Long stay property investment programme
Source: samuiforsale November 3 2006
Not a government-backed solution for foreigners to invest in Real Estate
The Tourism Authority of Thailand ( TAT) launched in 2002 its 'Long-Stay' campaign to develop and promote long term stay in Thailand. The project hoped to attract retirees (50 years and above) from countries that have harsh winters and a higher cost of living to stay for extended periods in Thailand, as well as visitors traveling for medical and health services, international athletes who wish to make Thailand their training base as well as international students.
The official TAT 'Longstay' campaign aims to offer assistance and certain privileges like communication services, facilitating longer staying arrangement and a one-year visa. It does not offer a property investment scheme for foreigners.
A Samui real estate agent is currently marketing a property scheme called 'Vacation Investment Programme' (VIP) suggesting a new government-backed option for foreigners to purchase property in Koh Samui. They say it includes the benefits of the TAT Longstay campaign and allows foreign investors to enjoy 'perpetual leasehold on properties in Koh Samui via a recently established (private) company.
This scheme is currently marketed as 'Thailand Longstay or Thailand Second Home Membership Program' copied from and suggesting a similar program as the 'Malaysia my second home programme'
In response to questions about TAT's involvement in the property scheme the TAT stated that foreign real estate investment is not part of a government policy to promote long term stay in Thailand, nor does the TAT provide services for foreigners to invest in real estate on the Samui Island (TAT). See TAT's website for the Long-stay project objectives.
It is the private service provider Thailand Longstay company limited (TLM) and its subsidiary Longstay Property Management Company Limited that is associated with the commercial property scheme and not the Thai government. TLM is a privately owned company and 55% of the shares are held by a Thai national Khun Ruamnakorn Tubtimthongchai who is the company's chief executive officer.
The TLM has been hired by the TAT to promote the Thailand Longstay Tourism campaign, for which reason the TAT participates for 30% in the TLM. However, the VIP, Second Home Program or Longstay Property is a separate commercial scheme created by the TLM as a private company together with Thai business men and real estate sellers. The suggested association between the Thai government and this property scheme is misleading.
The scheme seems simple, the foreign investor buys the property and TLM has ownership over the property 'as the agent of the foreigner' and in return provides the foreigner with a 30-year lease and a promise it can be renewed in 'perpetuity'. This is not an absolute right and like any other renewable lease constructions offered by any developer in Thailand, this is not guaranteed by law or the Royal Thai Government. The renewal of the lease is merely based on a contractual renewal right that you can very easily lose. In addition the scheme includes a very substantial fee to offset the TLM service and the TLM reserves the right to modify, limit, and/ or cancel any of the privileges and/or benefits offered without prior notice.
The scheme says 'the Thai government department will register the buyer as a perpetual owner'. This in practice means the local Land Office will register the foreigner's name as the 'lease owner' on the land title deed. This is not a new development or new law, as any lease in Thailand exceeding 3 years must be registered at the local Land office to be enforceable and automatically includes the registration of the lease and name of the lessee to the title deed. Normal lease laws apply on this scheme. The foreigner gets a 30-year lease, the maximum period allowed by Thai law, and the 'enduring forever, everlasting' renewal of the lease comes under contract law and is not more than a personal promise you can easily lose. Perpetual leasehold does not exist under Thai law and is legally meaningless.
This doubtful and misleading marketed property scheme has several legal drawbacks and in practice it will encounter legal problems as the Thai Land Code Act prohibits foreigners from purchasing land and prohibits Thai entities to acquire land as an agent of a foreigner. Without approval from the Ministry of Interior and the Land Department (which it has not) it must be deemed that the private VIP or Long-stay Property company will acquire the land under section 96 of the Land Code, as the owner in place of an alien, which contravenes section 113 of the Code.
Section 96 Land Code; 'When it appears that any person has acquired land as the owner in place of an alien or juristic person under the provisions of Section 97 and 98, the Director-General shall have the authority to dispose of such land and the provisions of Section 94 shall apply mutatis mutandis'.
Section 113 Land Code; 'Any person who acquires land as an agent of an alien or juristic person under the provisions of Section 97 or 98 shall be punished with a fine not exceeding twenty thousand baht or an imprisonment not exceeding two years, or both'.
The privileges and facilities offered under the Thailand Long-stay Tourism campaign are open for all foreign members and are separate from any commercial property scheme (TAT). However, with regard to recent political developments it is doubtful if the new government will adapt the Thailand Longstay Tourism campaign. Like other projects set up by the previous Thaksin administration it need to be re-studied.
The VIP, Yjailand Second Home Membership, or Longstay Property is a private scheme and not part of or even affiliated with nor approved by the Thai government.