Unfriendly To Foreign Investors

[Pattaya_Fox]

Editor,

Yesterday my attorney went into the Pattaya Land Office to register a land transfer for a parcel of land in Pattaya from a private Thai name (seller) into a Thai company name (buyer). I (a farang) was listed as a 49% shareholder and Five Thais were listed as the 51% shareholders in the company. For many previous transactions over many years, this has always satisfied the government regulations and the name change on the land title deed papers was always approved. Now- so sorry- new government directive from Bangkok. 1) all shareholders must be present at the land office and their identities verified for this type of transfer to occur. 2) if there are any foreign shareholders, the change will not be approved. Over 40 transactions were rejected the first day of this new directive. Effectively this prevents any foreigner from investing in new property transactiions; land or houses in Thai company names and condo projects exceeding the 49% foreign ownership rule. Way to go Thailand - a great way to make this country investor friendly!

Signed,

Looking Elsewhere

[whynot?]

Editor,

Yesterday my attorney went into the Pattaya Land Office to register a land transfer for a parcel of land in Pattaya from a private Thai name (seller) into a Thai company name (buyer). I (a farang) was listed as a 49% shareholder and Five Thais were listed as the 51% shareholders in the company. For many previous transactions over many years, this has always satisfied the government regulations and the name change on the land title deed papers was always approved. Now- so sorry- new government directive from Bangkok. 1) all shareholders must be present at the land office and their identities verified for this type of transfer to occur. 2) if there are any foreign shareholders, the change will not be approved. Over 40 transactions were rejected the first day of this new directive. Effectively this prevents any foreigner from investing in new property transactiions; land or houses in Thai company names and condo projects exceeding the 49% foreign ownership rule. Way to go Thailand - a great way to make this country investor friendly!

Signed,

Looking Elsewhere

Way to go Thai is about right-does anybody have any clue as to how this new rule will benefit Thailand? Seems to me it will only serve to blow out farang investment in the Kingdom-why?

[thailand_tom]

intrest rates rising in the united states...people are going to get hurt very bad their..in about a year..since a lot do not have fixed morgages..with this new law in thailand and a bad economy in the united states..it will not be long before the thai government changes its mind...but..the damage is done for me..i was going to buy land and a business here in thailand..but..there is no way i am buying anything anymore..here..i do not trust the laws here and they change the laws to many ###### times...for me to rely on the law..also..unless the property ownership is 100% for the foreigner why should i buy...in the united states my wife who is a thai national can own land and the house..100%..why the hel_l are we settling for less...lets stop buying here until we can own the property 100%..

[Jomtien]

Somehow the market had to be regulated, protecting both Thai as Farang individuals who wanted to buy a house.

This regulation is NOT to push the Farang away, but for those greedy farang developers who thought they could buy land for 5.000 Baht a Wah (4 sq meters) and selling it for 25.000 Baht.

Some of the house prices where really absurd, moreover there are currently to many empty housing estates, mind you buying a house in an empty village, soon to become a ghost town.

Iam happy with the new regulation, as probably i will see the amount of empty house & houses for sale gradually lowering in the housing estate i live.

Drive up Soi Country Club, and you will see what i mean, thousands of houses at rediculous invlated prices, prices normal thai can never afford, that in their own country.

Peter

[Thaiquila]

Normal Americans can't afford to buy in beach resorts in the US either. Have farangs inflated the prices in rural Isaan? I doubt it.

[fourbaht]

Of course it is frustrating not being able to own land outright here when your wife can own land in her own name in your home country, but lets face facts, what are the chances of your wife ever having enough of her own money to buy land in the USA? Or of your average Thai being able to purchase land abroad. ( average is the key word here before you start jumping on me with examples )

Imagine how land prices would escalate throughout Thailand if you could purchase outright, you can buy half of Isaan for what most farrangs come here with after selling up in their home country.

Pattaya is a prime example of what farrang investment in an area does to push prices out of your average Thai persons price range. (and out of some farrangs range )

This in turn increases the cost of living all round and very soon you will be living in a similar environment and work work work ethic that so many of us left after finding Thailand such a different place to live.

All this has done has closed an existing loop hole for a short while that was being exploited by a greedy few.

Edited June 4, 2006 by fourbaht

[gharknes]

about time, greedy farang has spoiled it for everyone, why on earth would a farang want to own lots of land and property

this is just the start, watch them wipe out existing foreign large property and land owners

Pattaya Fox - why would you want to own lots of land and property ?? you can only live in one house at a time

I think eventually you will be allowed to retire here and maybe invest in retirement home if you meet certain criteria, why should you be allowed anything above that in a foreign country, greed has just turned to pain, watch the cheap property appear on the market now.

