The Thai Land Code stipulates that – apart from a few exemptions – foreigners are not permitted to own land in Thailand. Many foreigners seeking to buy immovable property in Thailand, therefore, chose legal structures like leasehold, usufruct, or ownership of the property by a Thai company, to mitigate the restrictions. However, these legal structures have weaknesses and, if not set up properly, may even involve legal risks. To encourage foreigners to invest in property in Thailand, the Thai National Legislative Assembly on February 8th, 2019, passed the Sap-Ing-Sith Act. The Sap-Ing-Sith Act was published in the Royal Gazette on April 26th, 2019 and will come into effect on October 27th, 2019. The new law is aiming to encourage foreigners to invest in immovable property to boost the economy in Thailand. Requirements, as well as the rights and obligations of the Sap-Ing-Sith, are as follows:
Overcharging tenants for electricity and water was a common practice among landlords in Thailand. Weak regulations laid the foundation for the collection of exaggerated deposits and punitive methods of landlords if tenants did not pay their rent.
The purchase or sale of a property is a legal transaction with a far-reaching legal and financial impact.
To secure a prospective purchase or sale of property legally, both the buyer and the seller may enter into a so-called Memorandum of Understanding (MoU) on the intention to conclude a main contract later. The parties of such a MoU can sanction a breach of the intention to conclude the contract later, with legal consequences such as compensation of damages. If the MoU is worded correctly, it should not be possible to enforce the transfer of ownership of the property, or payment of the purchase price, on the basis of the MoU. However, it should strongly incentivize the parties to enter into the main contract, since a breach of the MoU would carry a contractual penalty, and compensation, if the parties agreed on such legal consequences in the MoU.
In Q4 2017, the Bangkok condominium market grew steadily, particularly in the downtown area of the city. The number of new properties launched in 2017 overall also grew year on year by, with a 51% increase compared to 2016. Bangkok’s condominium market is likely to continue to grow in the future, given the many new mass transit lines and pipelines under construction (for example the MRT Pink Line, MRT Yellow Line and MRT Orange Line).
Looking at the period January to June 2017, Ninety percent of Phuket resort property purchases were in the range of THB 5-35 M per unit for villas and THB 8 M or under for condominiums. Investors are looking for rental yields of between 5-7% over the course of two to five years.
The cabinet has on October 13, 2015, approved significant tax incentives related to the property sector. The property transfer fees were reduced from 2% to 0.01% and the mortgage fee from 1% to 0.01%. The purpose is to support low-income earners who would like to buy homes priced below 3 million baht. The reductions will take effect this month for both new and second-hand homes. However, the effective date of this property measure is only on October 29, 2015 to April 28, 2016.
According to media reports, the government’s economic teams, real estate groups and major developers are proposing a reduction of property transfer registration fees from 2% to 0.01%. Furthermore, mortgage fees are proposed to be decreased from 1% to 0.01% with the goal of supporting the real estate sector in Thailand.
Plans to reform Thailand’s tax system, including the introduction of inheritance and property taxes, have been approved by the Chief of the military-led National Council for Peace and Order (NCPO), Gen.Prayuth Chan-ocha.