Thai government considers major overhaul of property ownership laws for foreigners

File photo

The Thai government is exploring a potential overhaul of property ownership laws that could significantly impact foreign buyers.

If approved by the Cabinet, the proposed changes would be the most substantial revisions in decades, particularly affecting foreign ownership in condominiums and the duration of land leases.

The government says the  move would bring economic benefits and boost investor confidence.

Proposal highlights

Deputy Prime Minister and Minister of Commerce Phumtham Wechayachai announced that the Cabinet has ordered a feasibility study into allowing foreigners to own up to 75% of the units in a condominium, a significant increase from the current limit of 49%.

Additionally, the study will explore extending the maximum lease period foreigners to lease land from 50 years to 99 years.

Phumtham emphasized that this is only a study order, with no Cabinet resolution yet made to implement these changes. He clarified that the focus is on assessing the potential economic benefits for the public rather than favoring specific business groups.

The study order follows a previous Cabinet resolution on April 9, which included a package of economic stimulus measures proposed by the Ministry of Finance.

Two key issues requiring further study are the duration of usufructuary rights and the regulations allowing increased foreign ownership of condominiums.

Usufructuary rights extension: The 2019 Act currently allows usufructuary rights for a maximum period of 50 years. The proposed change would extend this period to 99 years, aiming to provide more long-term stability and boost investor confidence.

Foreign condominium ownership: The current law restricts foreign ownership to 49% of a building’s usable space. The proposed amendment would increase this limit to 75%, potentially stimulating the real estate market by increasing demand for condominium units.

Phumtham explained that the Cabinet meeting on June 18 was to review the progress of these studies without making any final decisions. He stressed that the proposals need thorough examination to assess their feasibility and appropriateness. The Ministry of Interior is responsible for conducting the study, considering both benefits and potential obstacles.

The timeline for reaching conclusions remains undefined, although quick action is expected.

Phumtham assured that the outcome would be based on careful analysis, whether affirmative or negative. He reiterated that the proposals are not aimed at benefiting specific groups but are intended to support economic growth.

Phumtham Wechayachai. File photo

Political concerns and fairness

Addressing concerns about potential political connections or favoritism towards certain real estate companies, Phumtham dismissed these worries.

He emphasized that the study was ordered based on proposals from public and business entities. If the study finds the changes feasible and beneficial, the government will proceed with a Cabinet resolution. If not, the proposals will not be implemented.

Phumtham also highlighted the government’s willingness to consider investment-related restrictions, including visas, during discussions with representatives from over 30 foreign chambers of commerce. The goal is to create a fair and attractive investment environment for both local and foreign investors.

Anutin confirms proposal to amend laws

Deputy Prime Minister and Minister of Interior Anutin Charnvirakul confirmed the Cabinet’s directives to amend laws increasing foreign ownership of condominiums and extending land leases. The Ministry of Interior, through the Department of Lands, is drafting the necessary amendments to the Condominium Act and related regulations.

Anutin clarified that the essence of extending usufructuary rights from 50 years to 99 years aligns with previous laws, where leases could be extended. The proposed automatic extension to 99 years would help to boost investor confidence, Anutin said.

Condo voting rights to remain with Thais

The proposed increase in foreign ownership to 75% of condominium units does not include voting rights for setting regulations, which remain with Thai nationals. This ensures that while foreigners can own more units, the control over building regulations stays with local residents.

Anutin addressed concerns about the measure favoring major real estate groups, stating that the goal is to benefit the public and increase national income. He emphasized that during past economic crises, similar measures were taken to support the real estate sector, which had positive outcomes.

The influx of foreign investment is expected to lead to more real estate projects, increasing land value and benefiting Thai landowners. Anutin assured that any potential downsides would be managed to ensure overall positive impact.

What’s next?

The proposed changes will undergo reviews by various government agencies and public consultations before any final decisions are made. There had been no definitive timeline as when the proposals would be put before Cabinet for approval at the time going to press.

Anutin stressed the importance of following proper procedures to ensure the measures are beneficial and fair.

If approved, these changes could mark a significant shift in Thailand’s property ownership landscape, potentially attracting more foreign investment and boosting the real estate market.