Real Estate

New bill to clamp down on foreign land ownership through nominees

Source:Bangkok Post August 19 2009

The draft law will be the first to fully protect farmland, deputy permanent secretary for agriculture Thawatchai Samrongwattana said. The bill will set out clear measures to prohibit foreigners from buying land through Thai nominees, he said yesterday.

Thai companies and land ownership by foreigners in Thailand

Can foreigners still own land or a condominium unit beyond the foreign ownership quota with a Thai limited company in Thailand? In new regulations issued by the Thai government, starting with the land office guidelines May 2006, this circumvention of the law by foreigners is no longer ignored by the Thai government.

Real estate transfer tax/other taxes

Transfer of real property is subject to property transfer fee at the rate of 2% on the government assessed value. There will be stamp duty at 0.5% when the real property is transferred, except in cases where the seller is subject to a specific business tax. There is a specific business tax on the transfer of real property at the rate of 3%, plus a municipal tax of 10%, assessed on the amount of the specific business tax, bringing the total tax to 3.3%.

Registered and unregistered apartments in Thailand

Not all apartment buildings in Thailand are registered under the Condominium Act

Apartment buildings NOT registered under condominium laws do not offer individual ownership over the units. A unit in an unregistered apartment building is generally sold as lease of a specific part of the building. Only licensed apartment buildings registered under the Condominium Act offer freehold ownership and individual freehold ownership unit title deeds.

Legal introduction to land lease agreements in Thailand

Long term possession of real estate property by foreigners in Thailand usually includes a land lease agreement, as foreigners are prohibited from owning land in Thailand. It is allowed for foreigners to own the structures upon the land or lease land and then build on that land in their own name. Lease or hire of immovable property (land, land and house, condominium) for residential purpose by foreigners is governed by the Thailand Civil and Commercial Code.

The global financial crisis is affecting the Thai property market

Source: Bangkokpost November 28 2008

The global financial crisis is affecting the Thai property market as a Singaporean investor just withdrew an investment in a project on Sukhumvit Road, said Patima Jeerapaet, managing director of the property consultant Colliers International Thailand. He said land and condominium prices in the central business district (CBD) and Sukhumvit Road's early sois will decline due to limp foreign demand.

Thailand New Condominium Act

Skyline bangkok

Condo Act to protect consumers. Aims to weed out shady developers

Source: Bangkokpost May 17 2008


The amended Condominium Act will improve the overall condo market and screen out non-professional developers that take advantage of buyers, says Opas Sripayak, managing director of the condo developer L.P.N. Development Plc. ''The amendments will benefit condominium buyers as most of them will focus on consumer protection. Condominium developers should pay more attention to what the sellers promise,'' he said yesterday.


Government considers longer leasehold terms 

Source: Bangkokpost may 15, 2008

The government is considering allowing greater foreign ownership in property firms and extending leasehold periods beyond 30 years to stimulate the business, according to Finance Minister Surapong Suebwonglee.

The amendment would stimulate market segments that have been hit by sluggish demand, he said yesterday.

''This has been discussed quite seriously over the past two to three months. We need to think about the percentage of shareholding and leasing access compared with the number of years. The crisis that we have had in the past two years led us to think and look at a new paradigm,'' he said at an investor forum held by Euromoney.

Dr Surapong said the government would consider new rules on leasing more on par with the region. The government has also abandoned a controversial proposed change to the Foreign Business Act, which tightened the definition of foreign ownership to promote foreign direct investment, he added.

Longlom Bunnag, the chairman of the real estate agency Jones Lang LaSalle (Thailand), said property related to tourism and recreation was expected to benefit the most from any changes because of high demand.

''Existing laws allow foreigners to secure 50-year leaseholds in Bangkok's red zone, which is the commercial area such as on Sathon Road. ... I think Phuket, Samui and Pattaya may be in the government's sights for changes in regulations to benefit villas, resorts and long-stay travellers,'' he said.

Mr Longlom said the idea could improve Thailand's competitiveness, since many countries now offered longer leaseholds _ for instance, 50 years in China and Hong Kong and 99 years in Singapore. ''Thailand has the shortest eligible period for lease contracts.''

Issara Boonyoung, vice-president of Housing Business Association, disagreed with the idea of allowing foreigners to freely conduct transactions related to exchange of properties because it could restrict housing access for Thais.

