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New Property Laws for Foreigners
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  1. #1
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    panic New Property Laws for Foreigners

    New property law stuns foreigners

    Bangkok (dpa) - Thailand's booming property sector has been thrown into confusion by a new regulation issued this month that requires all partly foreign-owned companies to prove the source of their funding before purchasing land, industry sources said Tuesday.

    The new Interior Ministry regulation that went into effect on May 25 has already started to slow sales of housing estates in Thailand's popular seaside resorts, such as Pattaya, Phuket, Hua Hin and Samui Island, which have been specifically targeting well-to-do foreigners as vacation getaways or retirement homes.

    "The property boom ended on May 25," said Ronachai Krisadaolarn, managing director of Bangkok International Associates, a Bangkok-based legal consultancy firm that caters to foreign clients.

    Thailand has strict laws prohibiting foreigners from directly purchasing property themselves although loopholes in the law allow them to own land and their houses through long leases or a "nominee company," providing the company is majority Thai-owned.

    It is common practice for such "shell companies" to include Thai nationals who have been paid to act as nominees to facilitate the deal and who have invested nothing in the purchase.

    The new regulation, signed by Suraart Thoingniramol, deputy permanent secretary of the Interior Ministry, is designed to halt the use of such companies for property purchases in the future.

    "If it appears that an alien holds shares or is a director or it is reasonable to believe that a Thai holds shares as a representative of an alien, the officers shall investigate the income of Thais holding shares, delving into the number of years [they have spent] in the current profession and monthly salary," reads a translation of the law. "The provision of necessary evidence is required."

    The new regulation is actually an enforcement of Thailand's existing laws, legal experts said.

    "It's not a radical change. It's a radical implementation," Ronachai said.

    The regulation has already started to stall home sales to foreigners, sources said.

    "There's a lot of confusion," said Simon Landy, managing director of the Primo Co, a property-development firm. "Some land offices don't know what to do with it, and many have simply stopped transferring land."

    Bangkok Post

  2. #2
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    This is probably a good move in terms of slowing inflation. With so much foreign money flowing in, Thais are less and less able to afford land, especially in certain areas inundated with farang.
    Life is learning. If you stop learning, you might as well be dead.

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    I do feel sorry for the many people who are told by these agencies that it is possible to get around the law by setting up dummy companies in order for them to buy land. It has been accepted practice for a long time. When I was setting up my own company (a real one) and told my lawyer that I would also be buying a house in the company name, he did mention that if I owned more than 35% of the shares then the government would investigate to see if the company was real or not. Though, he added, they often didn't do this. By law, I cannot own more than 49% of my own company. The majority of shareholders have to be Thai. For me this was a bit difficult as I was the only one investing money into the company. But I found enough Thai shareholders who didn't want to receive any dividends.

    Any changes in the law or the possibility that laws could change, is always a worry for me. I could so easily lose everything. But, at least my company is real and I do have Thai employees and I do pay taxes.

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    Quote Originally Posted by Richard
    I do feel sorry for the many people who are told by these agencies that it is possible to get around the law by setting up dummy companies in order for them to buy land.
    I'm sorry Richard but the relevant phrase is 'to get around the law'. I don't feel sorry anyone who knowingly participates in an arrangement that is, in western parlance 'shady'.

    Even when everything is perfectly legal somone always suffers. Here where I live there has been a property boom these last 18 months mainly due to last years hurricane season. Floridians have been moving north and in the process driving up prices. Those who own significant tracts of land become instant millionaires whilst those at the bottom become even more stressed due to both retail prices and taxes heading skyward.

    And here's a puzzle for you, as property values increase and as you get a broader base to collect taxes from, why don't taxes go down? Expenditures stay roughly the same especially as most of the new people moving in are in the upper age groups and have no school age children (where most of the property taxes go here). No services are provided so you can't blame expansion of the service base.

    No taxes don't go down, they go up, drastically in some cases because they don't adjust the rate downards to reflect the upward valuations.

    Now if it is the same in Thailand, then have some sympathy for the Thai's who cannot afford land or a house rather than the Farang's who knowingly participate in a slightly shady land deal!

    And from a selfish point of view, this new ruling will hold prices or drive them downward just in time for the wife to buy a house when it's time to move there.

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    The Bangkok / Thai property boom specially where farangs live like Pattaya, would be over any away with out this new law, The property boom has last 3 years, that's about time for a correction, plus rising interest rates internationally, will mean an adjustment in prices downwards anyway. Migration always puts up property prices for the locals, making property unaffordable for many people, that's why people who live in affluent countries like the USA live in Trailer's, what standard of housing is that for some one who works hard, if that is all they can afford.
    To much migration in the west has led to an underclass.
    Over all Thailand actually has zero net migration, as there are more Thai's emigrating, than there are immigrants, it is just the situation in Thailand, that the immigrants on average have more money than the average Thai, putting up the prices. But since immigrants into Thailand are still relatively small, I don't put that as a major factor in Thai property prices, apart from areas that have large concentrations of farangs, such as Pattaya. Bangkok, has a lot of population growth due to internal migration, people from country areas moving to the city, which keeps prices high there, as well as a lot of international investment into industry, keeping wages relatively high compared with other areas in Thailand.
    The boom is over any way.

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    And if Richard has any problems with the authorities with his company, he can always move offshore to Australia for his Thai web site, and when this business starts making a profit, all the money and wages will have left Thailand, I don't think that is in Thailand's interest for Richard to leave.

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    Hopefully this enforcement will not affect any genuine companies giving genuine employment to Thais. Meanwhile -Happy Birthday, Richard !!!

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    Quote Originally Posted by Khun Don
    Hopefully this enforcement will not affect any genuine companies giving genuine employment to Thais. Meanwhile -Happy Birthday, Richard !!!
    I wouldn't have thought so since I get the impression it only deals with those companies setup to get around Thai land owning laws.

    I am sure someone will correct me if I am wrong, but I would have thought the route whereby you lease the land for 30 years, with options to extend, is the proper way for a 'Farang' to buy. Of course you have to be smart about it to protect you from outrageous increases in ground rent but that can be handled.

    Meanwhile let me also add:- Happy Birthday, Richard !!!

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    Quote Originally Posted by Peterg
    I wouldn't have thought so since I get the impression it only deals with those companies setup to get around Thai land owning laws.

    I am sure someone will correct me if I am wrong, but I would have thought the route whereby you lease the land for 30 years, with options to extend, is the proper way for a 'Farang' to buy. Of course you have to be smart about it to protect you from outrageous increases in ground rent but that can be handled.

    Meanwhile let me also add:- Happy Birthday, Richard !!!
    Peter-I did not make myself as clear as I should have done -I was thinking of perhaps an extra layer of bureaucracy being imposed in order to prove that foreign business registrations are "bona fide" -with a (large) charge for registration etc.

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    Quote Originally Posted by Khun Don
    Peter-I did not make myself as clear as I should have done -I was thinking of perhaps an extra layer of bureaucracy being imposed in order to prove that foreign business registrations are "bona fide" -with a (large) charge for registration etc.
    Unfortunately that is true anywhere. I remember in NJ, the slogan 'Read my lips, no new taxes", true, but fees for just about everything sky rocketed. They get you one way or another!

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