Jomtien you are 100% right

[Mobi]

If you read the main thread on this subject in "Thailand News Clippings", you will see that a preponderance of 'inside' information suggests that the prime motive behind this crackdown is aimed at curbing farang developers.

Indeed, it would seem that the source of all the trouble was a particularly aggrieved Thai developer in the Hua Hin area who was unable to sell his houses, whereas the local farang developer was selling his like hot cakes. Whether this is true or not, if you read the translation of the memo issued by the Ministry of Interior, it seems clear that developers are the target, not individual land owners. The issue is more the illegality of farang controlled companies setting up business as land developers, which is a prohibited business, rather than any percieved illegality in the ownership of houses through farang controlled companies. As the land office officials have no real way of determining who is a developer and who is an individual owner, and as their jobs may be on the line, all transfers involving farang controlled companies have been frozen. A majority of 'informed' opinion thinks that this freeze will be relaxed after a period of time. They want to get rid of the developers, not the house owners.

In the meantime, it would appear that there is nothing to stop a farang selling his house, by selling the shares in his company to another farang, and indeed there is one developer I have heard about in Pattaya who has separate companies for each house, and he plans to sell his houses in this way. Even a lawyer has said that this would be an acceptable route - but they would, wouldn't they?

Others are advocating 100% Thai nominee shareholders, and then transferring the shares to a farang, after the ownership of the land has been registered at the land office. This could be a highly dubious practice, not least because the land office may not accept the Thai shareholder company in the first place - after all, why would Thais form a companies to buy a house?

There has been a rumour posted in another forum that Thaksin is against this latest crackdown, and that business will be back to normal on Monday. Maybe wishful thinking, we shall see.

In the meantime, I would advise individual house owners, me being one, not to panic, and not to rush out and transfer or sell your house. I think the best plan is to let the dust settle for a few weeks and see the 'lie of the land' (no pun intended ). There will be plenty of time later to transfer the house into the wife's name, or whatever if they start investigating all these thousands of companies - which I personnaly am convinced they won't. (But I could be wrong).

Although this action may have some short to medium term affect on house prices, I for one would be happy if the excesses of the farang land developers are now curbed. We have empty housing estates all over the place full of mainly crap-built houses, and on top of that we even have farang speculators, who were buying and selling at a profit.

I don't think too many of us have settled in Thailand to see this sort of thing going on around us - that's what we hoped to get away from. The worst of them have done very little for the benefit of Thailand, and have probably put back even the slightest chance of farangs being able to legally own even a tiny piece of land, for years, if not decades, by their gross behaviour.

Edited June 4, 2006 by Mobi D'Ark

[Thaiquila]

Sensible post, Mobi, though nobody can predict the future. I hope people holding property through companies do not go into panic mode and take rash actions en masse.

[moo9]

Somehow the market had to be regulated, protecting both Thai as Farang individuals who wanted to buy a house.

This regulation is NOT to push the Farang away, but for those greedy farang developers who thought they could buy land for 5.000 Baht a Wah (4 sq meters) and selling it for 25.000 Baht.

Some of the house prices where really absurd, moreover there are currently to many empty housing estates, mind you buying a house in an empty village, soon to become a ghost town.

Iam happy with the new regulation, as probably i will see the amount of empty house & houses for sale gradually lowering in the housing estate i live.

Drive up Soi Country Club, and you will see what i mean, thousands of houses at rediculous invlated prices, prices normal thai can never afford, that in their own country.

Peter

Totally agree...house prices in the Pattaya area are absurd, considering the fact that many houses are just empty. We are also thinking of buying a house here (just now we rent), but I will not be ready to buy a 2-3 yr old house at the double price compared with its initial costs. I wonder how the prices stay up, or how long?

Regarding those ghost towns I really consider to take a house outside of a compound, if there weren't security concerns.

[naka]

Somehow the market had to be regulated, protecting both Thai as Farang individuals who wanted to buy a house.

This regulation is NOT to push the Farang away, but for those greedy farang developers who thought they could buy land for 5.000 Baht a Wah (4 sq meters) and selling it for 25.000 Baht.

Some of the house prices where really absurd, moreover there are currently to many empty housing estates, mind you buying a house in an empty village, soon to become a ghost town.

Iam happy with the new regulation, as probably i will see the amount of empty house & houses for sale gradually lowering in the housing estate i live.

Drive up Soi Country Club, and you will see what i mean, thousands of houses at rediculous invlated prices, prices normal thai can never afford, that in their own country.

Peter

Yes ... It might be rediculous (sic) but it also affects farangs who just want to buy a home.

Naka.

[skippybangkok]

Comon... since when do poli's make decisions in the interest of people. Who is behind it, and what do they personally stand to gain ?