''Thai people have lower purchasing power than foreigners. If the government allows foreigners to sell or buy freely, there will be no land left for Thais,'' he said.

Foreign ownership should have conditions and limitations, he said. For example, the government should continue protecting land for agricultural purposes due to its low prices, otherwise the country may lose most of its land to foreigners.

Regarding the increase in the foreign quota in condominiums from 49%, the government should limit the size of land plots to prevent developers from using legal loopholes to register townhouses as condo units, Mr Issara said.

However, Assoc Prof Manop Bhongsadadt of Chulalongkorn University said the issue was ''very sensitive'' and unlikely to survive the three readings required in Parliament to change the law.

It would be easier to extend leasehold periods from the current 30 years to 90 years as in the UK, he said. ''It will turn illegal transactions as in Phuket and Samui into legal transactions. The government is likely to collect more taxes.''

Mr Issara also agreed that extended leaseholds would create transparency and prevent the use of nominees. However, he said longer leaseholds and higher foreign quotas in condominiums should be allowed only in specific areas.

Opinion (samuiforsale)

Q. How serious must we see these ideas considered by the government as claimed by the Finance Minister Surapong Suebwonglee?

A. It is far too early to say that these plans are realistic or even to speak about 'the government is considering longer leasehold periods'. It would be more relevant if these ideas would be more concrete and proposed to the Parliament. Part of such a speech is of course aimed at his foreign audience and to take away some of the fear among foreign investors for a planned stricter law enforcement and amendments of the Foreign Busienss Act as planned by the previous military installed govenrment.

Q. Can we expect longer leasehold terms and greater foreign ownership in property firms in the short term? 

A. No, not likely. We could maybe see a separate act or regulation in the future allowing longer leasehold terms for foreigners, but such an act or regulation will certainly also have limitations (similar to specific commercial leases for industry and commerce). This will likely require a minimum investment by the foreigner and will only be allowed in certain areas and maybe only in approved housing development projects. It will certainly not be a general change of the law. The maximum 30 year term in the 'Hire of Property' section in the Civil and Commercial Code will not change. This will have too many complications and this is not realistic to expect.

Also the greater foreign ownership in property firms are unlikely to happen and not realistic in this stage. It is like assoc prof Manop Bhongsadadt of Chulalongkorn University said, it is a sensitive issue and unlikely to survive the three readings required in Parliament to change the law. For both ideas a change of the law is required and this is unlikely to happen.

Q. What will be the effect of minister Surapong Suebwonglee's remarks?

A. It will probably create some optimism with the foreign investors who visited the forum held by Euromoney and it will be used for marketing purposes by the property professionals, however, nothing has been proposed to the Parliament yet and it is unlikely to expect any real changes. If we would see longer leasehold terms for foreign property investors this would certainly help the property sector in the resort areas of Thailand which have been hit by sluggish demand since the May 2006 Land Office guidelines issued by the Thaksin government to prevent the use of front companies by foreigners and the proposed amendments of the Foreign Business Act by the military installed government.

As it is now a foreigner may hire land in Thailand as provided by the Civil and Commercial Code and a contract of hire cannot exceed thirty years.


Tax break (temporary rate reduction)

Tax breaks become official today

Source: Bangkok Post March 29, 2008

Tax breaks for property buyers will become effective today with the official publication in the Royal Gazette, according to Suparut Kawatkul, the Finance Ministry's permanent secretary. Three laws would become effective, with the first reducing specific business taxes for property operators to 0.1% from 3% for transactions occurring over the next year.

The second law will increase waivers for individual taxpayers to the first 150,000 baht in income from 100,000 baht now, effective for the 2008 tax year. The increase will effectively reduce withholding taxes for individuals immediately.

More protection for buyers of condos

Source: Bangkok Post March 2008

More protection for buyers of condos

BANGKOK: -- Condominium buyers are to get better legal protection thanks to the amended Condominium Act, under which developers who do not deliver facilities as advertised will be penalised.

The amendment will become effective on July 4. Surasith Sahasthamrangsi of the real estate business promotion bureau of the Land Department said at a seminar yesterday that the new Act would punish de velopers who used misleading advertising to boost sales.