Limited Companies at the Land Office

[Super Joe]

There's a new boss at the land office and he told my wife Monday that they will not be allowing land to be transfered into Limited Companies any longer, unless you can prove you have genuine Thai investors as shareholders.
They will do Leases and Usufruct's only.

SJ

[Norseman]

Is it possible to get more official info about this stupid new foreign investment and sales promotional drive SJ?

[Super Joe]

I doubt it Norseman unfortunately, as it just seems to be the individual Land Offices decision rather than a new Government regulation being issued.
I believe each individual Land Office has discretion to act how it sees fit on questionable issues, and the 'shareholder' issues certainly comes under that catagory.

SJ

[holmes]

There's a new boss at the land office and he told my wife Monday that they will not be allowing land to be transfered into Limited Companies any longer, unless you can prove you have genuine Thai investors as shareholders.
They will do Leases and Usufruct's only.

SJ

Good news .

[Governor]

There's a new boss at the land office and he told my wife Monday that they will not be allowing land to be transfered into Limited Companies any longer, unless you can prove you have genuine Thai investors as shareholders.
They will do Leases and Usufruct's only.
J

Good news .

Sorry you have lost me, but why is this good news.

Whilst I do admit to knowing little about Thai property laws I thought that the proper use of a Thai Company could protect the land and house brought by a foreigner, but I am probably wrong.

[Super Joe]

A Thai solicitor has publically written the following:

Land Department circular dated 21st July 2008 to all Provincial Governors regarding 'the registration of land ownership or buying land for the benefits of foreigners by using company's name or having a Thai national as a shareholder nominee in the company'

1. Check business objectives of the company. If it is found that the company is doing real estate business while there is a foreigner holding company shares together with some Thai nominees or there is a foreigner being a director of the company, the Land Official will investigate to a source of the investment of the Thai nominees. However, the Land Official will refuse to register of such an application by practice.

2. It is appearing that the company was organised by a foreigner or appearing his name in the company's memorandum or appearing his shares being preference shares having majority right to vote in the company or there is a Thai lawyer or Broker holding the main shares in the company, The Land Official will investigate to a source of the investment in such company.

3.It is a requirement that the registered capital of a company must be more than the purchase price of any property. Otherwise, the Land Official will investigate to the source of the investment.

4. In case a company leases a piece of land in a long term basis, investigation will be made to proof whether the land lease is made to benefit or the company is holding the property to the benefit of any foreigner

[jumpjockey]

No big surprise.

Land Department circular dated 21st July 2008 to all Provincial Governors regarding 'the registration of land ownership or buying land for the benefits of foreigners by using company's name or having a Thai national as a shareholder nominee in the company'

1. Check business objectives of the company. If it is found that the company is doing real estate business while there is a foreigner holding company shares together with some Thai nominees or there is a foreigner being a director of the company, the Land Official will investigate to a source of the investment of the Thai nominees. However, the Land Official will refuse to register of such an application by practice.

2. It is appearing that the company was organised by a foreigner or appearing his name in the company's memorandum or appearing his shares being preference shares having majority right to vote in the company or there is a Thai lawyer or Broker holding the main shares in the company, The Land Official will investigate to a source of the investment in such company.

3.It is a requirement that the registered capital of a company must be more than the purchase price of any property. Otherwise, the Land Official will investigate to the source of the investment.

4. In case a company leases a piece of land in a long term basis, investigation will be made to proof whether the land lease is made to benefit or the company is holding the property to the benefit of any foreigner

Everyone knew this was coming, started in Pattaya some time ago.
So your 5million house will mean a 5million registered company, which by my reckoning means loads of tax.

So what do the local developers/real estate agents/and house owners feel about this?

Or do we all deny it and look for yet more loopholes, and just why would anyone invest in a country that clearly does not want your money.

This just adds to the crash in real estate sales .(excluding condos). and of course we have the world wide credit crunch which is now hitting the scandi countries. Even yesterday there was a run on a large japanese bank.

There are tough times ahead for all.

[Super Joe]

Jumpjockey wrote:

So your 5million house will mean a 5million registered company, which by my reckoning means loads of tax.

No, this is not how the land office operate. They have, and still operate as of last week, their own valuation system and will not accept your valuation even if higher. Also companies register the land only in the company, ie without the house value as not yet built.

So what do the local developers/real estate agents/and house owners feel about this? Or do we all deny it and look for yet more loopholes, and just why would anyone invest in a country that clearly does not want your money.

Very few people open Limited Companies these days, they lease as per solicitors advice.

SJ

[jumpjockey]

So this means what exactly,

3.It is a requirement that the registered capital of a company must be more than the purchase price of any property. Otherwise, the Land Official will investigate to the source of the investment.

While they may not enforce it fully yet I think you must agree there is a distinct possibillity that they could or will.

Do the new regs not also mention the lease aspect.

In case a company leases a piece of land in a long term basis, investigation will be made to proof whether the land lease is made to benefit or the company is holding the property to the benefit of any foreigner

Hey I am no expert, but it looks rather black and white to me.

[Super Joe]

Sorry JJ, I edited my post while you put yours up. I added: "No, this is not how the land office operate. They have, and still operate as of last week, their own valuation system and will not accept your valuation even if higher. Also companies register the land only in the company, ie without the house value as not yet built."

In case a company leases a piece of land in a long term basis, investigation will be made to proof whether the land lease is made to benefit or the company is holding the property to the benefit of any foreigner

Farangs do not set up Limited Companies to then lease the land, they do it to acquire freehold.
A lease is registered in a foreigners own name on the back of the Land Title and registered at the Land Office, no company required, 100% legal.

'If' it is the end of Limited Companies I think its a good thing, takes away any possible worry about risk by farang. It's clearer now, either lease or rent.

Cheers,

SJ

[jumpjockey]

Very informative Joe,

So if you buy a house now in Hua Hin who holds the lease?

And am I right in thinking that the max is still 30yrs, regardless of what some might say about extensions. Ie 30+30+30.

My understanding from Pattaya is that only the first 30yrs are accepted by the land registry.

This must mean putting an awfull lot of faith in your leaseholder, thai or farang.

[Super Joe]

This must mean putting an awfull lot of faith in your leaseholder, thai or farang

Farang leaseholder ?? Oh boy.

My advice would be ..... Start the wind-up slowly, portray yourself as ignorant for a while, do not reveal any real knowledge until the 3rd or 4th day and be subtle
The above information is only my opinion, people should seek professional advice from a solicitor.

Cheers,

SJ

[jumpjockey]

Jo

With respect I never said I knew nothing about the land laws, also you answered my post. I never came looking for you.

The main thrust was that this has already taken place in Pattaya/The affect on real estate/Developers/Home owners.

The general state of the world economy and how this linked to tighter controls in thailand would affect prices and local owners and buisness.

Get it.

[Super Joe]

Deleted: can't be ar$ed, sorry.

SJ

[JimmyGreaves]

Are these checks being carried out by the land office on leases that existing companies who own land wish to issue?