Under The Current Climate Would You Buy A Condo?

[relayer]

...

What westerners forget however, is that we have no protections here. Its an innate assumption we acquire early on living in the cocoon of rights that we enjoy in the west, that those rights somehow are inscribed in our passports to protect us where ever we might be. Big brother wont let that happen to us! We have rights!

...

Sober wisdom.

Sad that there are so many complacent, comfortable, 'it-can't-happen-to-me' farangs here that aren't listening...

Edited January 23, 2007 by relayer

[backflip]

"Sad that there are so many complacent, comfortable, 'it-can't-happen-to-me' farangs here that aren't listening... "

If the naysayers presented any factual evidence, perhaps someone would listen. There are many opinions, but no facts. There are many stories that happened to a friend of a friend of a guy next to another guy in a bar. No one has presented any first-hand knowledge of any farang losing property due to Thai laws. On the other hand, there are lots of first-hand stories of guys losing property to wives, GFs, and business partners

[relayer]

...No one has presented any first-hand knowledge of any farang losing property due to Thai laws. On the other hand, there are lots of first-hand stories of guys losing property to wives, GFs, and business partners.

Uh, all three of those examples very much do involve Thai law -- the law that defines you and me and every other farang here not as an equal but as a temporary guest in this country, no matter the duration of one's visa.

Unless one is a citizen here, one is at a distinct disadvantage right from the outset (particularly if you can't understand what is being said, read what's being put in front of you to sign, etc.).

So, what are you trying to say?

[xbusman]

Lets start with Mr. Monson. Despite careful contractual agreements, somehow Mr. Thaksin managed to skin him for many millions of dollars. Seeking relief in Thai courts, Thaksin decided not to show up. The judge decided that without a defendant, there was no case. It was ugly, it was completely one sided, and Monson got fleeced under Thai law. Unfortunately, he forgot the first rule of Thailand.

Lets move on to Mr. Big himself. What he did regarding Temesak was legal at the time he did it. Changed a few laws, stretched a few points, but basically legal. After all, the brightest legal minds in the country set it up, the most esteemed judges reviewed it, and the Commerce department personally supervised it. AND THEN, A FEW MONTHS LATER, the democratically elected Prime Minister is persona non grata. IF IT CAN HAPPEN TO THAKSIN, WHAT ARE YOU THINKING? This is not hearsay, this is not the friend of a friend, this is published in the Bangkok Post. THERE ARE BOOKS DETAILING THIS.

Jeeze louise, pull your head out of the sand and think a wee bit. If you think your rights and priveleges are more than ZERO, you are a bleeding idiot.

AGAIN. in case anyone missed it, we live here tenuously by the good graces of the government under HM. Things can AND DO change radically back and forth. Its called the "THIRD WORLD" and called that for a reason. Dont be naive, foolish, or live in denial, those are very dangerous strategies for survival in the "THIRD WORLD".

Only invest what you can walk away from, dont get into arguments, much less fights, our opinion on the Royal Family is neither solicited or appreciated no matter what it is, smile alot, dont get angry, and enjoy what this wonderful country has to offer.

[dsfbrit]

...No one has presented any first-hand knowledge of any farang losing property due to Thai laws. On the other hand, there are lots of first-hand stories of guys losing property to wives, GFs, and business partners.

Uh, all three of those examples very much do involve Thai law -- the law that defines you and me and every other farang here not as an equal but as a temporary guest in this country, no matter the duration of one's visa.

Unless one is a citizen here, one is at a distinct disadvantage right from the outset (particularly if you can't understand what is being said, read what's being put in front of you to sign, etc.).

So, what are you trying to say?

I think he is simply pointing out that despite all the comments relating to such things as owning land 'illegally' via the company route - the people who predicted there would be a large number of farang who would have their land confiscated in midnight raids from the 'land police' were plain wrong.

As for being equal to some poor poverty stricken Thai - forget it. I would rather be an unequal Farang with enough money and a good Thai lawyer and 'been around' for a while and know how to fight my corner.

Sure I may lose, but at least I would be able to moderate my stance as each new situation evolved. I have found in Thailand that most things can be negotiated - in other words very few things in Thailand that are 'illegal' are really 'illegal' in the Farang sense of the word.

If they were there would be none of these jobs carried out by Farang - Number 39 is my favourite.

http://www.thaivisa.com/forum/index.php?showtopic=90291

Edited January 24, 2007 by dsfbrit

[DragonQuest]

I would not buy a condo here because I cant read what Im getting into, unless Im a citizen and have right's like the thai's do I woulndt get involved in the whole process sounds like a headache to me, I rather save and Invest somewhere else, you always get double-triple-quadruple priced here anyways so unless you like that then by all means just do it! lol

[backflip]

"So, what are you trying to say? "

Nothing more or less than I posted. Despite all of the horror stories, no one has first hand knowledge of a farang losing their property, as I described. Since Sunbelt Asia has been instrumental in assisting with farnags forming companies to buy land, I'd expect they's be the first ones to post, "Ohmigod! Khun Smith from Australia lost his home because he had an illegal company", and they would refuse further business to form such companies. They have not, and they have not.

