Real-estate companies owned by foreigners through nominees should restructure their shareholdings now to avoid future problems involving land-holding rights, according to a local lawyer. Foreigners seeking rights to property in Thailand should also consider alternative laws, especially the long-overlooked Real Rights Act, said Nirut Dej-udom, a partner with Bangkok Jurist Limited.
Mr Nirut said that for several decades the governments' stance on the enforcement of real-estate laws had been inconsistent and unclear. This had led foreign-owned developers to exploit lax supervision and loopholes and register themselves as Thai entities. But the amendments to the Foreign Business Act were about to change all that, he added.
Therefore, he urged the companies with nominees to seek real Thai partners who could genuinely invest in their businesses. Once the amended law takes effect, their shareholding structures might be explored and the credibility of the investment by each shareholder scrutinised.
A company that neglects to declare the sources of investment by its shareholders, in particular Thai ones, will face legal action with a maximum jail term of three years and/or a fine of 20,000 baht for an individual and a 50,000-baht fine for a business.
For foreigners seeking the rights to Thai property, he suggested that their contracts be based on the real rights law, which offered more protection to rights holders than normal leasing contracts. Under this law, the rights are attached to the assets, while under leasing contracts, they are attached to individuals.
The Real Rights Act endorses the rights of holders to use the property according to the agreed terms within a specific period. This law has been in place for a long time but is not popular due to its complications.
Clayton Wave, managing director of the property consulting firm Senior Home Real Estate, noted that the amended law had put an end to a decade-long boom in Pattaya's real-estate market during which foreign demand had pushed land prices in the resort city by about 20% a year.
Sophon Pornchokchai, managing director of the Agency for Real Estate Affairs, viewed that Thailand should not fully allow foreigners to own land, citing similar restrictions in neighbouring countries.
He said the government should focus instead on foreign direct investment in export-oriented industries to further strengthen the economy. To attract such inflows, long land leases with low fees could be used as an incentive.
''Vietnam, Cambodia and China allow only long-term land leasing. Although they don't allow foreigners to buy land, foreigners flock to them. It's not necessary to lure investors with the prospects of land ownership,'' said Dr Sophon. Bangkok Post.