"New Property Laws" ..... advice please !!!!!

[lockwood74]

I set up a company 2 years ago with the intention of buying a plot of land to build a holiday home, since then I have bought 2 plots of land that are adjoined to each other in Hua Hin totaling 136 sq wah.
The company registration is set up as 49% (English Name) 51% (Thai names of who I dont know personally), these names were given in order to set up the company. I have had no problem in buying the land,

1. Am I at risk with these so called new laws ?

2. Will I be targeted ?

3. Are the authorities looking for new company registrations to be targeted or existing ones ?

4. Should I continue with my plan to start construction this August, or sell up and get out ?

Any advice based on good knowledge would be most helpful

Regards

John Lockwood

[Wanderlust]

lockwood74,
Before I start I just want to correct something that you have obviously been told or read - the law has not been changed regarding these issues, but the relevant Ministry here issued a directive stating that certain regulations had previously not been enforced properly, and that now they should be (in so many words). However the wording was sufficiently open to interpretation to lead to mass confusion and debate on here and all over Thailand!
As it stands there has been no comment as to any retrospective action being taken, as in deals that have already been done, and many people think that is unlikely, although it is probably still possible legally. Also many people interpret the statement as being aimed solely at foriegners wishing to buy large tracts of land with the intention of developing and then selling property, rather than those wishing to have a home for themselves.
You will get advice from some on here telling you that there is no problem, and others telling you to pull out now, while the advice I would give you is to contact your Thai lawyer, or if you haven't got one to get one PDQ! I believe that you should probably hold fire on construction until you have had legal advice but also until the promised 'further clarification' from the Ministry transpires.
At the end of the day you (and others) were exploiting a loophole in the Thai law, because the only legal way to own land here is if you invest 40 million baht in a government scheme, and even then it is a limited amount (not sure but somewhere between 1 and 3 rai). The questions you have to ask yourself is whether you can afford to lose the money you have invested if the worst comes to fruition, and what are your alternatives? It depends on what your plan was really, if you were planning to sell up after a while, or keep it forever, or rent it out to others or just use for yourself. Whatever anyone says the position is not clear, so I wouldn't make any decisions right now - consult a good Thai lawyer.

[JW]

Wanderlust,

A common sense answer - at last. The land office have transferred land this week, and clients have bought homes also this week, after getting advice from their lawyers. More developers are now offering lease agreements also.

[prcscct]

One snippet I read recently is that one of the checks is going to be to see if any of the Thai shareholders actually has the funds necessary to purchase the property. It didn't say, but I assume total funds necessary remitted jointly by all Thai sharholders would be accepted as well. I think dates of deposit into various accounts would be checked as well. Pete

[Burger]

You are right Pete, when it first started a couple of weeks ago, the Land Office in Hua Hin had a standard information sheet which told buyers what info to bring in about their shareholders.
Last week and this week they have been transfering land to 49% foreign companies without this request of shareholder info.

Burger

[PAINTER01]

Hi Lockwood,
I also set a comp up last Nov to buy land and build villa, with hindsite I am now very relived that mine was one of the last to be programmed to be built, I had only paid a 100k thai baht deposit.
We was due have our land registered and break ground on my propety in the next few weeks.
Been in touch with my BKK lawyer and basicly told him that if the company needs to be restructered and its not 100% safe I will walk away.
Also been in touch wih the HH land office and asked them for clarification posted below

"Dear
Thanks for the question you sent to me yesterday. It seems that you are very worry about what you have learned from the newspaper in the UK. Anyway, the answer for your question is that as far as I concern, I did not have any idea of that rumors. What I have heard is that the Ministry of Interior has circulated the letter to the concerning authorities, and order them to investigate if there is any thing wrong in case a company registered in Thailand but owned by foreigners want to buy a peace of land. Therefore, I still think that it is firm if your company want to buy lang for business purposes. However, you must keep in mind that more than half of shareholders or partners in your company must be Thais or the capital of the company owned by foreigner must be less than 49%. So if your company lines in accordance with section 97 of the Land Law of Thailand, Then, it would be OK.

I hope that my answer could be of your help.

Regards

Swaty"

I hope this is informative for you as well?

If we can not safely purchase I will be gutted, been coming to HH for 5 years and fell in love with the place, but not prepared to gamble 150k uk pound's on structers which are open to be taken off me on a whim on a legal ruling as and when local authorites see fit.

As an aside I really feel for people who have brought houses who have this hanging over their heads

[machersjohn]

I have been watching this thread and the paranoi. My take is some influensuasial person has not had his/her way and the order was invoked to look more closely ensued.

