According to a recent article in Khao Sod, Thailand’s 3rd largest leading Thai daily newspaper, Thai Finance Minister Apisak Tantivorawong had mentioned that his ministry is presently considering the feasibility of offering foreigners 50 Year residential land leases on the proviso that the land remains in the hands of Thai nationals. In his capacity as guest speaker at a recent real estate trade show held last week. The Finance Minister then went onto say that he’s hopeful that the proposed reforms will most assuredly translate into a local real estate boom as foreign investment demand for land will most likely soar should his proposed reforms be enacted.
At present foreigners are prohibited under Thai Law from ever owning land in their own name, and as such most foreigners have little option but to use Thai proxies, through private limited companies to bypass this restriction, and in so doing own land and houses indirectly by virtue of their proxies.
Despite this becoming common practice, one is still technically exploiting a loophole in the law and as such, it’s viewed in a dim light by the Thai authorities that for the time being at least still choose to turn a blind eye to this practice. In fairness to the authorities they have attempted to impose stricter controls on the Thai proxies, whereupon they’re often called upon to account for any funds used to purchase shares in a Thai limited company. Additionally should any dispute arise amongst one or more of the Thai proxy shareholders this too can be legally problematic.
Quite understandably any law-abiding foreigner who wishes to buy either land and/or a house is placed in an untenable situation. For starters despite paying for the asset with their own hard earned money they’re still prohibited under Thai Law from putting the asset into their own name. Conversely placing the asset into a Thai nationals name often holds little appeal and in so doing one is forced to reluctantly go down the private limited company route with Thai proxy shareholders, which is both costly and as previously mentioned above may be potentially problematic legally.
This catch 22 situation which most foreigners now unwittingly find themselves in needs to be rectified and quite frankly its about time that a viable third alternative such as a long term lease is put on the table. Thus it should come as no surprise that the Ministers words were well received by the chairman of the developers association Mr. Atip Bhijanonda who hosted Thursday’s event. The chairman then expressed his opinion that it was selfish thinking on the part of Thais stating that foreigners invest here and give their money to us, and we don’t let them have their own homes. He then put forth a persuasive argument of which I wholeheartedly agree with that Thai people send their children to study abroad and very often buy overseas houses without restriction, and that this simple gesture has yet to be adequately reciprocated.
If implemented foreigners will be allowed to lease residential land in their own name for half a century. The chairman then went on to say that this was “a correct idea” since Thailand already has existing laws in place which allow foreigners to lease factories and commercial property for 50 Years, yet when it comes to residential property for the time being at least foreigners are still restricted to a maximum of 30 Years, and that this continued discrepancy is not only discriminatory but is also nonsensical.
Perhaps its worthwhile to point out that the topic of the 49 percent rule in relation to foreign owned condos was not discussed at this event.