Unofficial government adviser Thaksin Shinawatra this week reaffirmed his desire to see a new comfort zone for foreign property buyers and long lease holders. He thus joins real estate dealers and potential investors in urging the necessary legal reforms to permit up to 75 percent of condominium units to be foreign owned and to extend maximum leases on various types of property from 30 (normally) to 90 years.
At the moment, not more than 49 percent of condo units can be in foreign ownership to ensure Thais retain majority control, whilst most land leases (eg on villas) are a maximum of 30 years to avoid any suggestion the country is too indulgent to more than one generation of foreigners. Given that the Thai economy overall is still stuck with low growth rates, the potential reforms are intended to create much-needed extra revenue and to motivate the property market as a whole.
The main sticking point is the fear in traditionalist quarters that the Pheu Thai administration is selling rather than saving the country. Thus, it is argued that expanding the foreign quota for condominium ownership risks “outsiders” taking over control of committees or conspiring with others to dominate whole sections of some cities. Condo prices may irrationally skyrocket as happened recently in Canada when there was a rapid influx of foreign purchases.
According to the Housing Business Association (HBA), actual reforms are likely to be complex. For example, the extension of the foreign quota in condominiums could depend on a minimum sale price of, say, 10 million baht, and be restricted to cities which are already popular with foreigners. Moreover, taxes on foreign-owned units could be raised and the right to sit on juristic committees could be restricted to ensure Thai voting members remain the majority.
As regards land leases, HBA suggests a new framework is required too. The illegality of nominee shareholders needs to be prohibited in new legislation and bold frameworks should be established to regulate land use according to urban planning regulations and zoning requirements. There might be a maximum size of 4 rai to prevent foreign-dominated companies buying up rural land wholesale for industrial development or profitable investment.
Reforming Thailand’s property laws is not new. The military-backed government following the 2014 coup approved a regulation for foreigners investing at least 40 million baht might purchase a rai of land, but withdrew consent after a storm of protest. The resistance to the junta was sparked by several groups, including the then opposition Pheu Thai party which is now in the driving seat. Whatever proposals are adopted by Thailand’s parliament in 2025, if any, one feature is already very obvious. The devil will lurk in the detail.