[gharknes]

If you read the main thread on this subject in "Thailand News Clippings", you will see that a preponderance of 'inside' information suggests that the prime motive behind this crackdown is aimed at curbing farang developers.

Indeed, it would seem that the source of all the trouble was a particularly aggrieved Thai developer in the Hua Hin area who was unable to sell his houses, whereas the local farang developer was selling his like hot cakes. Whether this is true or not, if you read the translation of the memo issued by the Ministry of Interior, it seems clear that developers are the target, not individual land owners. The issue is more the illegality of farang controlled companies setting up business as land developers, which is a prohibited business, rather than any percieved illegality in the ownership of houses through farang controlled companies. As the land office officials have no real way of determining who is a developer and who is an individual owner, and as their jobs may be on the line, all transfers involving farang controlled companies have been frozen. A majority of 'informed' opinion thinks that this freeze will be relaxed after a period of time. They want to get rid of the developers, not the house owners.

In the meantime, it would appear that there is nothing to stop a farang selling his house, by selling the shares in his company to another farang, and indeed there is one developer I have heard about in Pattaya who has separate companies for each house, and he plans to sell his houses in this way. Even a lawyer has said that this would be an acceptable route - but they would, wouldn't they?

Others are advocating 100% Thai nominee shareholders, and then transferring the shares to a farang, after the ownership of the land has been registered at the land office. This could be a highly dubious practice, not least because the land office may not accept the Thai shareholder company in the first place - after all, why would Thais form a companies to buy a house?

There has been a rumour posted in another forum that Thaksin is against this latest crackdown, and that business will be back to normal on Monday. Maybe wishful thinking, we shall see.

In the meantime, I would advise individual house owners, me being one, not to panic, and not to rush out and transfer or sell your house. I think the best plan is to let the dust settle for a few weeks and see the 'lie of the land' (no pun intended ). There will be plenty of time later to transfer the house into the wife's name, or whatever if they start investigating all these thousands of companies - which I personnaly am convinced they won't. (But I could be wrong).

Although this action may have some short to medium term affect on house prices, I for one would be happy if the excesses of the farang land developers are now curbed. We have empty housing estates all over the place full of mainly crap-built houses, and on top of that we even have farang speculators, who were buying and selling at a profit.

I don't think too many of us have settled in Thailand to see this sort of thing going on around us - that's what we hoped to get away from. The worst of them have done very little for the benefit of Thailand, and have probably put back even the slightest chance of farangs being able to legally own even a tiny piece of land, for years, if not decades, by their gross behaviour.

excellent post Mobi..............greedy western developers spoiling it for everyone

[Nuff Said]

Most, if not all, of the postings on this matter have concerned the possible effects on housing developments if the new regulations stick and are rigidly applied. But they must also be a serious concern to condominium developers. Although foreigners can legally own up to 49% of the saleable floor space in such buildings, the developers of projects that are still on the drawing board are usually heavily dependent on selling a substantial proportion of the remaining 51% to foreigners who are prepared to use the company method of ownership. If this avenue is blocked it could force them to re-think their plans, as the chances of selling the 51% Thai quota only to bona fide Thai's, and not foreigners hiding behind Thai nominee companies, may not be a realistic possibility.

It's also possible that the new enforcement of the existing regulations may have nothing to do with stopping foreigners either buying up land for development, or individuals buying houses through the company route. The Baht has strengthened recently, about a month ago it reached B37.50 to the $ although it has dropped a little since then. A countries currency is strong when there is a considerable demand for it, but Thailands exporters don't like a strong Baht it as it makes their prodcuts more expensive in the international market. Central Banks don't like intervening in the foreign exchange markets as it costs them money. Just a thought, but perhaps the tightening of the company ownership regulations may have been the idea of the Governor of the Bank of Thailand to help stem the flow of foreign money into Thailand and thus cool off demand for the Baht, and reduce it's value against other currencies,without having to intervene in the currency markets.

[Samut]

Somehow the market had to be regulated, protecting both Thai as Farang individuals who wanted to buy a house.

This regulation is NOT to push the Farang away, but for those greedy farang developers who thought they could buy land for 5.000 Baht a Wah (4 sq meters) and selling it for 25.000 Baht.

Some of the house prices where really absurd, moreover there are currently to many empty housing estates, mind you buying a house in an empty village, soon to become a ghost town.

Iam happy with the new regulation, as probably i will see the amount of empty house & houses for sale gradually lowering in the housing estate i live.

Drive up Soi Country Club, and you will see what i mean, thousands of houses at rediculous invlated prices, prices normal thai can never afford, that in their own country.

Peter

[Heiniken]

I know a path around this mess and foreinger can own their land houses and soo on. But you have to pay me to tell you coz im Thai Just transfere some Bath to me and i tell you after