A good time for property investment?

[Burger]

Pete,

We had the same statement here last year at a public meeting, 8 months ago.
People asking questions about foreigner's holding land and the Government official 'towing the party line' and saying you should not have nominee shareholders etc.

This was the same thing, the official said:

I recommend that they restructure," Commerce Minister Krirk-krai Jirapaet told foreign journalists at a dinner talk on Friday.

Obviously he has to say this, he 'recommends it', but no mention of any new law or regulation against it.

There is word of an announcement in the forthcoming months of a company offering 70% mortgages to foreigners and an extension to the current lease period, but don't hold me to that.

Burger

[seasides]

if your reason to buy property here is a pure question of financial return or if you buy a property for yourself and use it:

it makes no difference.

if, and really if, you find a unit that offers convenience (easy to reach, great location, top value, and so on.)

the problem is: high-convenience units never get cheaper, even if there's a crash.

look back to 97: the high end market did not get cheaper, prices just stayed flat.

but if saving money is your prime concern, look around, there should be excellent deals around.

more and more people need cash and are willing to sell even at a loss.

[caller]

Its a bit rich for someone put in power as a result of an armed coup to ask to be compared to other "civilised" countries!!!

Maybe he meant Burma?

Burger, I take it from your post that what was said before was when the old adminisration was in power?

Okay, its only a report of a speech in a newspaper, but the current Govt. seem a very different proposition and have not been slow to leave their mark on farangs in many ways - property developers, visas, investment - and what was said certainly seems to signal intent, does it not?

Such actions and pronouncements by representatives of this Govt. have to be considered by those looking to buy, not just ignored as "we've heard it all before, but what happened", surely you can see that?

[Winkie]

A little paranoid, don't you think?

Winkie

[Burger]

Caller wrote:

Burger, I take it from your post that what was said before was when the old adminisration was in power?

Okay, its only a report of a speech in a newspaper, but the current Govt. seem a very different proposition and have not been slow to leave their mark on farangs in many ways - property developers, visas, investment - and what was said certainly seems to signal intent, does it not?

The clampdown on foreign property developers and stopping of tourist visa runs was actually done by Thaksin's regime, not this new military one.
The regulation about investment excluded property.

All the new regualtions/laws this new 'government' has bought in has excluded property buyers.

What was the Government guy being interviewed supposed to say ? He never made any warning or indication of any impending law change.

Burger

[Burger]

Here's a challenge for you all:

Can anyone tell me of one single law or regulation that any Thai Government has introduced in the past two years that has affected an ordinary foreign couple from buying a holiday or retirement home ?

Burger

[buksida]

Burger,
You obviously know a lot more about this than I as it is your line of work so I could be wrong but didn't the company shareholder shakeup last year affect people opening companies to buy property? Now they have to or are being advised to take a lease route? I know this wasn't a new law as such but it has affected people wanting to invest here as they now have less options.

Foreigners warned on land
Bangkok Post: 29 January 2007
By: UMESH PANDEY

Krirk-krai: Resorts not in Thai hands.

Foreign investors holding property through shell companies using Thai nominees have been warned to restructure their holdings or face prosecution.

"Foreigners using shell companies to buy housing across the country are violating two laws. One, the Land Act that forbids foreigners from holding land and two, the Foreign Business Act by using nominee structures. I recommend that they restructure," Commerce Minister Krirk-krai Jirapaet told foreign journalists at a dinner talk on Friday.

Under Thai law, he pointed out, foreigners can only own land if they have businesses promoted by the Board of Investment, under the Industrial Estate Act or with written permission from the Interior Ministry.

"Look around you - all the land in Samui, Phuket and Koh Chang is in the hands of foreigners. They cannot take the land away but there's a sense of nationalism and therefore they should restructure," a combative Mr Krirk-krai said in response to questions from foreigners.

The resort islands of Phuket and Samui have been the focus of foreign investors who have snapped up million-dollar villas as second or retirement homes, but the imminent changes to the Foreign Business Act have begun to keep investors, developers and buyers at bay.

It is expected that among those to be hurt the most by the new rules will be companies selling villas to foreign buyers, as any foreigner will need to set up a company with at least a 51% Thai shareholding. To comply with the amendments, companies will need to change from freehold to leasehold contracts.

Market experts believe the villa-for-sale market in resort destinations will suffer as a result.

Mr Krirk-krai also said that the government would likely look at ways to plug the loopholes under which companies use Non Voting Depository Receipts (NVDRs) to circumvent FBA-mandated restrictions on foreign ownership.

"I will make sure that over the next three or four months we will plug this loophole," he said.

NVDRs are issued by Thai NVDR, a subsidiary of the Stock Exchange of Thailand, to foreign investors who have bought shares in listed companies that are already up to their foreign-ownership limits.

