But here I can't even buy a small house jointly with my Thai wife.

Edited June 10, 2006 by Lazy Sod

[SunbeltAsia]

Whats the story elsewhere?

This was in my mailbox this morning. It is from Marc Holt with Holt Realty.

Holt-Realty Opt-in Newsletter: June 2006 - #1 of 2

Foreign Property Ownership Edict by Interior Ministry

There has been a new development in the property market I thought you should hear about. Even if you have already heard this news, I hope this newsletter will clarify things for you.

As we all know, Thailand has laws in place to restrict foreigners from owning property here in their own name. However, by setting up a Thai-registered company with the foreigner owning up to 49%, and nominee Thais owning 51%, many people have been able to buy land and houses.

The Interior Ministry issued a directive on May 28, 2006, telling all district governors to enforce the law and crackdown on foreigners using this loophole. Basically, land departments have been asked to use their power to investigate when registering land possession rights and contracts between parties. They may investigate both parties, if there is a foreign shareholder, and call them for questioning or have them send relevant documentary evidence. The order goes on to say that an investigation may be started where there is reason to believe that land is being bought for the benefit of foreigners, or it is reasonable to believe that a Thai holds shares as a representative of a foreign company shareholder.

For example, the provincial officers may order an examination of limited companies, limited partnerships and general partnerships “having the aim of carrying out business in immovable property. If a loan was taken by the Thai for the purchase of shares, then evidence of the loan is required.”

However, the law does not specify which officials are responsible for investigating, nor does it say what will happen after the “investigation”. It just says that “If after due investigation it can conceivably be believed that the request for registration....is to bypass the law, or it is believed that those involved are buying land for the benefit of a foreigner...the officers shall forward the findings to the Land Department to await the order of the Minister.”

As no deadlines are set for the investigation, or how soon the Minister will deliver a judgment, there has been a lot of confusion and Land Department officers have been understandably reluctant to process transfer applications.

As a result, the property markets in Phuket, Samui and Pattaya in particular have come to a virtual standstill.

But this is Thailand, and the first things many lawyers involved in the property business did was look for loopholes, and they quickly found them. I won't describe them here for obvious reasons. Some property transfers I have heard about have already been carried out using the loopholes and they went through smoothly.

Despite this, there is so much confusion that the market may take a few months to settle down and get back to business as usual. Meanwhile, it is not the foreigners who are losing much. Anyone with properties already registered before the edict was issued are just sitting tight and waiting if they were intending to sell. If not, then they have nothing to worry about. But it is the Thais who rely on the property market for their income that are really suffering. Many developments have stopped work while the owners try to work out what to do. Workers are being sent home. They won't be asked to return until it is clear that property sales will be able to go ahead again. Other Thais employed in businesses that supply and support the property sector also stand to lose their jobs as a result. And let's not forget that the Land Offices are losing millions of Baht in revenue and taxes every day.

I have heard of a report on the Thai news that the government has called a meeting between government officers and people in the property sector to discuss the situation. I can't say at this stage where this will lead, but perhaps the edict will have an unexpectedly good result: It may have shown the government how dependent property sales are on foreign investors for a start. It may also show that the Thai government could find it much more profitable to consider allowing foreigners to buy and own their own land and home to live in. Of course, if this does come under consideration I am sure the government will impose some restrictions, but at least it may become much easier for foreigners to buy and own their own house and land in the future.

It was obvious from the start that the edict was really aimed at the many foreigners who have come here and opened up a Thai company with Thai nominee shareholders so that they could buy large pieces of land and develop housing estates. Now that it has become much harder for them to sell their homes many will be forced to sell their holdings and perhaps go elsewhere taking their money with them.

Soon after the edict came out I heard of one transaction that sailed through the Pattaya Land Department without any problem because the Thai company with a foreign shareholder was selling the property to a Thai. So, if foreign investor developers do decide to look elsewhere they should be able to sell their holdings to Thais. The only difficulty may be in how long it takes to find a buyer and whether they will get their money back and perhaps even a profit.

The current property boom has been driven largely by foreign investment money. The average Thai is struggling to buy a house and land, so nothing has changed for them. Again, this fact may well have some bearing on the decisions the government takes in the future. Would it be beneficial to the economy to let foreigners buy and own a land and house for their own occupation? Would it stop Thais buying that same land and house? The obvious answer will be that it won't make the slightest bit of difference at all. Property prices for foreign investors tend to be higher than anything many Thais can afford. In addition, most of the foreign investment has been in only four areas: Phuket, Samui, Pattaya and Bangkok, areas, with the exception of Bangkok where your average Thai is not interested in living.

In my discussions over the last few months with some high-ranking people about why foreigners cannot own property, the invariable response was, “Why don't foreigners want to just lease property?”

When I explained that if we are going to live here, bring in our money, and generate income for a large number of Thais, why can't we own our own house and land instead? I told them that allowing us this small privilege would actually generate a huge inflow of foreign capital. They were stunned. Apparently, it had never entered their heads that letting us foreigners own a small piece of land in Thailand might actually benefit their country. Perhaps this edict has made them realize just how much money could be generated if they loosen up the law for us.