The fact that you would sign something that you don't understand says more about you, than the Kingdom of Thailand.

Edited January 24, 2007 by backflip

[Vespa]

I am closing next week on a Condo.

[palmtree]

No laws to protect us and they change anyway It's real spooky and we don't know whether we should form acompany with 5 other people we don't know or lease from the developer/owner for 30 plus 30 plus 30 (We'll be dead long before anyways)

Prices much higher than I thought they would be for -We are looking at a seaview 4 bedroom unit) 13.5 million baht

Visa may be a problem - We are thinking of a retirement visa though

Worried about who will succeed the present king who is such a unifying force at the moment.

Still we would love to come and live here in phuket.

Any comments would be helpful

Thanks

Palmtree

Edited January 25, 2007 by palmtree

[xbusman]

Rent! So many empty places everywhere, at rentals that are far cheaper than ownership costs.

You, as a farang, cant own land here. Dont play games with laws in foriegn countries, for that matter, dont play games with laws in your own country, isnt life trouble enough with asking for more? Personally I think a 30 year lease is just as risky, you have no recourse to speak of if the developer breaks the lease after they have your money.

RENT, its easy, its cheap, its almost risk free. Dont like your neighbor, be in a new place tomorrow. They build a tapioca plant 6 meters outside your bedroom window... be in Koh Samui on Wednesday (think I am kidding? take a look at the Condos out by Rayong that have been empty for years because of the tapioca plant upwind, hundreds of beautiful homes and condos under a six in layer of aromatic tapioca dust), your visa rules change and you have to make a visa run every xx hours and have xx million baht in the bank, be in Malaysia next month.

No one is willing to argue with the main point of the whole discussion. The "Rule of Law" does not exist here. At best, at very best, the legal system is arbitrary and capricious. It is designed to protect the status quo of the Thai elite, then the Thai business, then the middle class, and sometimes the poor. Note carefully you dont even rate on the scale. You rate somewhere after buffalo and ahead of multiple cell bacteria. You really want to depend on this structure to protect your investment? Dont be daft.

They have been very clear, for years and years. FARANGS CANT OWN LAND! Nothing ambiguous about that. You can buy a condo, up to 49% of any development. If you have to buy, and would not get hurt by losing the investment, buy a condo. Many farangs here get used to living in a culture where the law is consistently and capriciously disregarded with impunity. They advocate that attitude on a variety of levels and really, most have gotten away with it. The only caveat is that if you are going to play that game, only do so with money you can afford to burn because come the day you might have to burn that money.

Rent.

[quiksilva]

Backflip that might be true for now, but unfortunately I think there will be rather alot of first hand opinions coming soon. As we all probably know the goal posts are about to move dramatically, give it a few months.

Once the revised FBA comes into effect that former loop hole will close quite a tight noose around the necks of many who misguidely went down that 'ownership' route. Okay some revisions may happen but you can bet your bottom dollar that they will not help people who acquired land in this manner.

It has been clearly stated that all companies that fall under the revised definitions will need to register with the Ministry of Commerce and as someone else on these forums pointed out, if it appears that this firm was created for the sole purpose of owning land, they will have to notify the land department who will have no choice but to act.

The PM mentioned in his speach yesterday that stamping out corruption is high on their agenda and that closing loopholes is one of the reasons why the FBA revisions are necessary.

Foreign chambers of commerce are already publicly stating that they do not and indeed have never condoned the nominee structure.

Read between the lines, there's a storm coming.

PS I very much doubt whether Sunbelt would help set up illegal nominee structures (which have been criminalised for several years now) and even if they did they'd be a strange bunch to admit to it in a public forum, especially in the current climate.

Palmtree: if its something you desperately want, lease it.

Edited January 25, 2007 by quiksilva

[Blake7]

Rent.

yes, I have decided not to buy and continue renting. Friends have been mocking me for spending around 1m baht a year on rent - I have been here 3 years already - saying I can buy somewhere on this price. However to get the same standard I am renting I would have to pay around 12 - 16 m baht. The question is will I be here another 10 years? Also 16m is alot to pay for such poor local infrastructure.

I have a friend who is desparetly trying to sell a condo - his starting price was 18m now he is looking for any offer. Would probably accept 11m.

Question is, who thinks the prices will hold?

[quiksilva]

Prices will hold. In the LOS values may fall but prices dont. Owners prefer to hold and wait rather than cut their losses.

Edited January 25, 2007 by quiksilva

[thaigene2]

"Sad that there are so many complacent, comfortable, 'it-can't-happen-to-me' farangs here that aren't listening... "

If the naysayers presented any factual evidence, perhaps someone would listen. There are many opinions, but no facts. There are many stories that happened to a friend of a friend of a guy next to another guy in a bar. No one has presented any first-hand knowledge of any farang losing property due to Thai laws. On the other hand, there are lots of first-hand stories of guys losing property to wives, GFs, and business partners

Backflip - seen this?