NVDR holders are entitled to full economic rights, including dividends and rights issues, but are not allowed to vote, except on motions involving delisting. Voting rights are automatically restored if the NVDRs are sold back to Thais.

Mr Krirk-krai said the military-installed government was in a rush to resolve this issue because abuse of the laws was a key reason for the fall of the previous government.

"It's not that we are backtracking from globalisation and not welcoming foreign investors, but what we want is good quality investors, not just any investors," he said.

"If the investors cannot observe one or two laws that are similar to those in other civilised countries, then we should not care about them."

[Burger]

buksida wrote:

Burger,
You obviously know a lot more about this than I as it is your line of work so I could be wrong but didn't the company shareholder shakeup last year affect people opening companies to buy property?

No law change affecting buyers, all that happened was the the Commerce department wanted to see shareholders bank details to prove they had the funds to buy the shares.
Any decent solicitor already did this as a matter of course, it was aimed at the bad practicing solicitors who were not filing the bank details.
You can still set up a company by signing paperwork that takes you about 15 minutes, solicitor does the rest.

Now they have to or are being advised to take a lease route?

Solicitors do seem to be advising the lease route now, but will happily set companies up for their clients too.

Burger

[Jockey]

Solicitors do seem to be advising the lease route now, but will happily set companies up for their clients too.

Burger

Is it not true that the land office are refusing to put land in the name of a company that has a Farang as a shareholder? If so, yes, solicitors will happily set up a company for someone and take their money... only for the purchaser to later find out the land can not be registered in the companies name.

[PeteC]

I heard on the radio in the car today that a very big property forum is in the making. The big guys will be there, Raimon Land, Saville(sp), a bunch of government officials etc. The topic apparently is if the property boom going since 2003 is over. I'll report results when they are published. I think the forum is in a week or two. Pete

[Burger]

Jockey wrote:

Is it not true that the land office are refusing to put land in the name of a company that has a Farang as a shareholder?

No, that's definately not the case Jockey, they are registering land in companies just as before.


Burger

[hogus]

Well, in my eyes it's not a challenge, but a nice "rhetorical" question!

Anyway, the officials don't become tired to point out, that it's not allowed for foreigners to own land&house, but our friends with vested interests also don't become tired to persuade potential buyers of how great it is to buy land&house ... that's really "Amazing Thailand" !

An honest and trustworthy lawyer will recommend the Company-route only in combination with an active business!
All other decent solicitors will advise the lease-route.
Of course, that's not the result of a very new law.
New is only, that more and more lawyers are stopping to ignore the law (and the official interpretation).
Seems that many of them don't like the idea to get their fingers burned completely, if the times should become harder.

Personally I know people, who have cancelled their inactive Companies and transferred their land & house to their Thai-spouses/gfs.
Some other guys brought their new house back to the market, and were happy to get about 80% of their former investment in cash-money, after 1 year of waiting for a customer and 2 years of "ownership".

To be fair, I also know one Swedish guy, which could make a 60% profit with his house within 9 months, but he announced his self very proud as a "soldier of fortune" and I really forgot to ask him, whether he used the company-, lease-, or spouse-route.

[Jockey]

I bought my house through the company route two years ago and sold it last September for double what I originally paid for it. Having said that, I spent a lot on it, so the overall profit was about 50%. Also, I may have sold at a more optimistic time than now. If I do decide to buy again, I'll put it in my girlfriend's name and let her lease it to me over 30 years. Better still - I could get her to organise a mortgage on it! I don't think I'll consider setting up another shell company for the sole purpose of buying land. I always felt uncomfortable with that arrangement, and it looks like my suspicions about doing this might be valid. After all, Thai law is clear on one thing - a Ferang can not own land unless under very special circumstances. Also, it is clear a Ferang can not own more than 49% of a company. Isn't it ironic that we have been using these two very clear laws and turning them on their head in order to
A) Own a company
B) Own land!

[Jockey]

Here's a challenge for you all:

Can anyone tell me of one single law or regulation that any Thai Government has introduced in the past two years that has affected an ordinary foreign couple from buying a holiday or retirement home ?

Burger

I think you are missing the point Burger. Granted, the laws have not been changed in the last two years, but the military government are trying to stop foreigners from using loopholes in the law in order to own land. In other words, they are tightening up and investigating the flouting of existing laws. These are very worrying times for people who own property in a company name and also all those who are generally involved in real estate. There is no point in pretending otherwise. I only hope there can be a sensible outcome which makes it possible for Ferangs to own their homes without worry, but right now there is obvious concern.

[Big Boy]

Jockey wrote:

If I do decide to buy again, I'll put it in my girlfriend's name and let her lease it to me over 30 years.

I've seen this said on this board several times. Is there some advantage to be gained by being seen to be leasing your house? I guess its only a cover for something ie I don't suppose for one minute you'll actually be paying her rent.........or will you?

What is the disadvantage of putting the property in your partner's name, and appearing as a kept man?