More Legal Obstacles to Property Investment in Thailand

So, you’ve done your due diligence, spent countless months looking at the fundamentals of investing in property in Thailand, you’re convinced you’ve found a profitable niche and you’re about to commit with a full understanding that you will have to set up a local company structure to get around the restrictive rules that prevent foreign freehold ownership of land and landed real estate…and then along come more legal obstacles to property investment in Thailand.

What is it about Thailand that is so infuriating?  Could it be the fact that the nation needs foreign direct investment, it claims to want foreign direct investment, it is a country with huge real estate potential and a booming tourism market and it is also a country with a government installed after a military coup last year that seemingly hasn’t a clue when it comes to sending a clear and positive message to potential investors?

At the moment you can own landed property in Thailand and get around all the restrictions that prevent foreign freehold ownership by establishing a local company structure and then having local nominee based shareholders who waive their voting rights – thus creating a secure and legal entity for the ownership of real estate assets in Thailand. 

This is a method used by an increasing number of foreign buyers and investors who all want to be in on the strong market in Thailand and/or own a stunning piece of real estate in an incredibly desirable country.

The fact that this large obstacle is in place is preventing mass property speculation in Thailand meaning that the property market is as protected as it needs to be – which is a very good thing in our opinion.  After all, we would hate to see Thailand marred in the same way that many other attractive countries have been with the current global incessant and obsessive need for property assets abroad.  So it is only those who are seriously committed to investing in Thailand and to its emerging but potentially very lucrative property market that are willing to jump through the hurdles put in front of them in a bid to slow down harmful speculator activity – and that’s fine, it keeps the numbers of market entrants down, it protects the integrity of the real estate economy.  So why then does the Thai government want to firmly close this so called ‘loophole’ with a change to the Foreign Business Act which will make the use of nominee shareholders illegal and thus prevent any further investment into landed property from foreign investors - and put at risk those assets which have already been purchased through such a company structure?

The Thai government’s proposals, if passed, will kill off a lucrative foreign funded arm of the Thai economy, massively restrict the local property market, upset constructors and halt resort developments that were largely targeting overseas buyers and create a pervasive feeling of mistrust among investors when it comes to Thailand. 

But hey, it’s not all bad news - countries in the same geographic region such as Malaysia which are going out of their way to make it far more attractive for foreigners to buy, own, reside in and invest in property will likely witness an intensification of interest by all those turned away from Thailand by the increase in legal obstacles for real estate ownership.  Of course, we could say that it will be a great shame for Thailand if the new laws are passed – but naturally the government knows what it is doing and is fully aware of all of the likely consequences and the fallout that will ensue if it goes ahead, and it of course has its reasons for taking this action – and maybe one day we’ll find out what those reasons are.

Special Reports: Property News for Thailand

Thailand Property Buying Guide for Foreigners
The amount of restrictions that apply to foreign property investors in Thailand makes the whole property buying process complicated

Thailand Property Investment Potential
Potential for property investors in Thailand is in abundance but dependent on the success of the tourism industry

Thailand: A Guide for Property Investors
The profitability of investment property in Thailand has increased significantly in recent years making Thailand real estate highly desirable.