" [...] However, interviews with estate agents, business executives and diplomats in Bangkok paint a picture of growing concern that, far from further liberalisation, there could instead be further unpredictable moves to placate national pride and to protect powerful Thai interest groups at the expense of foreigners. “There has been a change in the climate,” says one senior diplomat based in Bangkok.

One Thailand-based British executive recently lost a £48,000 deposit on a flat after discovering legal problems with the foreign ownership quota in the building. [...]"

Source: Timesonline.co.uk 2007-01-21

Now before you say this guy was stupid and probably didn't perform due dilligence by checking the building quota, I would suggest you suspend your rather chronic disbelief. He's unlikely an idiot..and probably did check. Alot of these condo juristic managers won't supply the letter indicating the quota until the exchange is taking palce at the Land Office.

And no you're right - he didn't lose his home due to a raid by the 'land police' over an illegal company structure, but I'd say this is just about as bad, and makes the case that others above have stated: Namely, that there is too much geared against us here and not enough in favour to buy a place - whether people have 'lost their homes' to the 'land police' isn't the issue.

We've lost our confidence. Isn't that enough for you? It is for me. My money stays in the bank now until the visa issue is cleared up and there is a more friendly environment toward farangs with Thai families (i.e. joint-ownership, access to financing, ability to remain permanently to support your thai dependents - not as a 'visitor')

I remember a couple of years ago when a couple of us were warnign that buying a place using the company route was a dead-end street and that the government would one day clamp down, we were told by numerous posters that 'it would never happen'. Weren't you one of them Backflip?

[Casanundra]

All of us in the office attended a meeting yesterday with the Thai Prime Minister that included a lot of representatives from the Chambers of Commerce and Ambassadors from the foreign embassies based here in Bangkok.

The major feedback from the foreign embassies to the PM made it clear that they felt that the current stance and policies from the Thai government were blocking foreign investments to which the PM gave the statement that this wasn't true. See the Bangkok post today which stated that the PM says that "Thailand remains open to foreign investors and is committed to implementing structural reforms aimed at long-term sustainable growth" however, this answer was received with a lot of raised eyebrows and comments to the contary from the audience and the general conversations and mumblings from the foreign community that were present felt that in all liklihood the important deals would be dealt with under the table while the rest of us would continue to be squeezed one way or another by the new rules that have been enforced, not to mention the new ones coming up through the pipeline.

It's a fact that the confidence in the foreign community for continuing investment in Thailand is currently shattered and yet here we are seeing a Thai PM openly saying that it's not true and how committed he is to promoting it, yet the current laws and policies that have been put in place all send out a completely different message.

Two comments muttered from guys at the meeting yesterday. "I am not comfortable bringing in 100 million only to have to hand over 30% to the bank for retention and then in addition to that hand over 50% of my company and investment to someone who can have equal control on what happens - it just ain't going to happen..." and "I had to go back to my parent company for a loan to pay my Thai staff a salary and to purchase some raw materials for future growth, unfortunately the 30% retention requirement of the funds meant that I couldn't obtain the funds from my parent company and it caused us a lot of embarrassment as for 5 days we didn't have a clue on how we were going to pay the staff let alone continue doing business..."

For me the proof of the pudding lies in that meeting with the Thai PM yesterday and regardless of what he says versus the reality of the current situation on the ground, if under these conditions you still want to invest in Thailand then good luck to you because clearly your sense was left at the airport when you arrived and please don't spill too many tears when it all goes horribly wrong for you and yours in the near future when the new constitution gets published and adds further fuel to the fire that is currently smouldering on out there.

Edited January 25, 2007 by Casanundra

[palmtree]

Thank you for suggesting that I rent which is what I think we will do. After a few years in Thailand who knows maybe Malaysia next- somewhere like Langkawi? At least they have a well thought thru package and clearer rules for foreigners on property ownership and visas etc.

The place we saw was very nice indeed as are many places in phuket but while we were walking around the place we noticed a lot of bad design features and the spec was very low. The finishing was shoddy and fixtures were cheap and badly fitted. The water in the bathroom drained away rather than towards the drainage etc etc. We've come across this time and time again. We could see that we would have to put in more money and time to fix things before we could move in. I would never buy anything so substandard with such little protection anywhere else in the world for two hundred thousand pounds and can't understand why I like so many others would be inclined to do so here.

Is there something here in the air?

