Copied from another website, believe its from a large Pattaya developer, so vested interest, pinch of salt etc:
Burger
Foreigners may NOT own land in Thailand ! Nothing new
Thais may NOT act as nominees for holding shares for foreigners in a company! Nothing new
Foreigners may "normally" NOT own more than 49% of a Thai juristic person (company) Nothing new
As the Senior Lawyer and partner in our law firm advised, in the past it was standard practice to register a land transaction into a company, with initially all shareholders and directors being Thai. Shares and Directors where changed after the registering of land transfer.
Over the years the land offices have become lenient, and it has become possible to register land in companies with sole foreign directors and up to 49% foreign ownership.
This is legally still possible, however the new directive from the interior ministry, suggests that some foreigners are doing this for a living and it would thus be prudent to, ". if it is apparent that a foreigner holds shares or is a director or it is reasonable to believe that a Thai holds shares as
a representative of a foreigner, the officials shall investigate the source of income of Thais holding shares; inquiring into the current profession and the number of years in the service and monthly salary.", thus the official needs to start to do all sorts of paperwork and expose themselves. Why would an official receiving 7000 Baht monthly salary do that ?
Therefore, currently Land Offices are not transferring land into companies with foreign shareholders or foreign directors. Why should an officer risk doing anything else.
For us, this represents a small procedural change in that land is transferred into companies that are not 51% Thai owned but 100% Thai owned. Subsequently ownership of shares and directors is changed. Still: Nothing new
Because 51% is a majority and 100% is a majority. Nothing new. Only a change in the procedure of registration.
Why is the Government doing this ?
There has been a complaint from Prachuab Kiri Kahn (Huahin) pertaining to foreigners buying up small plots of land and splitting them for commercial Real Estate Development purposes.
Such a complaint must be taken in by the government and if the plaintive is influential even acted upon.
To understand the motivation behind such a complaint however it is important to understand a bit of history and the current real estate market in Huahin.
The government has long promised the mega bridge and superhighway connecting Bangkok to Huahin. Thaiair started flights to Huahin and there was even a ferry service between Pattaya and Huahin. Land speculation in Huahin was at a peak. However, the Bridge and superhighway has never materialized, flights have since been stopped and the ferry service has faltered. Recently however the Huahin property market has been revived, sparked by a few high end condominium projects sold mainly to well to do Bangkokians and small Farang detached housing developments. The Thai end of the market, through copy copy mentality, was soon overdeveloped and has since run into oversupply, while the small detached Farang developments are still selling units. Oversupply is impossible in this market as a villa is sold and a new one is built.
Farang developers (without developers licences) still selling while banks are foreclosing licensed Thai developer's properties has almost understandably brought about the current complaint and subsequent ministerial action.
Comparably the government is regularly forced to crack down on social woes by closing bars at midnight which is also not ideal for tourism.
Will the government crack down on "indirect" foreign ownership of land ?
No. If the government wanted to crack down on foreign "indirect" ownership of land, they would have multiple very effective ways of doing that. The "foreign" Thai real estate market brings in billions of US dollars in foreign direct investment into the country. The government certainly dose
not want to miss that. Foreign residents attract relatives and friends as tourists. And log stay Farangs are a constant source of currency flow into the Kingdom.
In fact the Tourism Authority of Thailand has just initiated a program to lure long stay Farangs into Thailand and sell them real estate through its 100 million Baht 30% share in the Thai Longstay Company Ltd. XXXXXXXX and 50 other major developers catering to Foreign buyers where invited to sign MOU's with the company and the TAT at a ceremony nationally televised on May 12th 2006 under the patronage of H.E. the governor of the TAT.
The government understands exactly what is going on in the Thai real estate market. It knows exactly who the players are, that are doing the Farang business. If it wanted to shut them down it could do so in 1 hour or less.
But bureaucracy is bureaucracy and thus there shall be times when bars close at midnight, the odd tourist is arrested for topless sunbathing and occasional undeliberate bureaucrat action that invokes a media wave decrying the end of the real estate market in Thailand. - nothing new.
For us it is not a legal problem but a marketing setback which will take marketing effort and some time to heal. According to insider information we will soon be back to the old procedure.