The reality is if every purchase made in a thai/ farang company was made the subject of an investigation then the thai land office would grind to a halt. This does not take into condsideration the likely hood of bribes to look the other way.

It also allows a thai person to querie the legallity of your purchase on a one to one to basis which you would be unlikely to win.

I should say that i am not in the buying categary but inthe lease situation, which i am sure will out live me.

In conclusion if you have no problem with your neighbours i doubt you will ever have a problem.

Only my interpretation

[JW]

From www.property-news.com


The market suffered a serious blip last month as lawyers, developers and agents alike scrambled to interpret a new Directive from the Land Department. But had anything actually changed? Tony Adams investigates.

Issued on the 15 May by the Land Department of the Ministry of the Interior to all the provincial governors, the new Regulation established procedures for land officials to follow when dealing with an acquisition of land by a corporate entity with foreign shareholders or directors. Issued with the stated aim to “to prevent any law avoidance or buying land for the benefit of foreigners,” the Directive outlined how any company established to buy land in Thailand would be put under increasing scrutiny and the Thai shareholders involved would have to disclose their assets and prove that they were genuine investors.

‘If it appears that the company has foreign shareholder(s) or has foreign director(s) or has appropriate reasons to believe that there are Thai people holding shares as the foreigner’s nominees, then the officers must investigate the income of every Thai shareholder,’ the Directive said.

The Directive was clearly a reaction to the widespread use of Thai nominee shareholders, particularly in resort areas, by foreigners as a means of acquiring freehold title on land. It was not however, a change in the law, as announced by the Bangkok Post on 31 May under the headline ‘New Property Law Stuns Foreigners.’ The effect of the Post piece, which contained quotes such as ‘"The property boom ended on May 25," was immediate.

Popular expatriate forum ThaiVisa.com immediately picked up the story and was flooded with posts which ranged from anti-Thai rants, to questions about the future validity of condominium ownership and debates over when it is appropriate to put property in a Thai spouses name. Other websites followed suit and the by the next day hundreds of concerned emails were arriving in the inboxes of lawyers, developers and agents. Many were unhappy with the feature that sparked the panic.

“The Bangkok Post report was unnecessarily sensational,” Gary Biesty, senior partner in the law firm Johnson Stokes and Master said, citing the source that broke the news. “It was inaccurate in the sense that it suggested that it was new law, because it’s not. It was even inaccurate when it suggested it was a new application of the law, because it’s not. The determination of whether a Thai person, be they a juristic or individual person, is a real investor or somebody that is simply assisting a foreigner to circumvent the law has always been the same. For as long as I’ve been here, which is now 16 years, the test for a nominee has been: ’are you somebody that habitually invests? Are you somebody that has financial worth? And did you actually invest the money?’ So the regulation is simply a restatement of those three tests to determine if the Thai person is a real investor or are they simply a nominee who is been used to circumvent the law.”

By the time the Post piece was printed the Directive was already beginning to have an effect, mostly at the Chonburi Land Office, which deals with Pattaya and the Eastern Seaboard, where transfers stopped altogether for a few days. At the time of going to press, transfers to companies had resumed though mainly in cases where a foreigner’s Thai spouse was a majority shareholder. Similar delays where also reported in the Samui and Phuket Land Offices.

“I think it will all blow over,” a well-known Pattaya agent, who wished to speak off the record, said. “Ninety-nine percent of developments here are Thai-owned and run, but they are selling to the foreign market and do not want to see this kind of thing happening. Similar things have happened in Chonburi before, with no foreign bank accounts being allowed and no work permits being issued for periods of time in the past, so I am not overly concerned about this. However it will understandably make new investors wary for a period of time.”

Loss of investor confidence soon emerged as the main concern within the industry.

“It [The Bangkok Post feature] had an impact on investors who are perhaps less sophisticated than others and who perhaps hadn’t discussed and understood the nature of their investment with their lawyers before the article appeared,” Gary Biesty said. “We had relatively few enquiries from any high net worth buyers, who tend to be more sophisticated and tend not to be concerned. Our developer clients who are sophisticated and do understand the market, were concerned because of how potential buyers would view this. The real impact was not the legal issue, but the pure negative impact it would have on potential buyers. So developers were irritated by the inaccuracy of the report rather more than concerned about the quality of the title that foreigners would enjoy if they came in as true investors.”

Only time will tell how badly the market will be affected. Some companies though are already benefiting from the Directive. International tax and legal consulting firm, BDO Richfield Advisory Limited, launched a new investment service last year and now looks set to reap the rewards of a clampdown on nominee shareholders. By using a holding company structure, which allows foreigners to legally buy land and property without comprising their investment.