We bumped into a Western couple who were living in Singapore last week when we went to look at some villas here. They had come over for the day with their 3 small children to buy something in Phuket. The agent had lined up some places for them to see. They had arrived at 10am and it was 1pm and they had already been to 4 different places. They were going to leave to go back to Singapore that very evening. The poor woman looked absolutely harried and was running around keeping her kids who weren't the slightest bit interested under control and wasn't even looking at the placeproperly. They said they had to buy by the end of the day. His boss it seems had just bought something for US$ 2 million and said the time was ripe etc etc so they didn't want to lose out. We have met people who don't think twice about buying something off plan for 30 40 million baht. There are places we have been to see that are selling for 200 million baht and people have bought.

What is going on.

I just don't get it.

palmtree

[palm]

"Sad that there are so many complacent, comfortable, 'it-can't-happen-to-me' farangs here that aren't listening... "

If the naysayers presented any factual evidence, perhaps someone would listen. There are many opinions, but no facts. There are many stories that happened to a friend of a friend of a guy next to another guy in a bar. No one has presented any first-hand knowledge of any farang losing property due to Thai laws. On the other hand, there are lots of first-hand stories of guys losing property to wives, GFs, and business partners

Exactly right! I own properties in Rio, Belize, England and Thailand. I've never heard such a crock of <deleted> talked by so many.

The law firms and expats I've spoken with have NEVER heard of anyone loosing legally-owned property in this country because of Thai laws being bent against them.

[xbusman]

Palm, your right. I bet it would be tough to find someone who lost a legally owned condo that met all the criteria and was purchased with the help of real legal firm. But there are plenty of stories of people becomming persona non grata and enjoying their Thai property from England or the US with little hope of ever recovering their money. They do indeed still own the asset and I bet they could even rent it out at the going rate.

No one is arguing that you can "lose" the property. No one is arguing that it is a good or a bad investment. The point of the discussion is that we are guests here, and that can be revoked at the drop of a hat. We have no rights, no legal protections, no recourse. Anyone with two working brain cells can figure that out after being here a few months. If you invest, only invest what you can walk away from. Investing here is on the order of junk bonds, pork belly futures, or venture capital. In other words, high risk.

Really Palm, take one minute to think about what happened to Thaksin. He did not lose his property (yet) but he is not enjoying it much is he. If it can happen to a legally elected prime minister, I am sure you will far much better in the legal system than he will.

Invest away, have at it. Great returns can be found in Thailand. But if you invest more than you can walk away from, be sure to buy a condo over six floors with parking lot below.

[quiksilva]

For those who doubt, check out this article from one of Thailand's leading legal practices, from today's Bangkok Post

CORPORATECounsellorTILLEKE & GIBBINS

Implications of Foreign Business Act amendments

On Jan 9, the cabinet appointed by the Council for National Security approved a bill to amend the Foreign Business Act of 1999 (FBA). The most significant issue on the bill was to amend the definition of ''alien'' to also include companies in which foreigners have the majority vote regardless of their ownership in the companies.

Under the current FBA, a company with foreign shareholding is regarded as ''alien'' if the majority of its registered capital is held by foreigners. Various businesses are reserved for Thais under the FBA for different reasons, and foreigners wishing to conduct a reserved business have to apply for an alien business licence from the relevant authority. To avoid such a requirement, many foreign investors opt for a joint venture with Thais in which the Thais hold the majority of the registered capital but the foreign minority shareholders have management control over the company and get higher returns. This is accomplished through a structure that gives voting control to the (foreign) minority shareholders. Such arrangement per se is legal and recognised by Thai law.

If such a structure is legal and recognised by Thai law, the question now arises as to why the new bill contemplates on illegalising it. This brings us to the real issue, which is the use of this minority voting control to circumvent the letter and principle of the FBA. It should be noted that the FBA has provisions prohibiting ''nominee'' arrangements whereby the Thais are not real investors but merely act as ''nominees'' to hold shares for and on behalf of the ''beneficial'' (foreign) owners. While the said nominee arrangements are explicitly prohibited under the FBA, minority voting control is not.

The bill is presently under review by the Council of State and thereafter will be forwarded to the National Legislative Assembly for approval.

The whole process of passing a bill and enacting it into law generally takes at least a year. However, it may be different for this bill, as the government wishes to revamp the foreign ownership structure in restricted businesses in Thailand, especially in land and telecommunication industries.

What are the highlights of the bill? A company with foreign shareholders having majority voting rights will be regarded as ''alien''. Therefore, if the amendment to the FBA is promulgated, all companies with foreign shareholders having voting control will be regarded as ''alien'' regardless of their shareholding. Such companies have to notify the director-general of the Department of Business Development (DBD) in accordance with the rules and procedures to be prescribed by the DBD within one year after the effective date of the law. After the notification to the DBD, such companies have to comply with the following conditions depending on their business:

1. Companies engaging in List 3 businesses, e.g., construction, services, retail, wholesale, broker and agent, and hotel: After the notification, these companies will be allowed to continue their business operation until they are dissolved.