Of course, we can't expect them to just give us carte blanch to buy whatever we want. They may impose some restrictions, just as they have with the current law that allows a foreigner married to a Thai to buy up to 1 Rai of land in joint ownership, provided the foreigner invests 40 million Baht in government bonds or some other approved investment vehicle. Every foreigner I have spoken to about this has said, “No way! Why should I tie up my money this way without any real benefit?” A valid point and one the government should consider carefully if they do decide to change the land ownership laws.

So, where does this leave you, a potential property buyer?

Well, the first thing to do is to do nothing. Just wait and see. If you are interested in buying property here, spend the time checking the market on our website to see what is available and wait to see if it becomes easier in the near future. We are adding a lot of new developments right now, including some very reasonably priced condominiums.

You can still buy a condominium and own it outright, as long as no more than 49% of the building is owned by foreigners. Of course, you may find that the other 51% of the building remains virtually unsold because not many Thais like living in condos, and very few of them ever buy them.

As with many laws that are passed here that are subsequently seen to be unworkable, the officials involved may just decide to stop enforcing the edict after a little while. Nothing has really changed. The law the Interior Ministry asked officials to enforce has been in place for about 26 years. The only thing that has changed is that the Ministry decided it should be enforced now. So, that is what is happening. But as the result has not achieved what was intended, then the edict may be placed in a file somewhere and allowed to gather dust.

My advice? Just be patient and wait. The dust will settle and then I will send out another newsletter to bring you up to date with the latest information.

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Cheers!

Marc Holt

Managing Director

Holt-Realty

[rishi]

I'd like someone to investigate how all the chinese-thais here managed to snap up so much freehold property, especially those who's parents weren't born in Thailand. If the authorities are going to investigate 'foreigners' owning property..then let's go back over the last 50 years and have a good luck at property transfers to those families who are now well and truly land-LORDS..

The majority of laws regulating foreign ownership as of today are less than 7-8 years old. Many things were different before then.

[thaigene2]

I'd like someone to investigate how all the chinese-thais here managed to snap up so much freehold property, especially those who's parents weren't born in Thailand. If the authorities are going to investigate 'foreigners' owning property..then let's go back over the last 50 years and have a good luck at property transfers to those families who are now well and truly land-LORDS..

The majority of laws regulating foreign ownership as of today are less than 7-8 years old. Many things were different before then.

So in other words, there was a land-grab by foreigners (chinese biz people or whomever fleeing communism or whatever). Then the land-grabbers changed the laws to fend off all potential challengers and cement their gains? Is that pretty much the size of it? Cause I don't see how this protects your average Thai who'd struggle to buy a 1 million baht house upcountry somewhere..

[SunbeltAsia]

This is a setback for Sunbelt and these other businesses, but I doubt they'll be moving their businesses to Kuala Lumpur of Phnom Penh anytime soon.

As you mention it and as a update, we in fact we are looking at opening offices there. As we have the rights to all the SE Asia countries and are already located in Singapore, Hong Kong, China.

In addition, Sunbelt Asia office in fact will be doing a joint venture with a Legal client in United Arab Emirates to open a Sunbelt office. A BOI Legal client that is located also in Dubai has been after us for years to open a office there and we will be doing this. 17% of the Worlds construction cranes are there! Exciting times there indeed. No income taxes is the biggest drawing card for many companies and expats.

In March 2006, a new law has made it legitimate for foreigners to own property in Dubai. Foreigners can become freehold property owners in certain areas. They can also derive benefit from their property or rent it out for a period not exceeding 99 years. Foreigners, who are more than 80 percent of Dubai’s 1.2 million estimated population, previously bought property in Dubai’s bustling real estate market indirectly, through contracts with developers.

By the way, over 400 Sunbelt offices are in the network in Australia, UK, Ireland, Denmark, Sweden, Finland, Canada and the USA. I personally feel the Sunbelt Dubai office has the most potential with the demand from foreigners moving there. One thing is for sure, no office will have the weather as hot!

As for Thailand, to be frank, this news has not really affected us in our property division, our real estate office was only ever involved with one Land sale and that was to a BOI company from Dubai. Everything in Bangkok is almost all rentals and some condo purchases. What do you think would happen to the Thai property market if they made the same announcement as in the UAE. Foreigners can now own freehold land. A person can dream, right?

As for legal, our legal staff was very busy last week. We had many Americans coming in to our offices to set up a Amity treaty companies so they could own a business 100%. Last week, it was announced, the Treaty was extended for another 90 days that they are accepting applications.

www.lawyer.th.com

[PeaceBlondie]

I think I've got the solution:

MARRY A THAI MULTI-MILLIONAIRE!

(of the opposite gender, of course, so it's a legal marriage )

Then you live in her house that she bought with her Daddy's money!

[Dragonman]

I'd like someone to investigate how all the chinese-thais here managed to snap up so much freehold property, especially those who's parents weren't born in Thailand. If the authorities are going to investigate 'foreigners' owning property..then let's go back over the last 50 years and have a good luck at property transfers to those families who are now well and truly land-LORDS..

The majority of laws regulating foreign ownership as of today are less than 7-8 years old. Many things were different before then.

Section 86 Land Code 1954 ( nearly as old as me ). Although only applicable to everyone since around 1970.