“We don’t use people,” Paul Ashburn senior partner in BDO, said. “There are no Thai individuals in our structure, we use holding companies. I understand that we were the first transfer registered in Bangkok since this regulation came out, where we had a foreign shareholding owning 49% of the shares and there was no question about our shareholding structure, it was just routine.”
A typical BDO structure would have a foreigner owning 49% shares and the remaining 51% owned by four BDO controlled holding companies. As holding companies, each one can have shareholdings in the other.

“It’s very simple when we go to the land office and they ask for a list of shareholders,” Ashburn said. “They are all Thai. So, say we had four of our Thai companies in there, they then want to see the shareholding in those companies, we provide the shareholding list and they are all Thai. But they are all companies: there’s no people.”

Within weeks of the Directive, at least two other Thai law firms had announced plans of their own to offer a holding company structure to property investors. This may well be indicative of a general ‘flight to quality’, as investors seek more sophisticated advice and more soundly structured investment vehicles. Leasehold could also become an increasingly popular option as investors move towards the absolute certainty of 30-years ownership. Some observers, such as Gary Biesty, also believe that future changes in the law could be possible.

“It terms of changes to the law, we can’t predict whether they will be a positive or a negative,” he said. “I don’t foresee that there will a negative change in the law which would seek to further prohibit foreigners coming here to enjoy land rights. Although of course if there is continued abuse, like non-payment of legitimate tax, then there is always a danger that might happen. I think we should look much more positively. There is growing commercial lobby asking the Thai authorities to grant foreigners legitimate personal rights over land which exceed the current 30 years, but which fall short of complete freehold title. There is a very significant gap there, which if there is a commercial and political will, they could move beyond 30 years. This would be good for Thailand, good for foreign investment and add certainty and stability to what is otherwise a slightly uncertain environment.”

[tuktukmike]

Jw has made a good post bar one thing.

www.property-news .com

These people of course have a vested interest in this subject.

As for the Thais maybe extending the 30year lease, dont hold your breath.

I fully agree with a sort of holding company system and as i have said before if developers could get the Banks involved then we would all feel a lot safer.

But i would never invest in a private holding company set up by your lawyer or real estate agent, a lot can happen in 30 years.

My feeling is that as the subject has raised its ugly head it will not be ignored by whatever goverment comes to power in the coming months.

Mike.

BTW, I have heard of at least one property developer now offering a lease buy system in Hua Hin.

Maybe other know more details on this scheme?

[essbee]

John

I don't know your financial position, and that is your business. I am not in the Thai property business. Now if you need the money that you have invested then you need to consider your position. BUT if you are thinking of an investment then history shows that those who make money do so when others are too frightened and get out !!!!!!!
Its more fun than shares and a better bet than England winning the world cup !
PS you can also lose your shirt ........... (as Beckham will sadly)

[JW]

Very true essbee - on all fronts there.

[tuktukmike]

Very interesting.

BUT if you are thinking of an investment then history shows that those who make money do so when others are too frightened and get out !!!!!!!

Was this also the thought process before the Wall Stree Crash.

I also remember comments as to how intelligent people choose to buy land and house here, so the rest of us must be stupid.

Reminds me of the story of the King With No Clothes.

Essbee,

You are too modest.

Did you not say in a previous post that you have bought land here???

Of course a crash would not affect you as you would have only paid a small price.

No one wants too see anyone lose their money on a bad investment so what is the argument here.

In the Red corner you have the Real Estate Agents who will tell you everything is wonderfull and of course no problem.

In the Blue corner you have the people who have many years of experiance of thailand who say dont invest in what you can not own.

Who is right or wrong is up to the people who read postings on this web site, but when a new poster comes along with his tongue so far up peoples backside he could tickle their tonsils you have to start to wonder.

Remember those that have most to lose will always be the most vocal, while the rest will just quote the law in Thailand.

I have taken a load of crap on this subject from people who to this day hide their interest in this post, Everyone knows my business here and certain others have been asked theirs.

To date one claimed to have only bought a plot of land and his business was his own affair, very modest.

The second refused to answer when asked what his involvment in property was even though he was given a list of options.

Is this important on this web site?. Yes.

If you are making not only opinions but trying to persuade people all is ok with property then you can bet your ass it is.

I met a couple only last week who intended to buy a house out here, they were shocked when i told them that the Thai law says that a farang can not own land.

They woke up when i asked them if they were advised to register a company and if so WHY.

It seems their real estate agents had not bothered to inform them on the basic regulations of Thailand.

So agents flame away, I will stand by my comments.(Like it or not)

Mike.

[tuktukmike]

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