2. Companies engaging in List 1 and 2 businesses, e.g., domestic air transport, mining, newspapers, and television: After the notification, these companies will be allowed to continue their business for two years after the promulgation of the law. But according to a meeting between representatives of foreign chambers of commerce and Deputy Prime Minister M.R. Pridiyathorn Devakula on Jan 10, there is a possibility that the grace period may be extended, say by three years.

Companies that fail to notify the DBD within one year and continue their business operations will be subject to imprisonment or fines, or both, as fixed in the FBA. The FBA amendment carries higher fines than the current FBA.

The above conditions are applicable to companies that are not regarded as ''alien'' under the current definition of the FBA but will be regarded as ''alien'' after the enactment of the new amendment.

A different procedure will be applied to Thai majority-owned companies with ''nominee'' arrangements in violation of the FBA or companies with foreign shareholding exceeding the restriction under the FBA. Those companies are required to notify the DBD within 90 days after the enactment of the law and to take corrective measures or dissolve their businesses within one year from the enactment of the law to avoid penalties under the FBA.

It should be noted that the FBA and the new amendment are applicable only to companies engaged in businesses reserved for Thais under the FBA and/or other local laws. Foreigners or companies that are defined as ''alien'' under the FBA but engaged in businesses that are not reserved under the FBA, such as most manufacturing and all export activities, or companies granted approval by the Board of Investment to conduct reserved businesses, are not subject to the FBA or the proposed amendment to the FBA.

Written by Piyanuj Ratprasatporn, Partner and Director of the Corporate/Commercial Department, Tilleke & Gibbins International Ltd.

If anyone advises you "not to worry about it they never enforce laws here, dont bother registerring, they wont find me I'll slip under the radar"

Take a step back and have long cold look at what are you risking:

Max penalty: Fine of THB5,000,000 and 3 years in the Bangkok Hilton

Is it worth it?

If you use a nominee structure to own landed real estate, or even a condo where the foriegn ownership quota has been filled, get your ass to a lawyer and restructure that company ASAP

For everyone else stick to condo's or leases, unless of course you are happy to let your Thai spouse own it.

Edited January 26, 2007 by quiksilva

[trajan]

For those who doubt, check out this article from one of Thailand's leading legal practices, from today's Bangkok Post

CORPORATECounsellorTILLEKE & GIBBINS

Implications of Foreign Business Act amendments

On Jan 9, the cabinet appointed by the Council for National Security approved a bill to amend the Foreign Business Act of 1999 (FBA). The most significant issue on the bill was to amend the definition of ''alien'' to also include companies in which foreigners have the majority vote regardless of their ownership in the companies.

Under the current FBA, a company with foreign shareholding is regarded as ''alien'' if the majority of its registered capital is held by foreigners. Various businesses are reserved for Thais under the FBA for different reasons, and foreigners wishing to conduct a reserved business have to apply for an alien business licence from the relevant authority. To avoid such a requirement, many foreign investors opt for a joint venture with Thais in which the Thais hold the majority of the registered capital but the foreign minority shareholders have management control over the company and get higher returns. This is accomplished through a structure that gives voting control to the (foreign) minority shareholders. Such arrangement per se is legal and recognised by Thai law.

If such a structure is legal and recognised by Thai law, the question now arises as to why the new bill contemplates on illegalising it. This brings us to the real issue, which is the use of this minority voting control to circumvent the letter and principle of the FBA. It should be noted that the FBA has provisions prohibiting ''nominee'' arrangements whereby the Thais are not real investors but merely act as ''nominees'' to hold shares for and on behalf of the ''beneficial'' (foreign) owners. While the said nominee arrangements are explicitly prohibited under the FBA, minority voting control is not.

The bill is presently under review by the Council of State and thereafter will be forwarded to the National Legislative Assembly for approval.

The whole process of passing a bill and enacting it into law generally takes at least a year. However, it may be different for this bill, as the government wishes to revamp the foreign ownership structure in restricted businesses in Thailand, especially in land and telecommunication industries.

What are the highlights of the bill? A company with foreign shareholders having majority voting rights will be regarded as ''alien''. Therefore, if the amendment to the FBA is promulgated, all companies with foreign shareholders having voting control will be regarded as ''alien'' regardless of their shareholding. Such companies have to notify the director-general of the Department of Business Development (DBD) in accordance with the rules and procedures to be prescribed by the DBD within one year after the effective date of the law. After the notification to the DBD, such companies have to comply with the following conditions depending on their business:

1. Companies engaging in List 3 businesses, e.g., construction, services, retail, wholesale, broker and agent, and hotel: After the notification, these companies will be allowed to continue their business operation until they are dissolved.

2. Companies engaging in List 1 and 2 businesses, e.g., domestic air transport, mining, newspapers, and television: After the notification, these companies will be allowed to continue their business for two years after the promulgation of the law. But according to a meeting between representatives of foreign chambers of commerce and Deputy Prime Minister M.R. Pridiyathorn Devakula on Jan 10, there is a possibility that the grace period may be extended, say by three years.

