A proposal in Thailand allowing freehold land ownership to foreigners continues to gain traction. The Bangkok Post reported the Centre for Economic Situation Administration (CESA), a body chaired by Prime Minister Prayut Chan-o-cha, tentatively approved a series of measures designed to stimulate overseas investment.
In addition to being able to own land on a freehold basis, qualified foreign investors would be granted a long-stay visa for up to 10 years and enjoy personal income tax of 17 percent on local earnings.
That being said, the proposal remains some way off from becoming reality. CESA still needs to speak with several agencies about just how these measures would be implemented and what laws would need amending.
Should it eventually be approved, there are a few questions regarding Thailand allowing freehold land ownership to foreigners that need to be addressed. Here are the three most pressing ones.
3 key questions regarding Thailand allowing freehold land ownership to foreigners
1) What happens to those leasing land or who own it through a Thai company?
There are already plenty of foreigners who have either leased land or own it through a Thai company. One solution would be to provide this group with the option to convert their ownership into freehold providing they met certain criteria. However, this would be far easier said than done.
Thailand allowing freehold land ownership to foreigners would undoubtably alienate many leaseholders who would have likely waited had they known change was coming. Even if a pathway to convert ownership was created, some people in lease agreements would find themselves stuck either unable to meet the criteria or dealing with an owner uninterested in selling their land.
2) Does this actually benefit the Thailand real estate market?
Some experts aren’t convinced that these sweeping changes would actually benefit the Thailand real estate market. For example, the Real Estate Information Center (REIC) has called for more targeted measures to encourage overseas property investment. They have proposed giving individual projects the right to increase their foreign ownership threshold.
Another concern is that the government has set unrealistic requirements that would hamstring the proposal from the start. To put it bluntly, this can’t benefit the Thailand real estate market if no one is interested.
Obviously, the situation is fluid, but the current proposal as it stands may not be attractive enough to draw in more property investment.
3) Can it be successfully implemented?
Even if the proposal is approved, it will need to be successfully implemented which is a fairly enormous obstacle. In 2014, the Thai government unveiled a THB 10 million investment visa to encourage capital inflows into the country. The program was designed to stimulate the property and bond markets while providing international investors with an incentive to consider a higher level of investment.
It provided foreigners who purchased THB10 million in condominium units or other assets with a one-year visa that could be extended annually for as long as they held the investment. What’s more, the investor’s family were also eligible to receive visas.
Unfortunately, the visa was never successfully implemented with there never being any clear guidelines on where and how to apply. While some did manage to receive the THB10 million condominium investment visa, many others did not despite meeting all the qualifications.
Thailand allowing freehold land ownership to foreigners only matters if the program is backed by a clear and concise application process. It’s vital everyone be on the same page if this is to work.