Companies that fail to notify the DBD within one year and continue their business operations will be subject to imprisonment or fines, or both, as fixed in the FBA. The FBA amendment carries higher fines than the current FBA.

The above conditions are applicable to companies that are not regarded as ''alien'' under the current definition of the FBA but will be regarded as ''alien'' after the enactment of the new amendment.

A different procedure will be applied to Thai majority-owned companies with ''nominee'' arrangements in violation of the FBA or companies with foreign shareholding exceeding the restriction under the FBA. Those companies are required to notify the DBD within 90 days after the enactment of the law and to take corrective measures or dissolve their businesses within one year from the enactment of the law to avoid penalties under the FBA.

It should be noted that the FBA and the new amendment are applicable only to companies engaged in businesses reserved for Thais under the FBA and/or other local laws. Foreigners or companies that are defined as ''alien'' under the FBA but engaged in businesses that are not reserved under the FBA, such as most manufacturing and all export activities, or companies granted approval by the Board of Investment to conduct reserved businesses, are not subject to the FBA or the proposed amendment to the FBA.

Written by Piyanuj Ratprasatporn, Partner and Director of the Corporate/Commercial Department, Tilleke & Gibbins International Ltd.

If anyone advises you "not to worry about it they never enforce laws here, dont bother registerring, they wont find me I'll slip under the radar"

Take a step back and have long cold look at what are you risking:

Max penalty: Fine of THB5,000,000 and 3 years in the Bangkok Hilton

Is it worth it?

If you use a nominee structure to own landed real estate, or even a condo where the foriegn ownership quota has been filled, get your ass to a lawyer and restructure that company ASAP

For everyone else stick to condo's or leases, unless of course you are happy to let your Thai spouse own it.

One important point that people seem to overlook:

The new draft language talks about affecting List 1 business activities (under the Alien Business Law)...List 1 talks about "land business" or "trading in land business"....

most lawyers Ive spoken with interpret this as land developer businesses like "Golden Land" or "Grande Asset" (which owns Trendy and Regent) which is basically owned by foreigners (Lehman Bros.) through "Thai" holding companies (with super voting rights enjoyed by the foreign shareholders).....

they do NOT interpret this as companies which simply own land.... for companies which simply own land (but do not engage in "land trading business"), the definition of "alien" has NOT changed under the separate Land Law.....

so unless the current ministers start to move to also amend the Land Law, there is some room yet...but I wouldnt be surprised if they start to also amend those laws...

[think_too_mut]

I bought a couple years ago, when 1USD got 40THB. My completely fitout 160m2 condo in an architecturally attractive building cost me 6 million THB. A couple blocks down the street, people are paying over 100,000THB/m2. I think that I did OK, and that's what counts.

Yes, it counts. You live in there, you like the place, the price is not important.

When you come to the "market", the things change.

What you have loved and enjoyed becomes worth nothing. In terms of bricks and mortar.

I doubt you can get anyone to live in your condo, even for free, just to pay the levies. Let alone selling it for a profit.

That's where some people are coming from.

[quiksilva]

The new draft language talks about affecting List 1 business activities (under the Alien Business Law)...List 1 talks about "land business" or "trading in land business"....

most lawyers Ive spoken with interpret this as land developer businesses like "Golden Land" or "Grande Asset" (which owns Trendy and Regent) which is basically owned by foreigners (Lehman Bros.) through "Thai" holding companies (with super voting rights enjoyed by the foreign shareholders).....

they do NOT interpret this as companies which simply own land.... for companies which simply own land (but do not engage in "land trading business"), the definition of "alien" has NOT changed under the separate Land Law.....

so unless the current ministers start to move to also amend the Land Law, there is some room yet...but I wouldnt be surprised if they start to also amend those laws...

Interesting. So these individuals out there who have set up 'Thai' companies that do next to nothing other than own their house. Will be classified as a foreign business under the revised guidelines (where an Alien is defined by either the shareholding % or voting rights) the land department could do sweet FA because the Land Law has a different definition of an Alien?

Sounds too good to be true.... I hope it is, but still best take legal advice.

Edited January 26, 2007 by quiksilva

[trajan]

The new draft language talks about affecting List 1 business activities (under the Alien Business Law)...List 1 talks about "land business" or "trading in land business"....

most lawyers Ive spoken with interpret this as land developer businesses like "Golden Land" or "Grande Asset" (which owns Trendy and Regent) which is basically owned by foreigners (Lehman Bros.) through "Thai" holding companies (with super voting rights enjoyed by the foreign shareholders).....

they do NOT interpret this as companies which simply own land.... for companies which simply own land (but do not engage in "land trading business"), the definition of "alien" has NOT changed under the separate Land Law.....

so unless the current ministers start to move to also amend the Land Law, there is some room yet...but I wouldnt be surprised if they start to also amend those laws...

Interesting. So these individuals out there who have set up 'Thai' companies that do next to nothing other than own their house. Will be classified as a foreign business under the revised guidelines (defined by either the shareholding % or voting rights).

Then after you register that firm with the DBD as demanded if the DBD gave the Land Department a call and let them know that a farang has used this loophole to contravene the land code, the land department could do sweet FA because the Land Law has a different definition of an Alien?

That makes no sense but TIT I suppose.

Still best take legal advice, sounds too good to be true.

sorry but you made a leap here....the proposed amendment states that companies engaged in List 1,2,3 businesses must register that firm as a newly defined "alien" firm (with List 3 business companies getting grandfathering privileges)......

there is no wording that states that a company which only holds land (but does NOT engage in List 1,2,3 businesses) must register...where did you get that?

Edited January 26, 2007 by trajan

[quiksilva]

Oh sorry I edited my post when you quoted me. I thought that a foreign firm holding land but doing little else would qualify it as a restricted business. If it doesnt then that would be a great relief for many Im sure.

Edited January 26, 2007 by quiksilva

[bingobongo]

Housing inventories up 10%, leading to oversupply

24 January 2007

The inventories of property companies increased by 10 per cent from 84,058 units in the middle of last year to 92,462 units at year-end due to a sharp drop in housing demand in the final quarter, according to research by property consultant Agency for Real Estate Affairs (AREA).

http://thailand-property-guide.com/?p=news...&NewsID=290

[thaigene2]

sorry but you made a leap here....the proposed amendment states that companies engaged in List 1,2,3 businesses must register that firm as a newly defined "alien" firm (with List 3 business companies getting grandfathering privileges)......

there is no wording that states that a company which only holds land (but does NOT engage in List 1,2,3 businesses) must register...where did you get that?

At risk of fueling confusion about this....aren't we talking apples and oranges here? I simply don't see your argument Trajan.

All those little LTD companies formed by farangs to buy a house were done without concern for those Lists becuase, remember..the little compaines were considered THAI companies - not foreign companies. As far as I can tell they are in the sh+t as deeply as Lehman Bros, Temasek and the others. Big or small, on the List or not, they were using Nominees as a vehicle to (illegally) control the company that owns the house/land. Therefore the house/land is Thai - and they now also have one or two years to make sure the THAI SHAREHOLDERS are the REAL owners.

I can think of at least one medium sized media-service company in Bangkok that is a "Thai" nominee company...and totally farang contrrolled. Property is also owned through this company I believe for some of the family members. These guys are well and truly in the deep end...unless the govt throws them a lifevest. Good luck to them..

[trajan]

sorry but you made a leap here....the proposed amendment states that companies engaged in List 1,2,3 businesses must register that firm as a newly defined "alien" firm (with List 3 business companies getting grandfathering privileges)......

there is no wording that states that a company which only holds land (but does NOT engage in List 1,2,3 businesses) must register...where did you get that?

At risk of fueling confusion about this....aren't we talking apples and oranges here? I simply don't see your argument Trajan.

All those little LTD companies formed by farangs to buy a house were done without concern for those Lists becuase, remember..the little compaines were considered THAI companies - not foreign companies. As far as I can tell they are in the sh+t as deeply as Lehman Bros, Temasek and the others. Big or small, on the List or not, they were using Nominees as a vehicle to (illegally) control the company that owns the house/land. Therefore the house/land is Thai - and they now also have one or two years to make sure the THAI SHAREHOLDERS are the REAL owners.

I can think of at least one medium sized media-service company in Bangkok that is a "Thai" nominee company...and totally farang contrrolled. Property is also owned through this company I believe for some of the family members. These guys are well and truly in the deep end...unless the govt throws them a lifevest. Good luck to them..

Im sorry you still dont understand....you might wish to confer with your lawyer on: A. the differences between the Alien Business Law (and its newly proposed amendments) and the Land Law and their respective applications and B. the differences between "nominee" shareholders and shareholders who own shares (but with diluted voting rights).

Edited January 28, 2007 by trajan

[quiksilva]

It is confusing and for a while I thought I could see your argument trajan, but it still doesnt sit well with me.

Your lawyer might be technically correct regarding the letter of the law but in practice the FBA will almost certainly supercede the land code in this highly politicised rule change. Consider that the spirit of the Land law is that no Alien can own land, with only few specific exceptions (namley 40 M Baht for 1 Rai or as an IEAT/BOI privellege).

Officers at the Tessabaan are already looking into the financial muscle of the Thai shareholders in a firm to determine whether they are nominees or not.

The new terms of the FBA looks at all companies to see whether they are owned by Thais or foreigners, and they then also make sure that if its a Thai entity, that Thai's control it. If they do not, said firm must restructure or else.

So its not really looking good for these people so I stick by my original advice and tell all involved to get to a lawyer ASAP.

Edited January 28, 2007 by quiksilva

[trajan]

It is confusing and for a while I thought I could see your argument trajan, but it still doesnt sit well with me.

Your lawyer might be technically correct regarding the letter of the law but in practice the FBA will almost certainly supercede the land code in this highly politicised rule change. Consider that the spirit of the Land law is that no Alien can own land, with only few specific exceptions (namley 40 M Baht for 1 Rai or as an IEAT/BOI privellege).

Officers at the Tessabaan are already looking into the financial muscle of the Thai shareholders in a firm to determine whether they are nominees or not.

The new terms of the FBA looks at all companies to see whether they are owned by Thais or foreigners, and they then also make sure that if its a Thai entity, that Thai's control it. If they do not, said firm must restructure or else.

So its not really looking good for these people so I stick by my original advice and tell all involved to get to a lawyer ASAP.

quiksilva, it may not sit well but that is what the current laws (and current proposed amendments) state....

Land Law

Definition of "alien" under the Land Law refers only to majority capital (not voting rights)...

yes, officers at the Land Office (in connection with title deed transfers) do inquire into the financial background of Thai shareholders (OR the presence of a loan agreement to the company) to finance the underlying land transfer transaction (this goes to the question of nominee shareholders---i.e., whether Thai shareholders are simply holding shares on behalf of foreigners as "front stick men") but they do not inquire about voting rights of shares held by Thai shareholders... because this is not relevant under the Land Law

Alien Business Law (and proposed amendments)

Contrary to what you state, the Alien Business Law does not supercede the Land Law. Therefore, if they adopt the new proposed amendments to the Alien Business Law, then the definition of "alien" FOR PURPOSES OF restricted business activities under the ABL, will take into account voting rights. If that comes true, both "nominee" Thai shareholders (which has always been illegal) and "shares with diluted voting rights" will not be permtited to engage in List 1,2,3 business activities (except for circumstances where you obtain an ABL license ,get BOI privileges etc.).

Future Worst Case Scenario

HOWEVER, as I've stated repeatedly before, there is no guarantee in the future that the current military-installed ministers will not also propose a change to the Land Law (and re-define "alien" under that law)...if that happens (and there is no grandfathering clause to allow existing structures to continue) then people which currently hold such entities to hold land, will be scrambling......also, if you want to speculate about the future (in worst case scenarios), the government could rescind existing condo laws which allow foreigners to own condos (with no grand-fathering provisions) ...IF that happened there will also be panic.......BUT Im not speaking of future possible scenarios...Im speaking about the PRESENT laws and proposed amendments.....

[quiksilva]

Again I get what you are saying but its the spirit of the law that counts here. Here's the Commerce Minister saying the same thing in today's Bangkok Post, this loop hole will be closed.

Foreigners warned on land

Krirk-krai: Resorts not in Thai hands

UMESH PANDEY

Foreign investors holding property through shell companies using Thai nominees have been warned to restructure their holdings or face prosecution.

''Foreigners using shell companies to buy housing across the country are violating two laws. One, the Land Act that forbids foreigners from holding land and two, the Foreign Business Act by using nominee structures. I recommend that they restructure,'' Commerce Minister Krirk-krai Jirapaet told foreign journalists at a dinner talk on Friday.

Under Thai law, he pointed out, foreigners can only own land if they have businesses promoted by the Board of Investment, under the Industrial Estate Act or with written permission from the Interior Ministry.

''Look around you _ all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. They cannot take the land away but there's a sense of nationalism and therefore they should restructure,'' a combative Mr Krirk-krai said in response to questions from foreigners.

The resort islands of Phuket and Samui have been the focus of foreign investors who have snapped up million-dollar villas as second or retirement homes, but the imminent changes to the Foreign Business Act have begun to keep investors, developers and buyers at bay.

It is expected that among those to be hurt the most by the new rules will be companies selling villas to foreign buyers, as any foreigner will need to set up a company with at least a 51% Thai shareholding. To comply with the amendments, companies will need to change from freehold to leasehold contracts.

Market experts believe the villa-for-sale market in resort destinations will suffer as a result.

Mr Krirk-krai also said that the government would likely look at ways to plug the loopholes under which companies use Non Voting Depository Receipts (NVDRs) to circumvent FBA-mandated restrictions on foreign ownership.

''I will make sure that over the next three or four months we will plug this loophole,'' he said.

NVDRs are issued by Thai NVDR, a subsidiary of the Stock Exchange of Thailand, to foreign investors who have bought shares in listed companies that are already up to their foreign-ownership limits.

NVDR holders are entitled to full economic rights, including dividends and rights issues, but are not allowed to vote, except on motions involving delisting. Voting rights are automatically restored if the NVDRs are sold back to Thais.

Mr Krirk-krai said the military-installed government was in a rush to resolve this issue because abuse of the laws was a key reason for the fall of the previous government.

''It's not that we are backtracking from globalisation and not welcoming foreign investors, but what we want is good quality investors, not just any investors,'' he said.

''If the investors cannot observe one or two laws that are similar to those in other civilised countries, then we should not care about them.''

Edited January 29, 2007 by quiksilva