|
ANONGPORN
THANACHAIARY &
TIMOTHY WALES
CONTRIBUTING
WRITERS
In the
latest in a series of efforts intended to aid recovery
of the Thai economy in its long-suffering property
sector, the Interior Ministry issued two Ministerial Announcements
on August 17, lowering the transfer fee on sales of residential
and commercial buildings, including single homes, townhouses
and condominiums, from 2% to 0.01%.
The reduction of the land transfer
fee is a part of the August 10 package of economic recovery
programs. With the specified purpose of assisting the recovery
of the real estate market, it is a temporary reduction,
effective until December 31, 2000, of the fee paid
at the Land Office when ownership of buildings is transferred.
A day earlier, the Ruam Jai home-loan
program back by the Finance Ministry began accepting applications
from home owners. Under this program the
Government Housing Bank will lend 21 billion baht and 13 commercial
banks will lend 25 billion baht for use as home loans to purchase
existing homes or for planned homes.
The Finance Ministry
will guarantee bonds for the two programs as well as for a
4 billion baht program of the Secondary Mortgage Corporation
to purchase home mortgages form commercial banks.
These measures of the
Interior and Finance Ministries follow a number
of changes in the last several months to various property laws and
regulations, resulting in increased opportunities for purchasers
and sellers.
Enacted earlier this year,
these new laws include amendments to the Land Act and the
Condominium Act, and the introduction of a new act, the Commercial
and Industrial Lease Act. In a separate development,
the Land Department has relaxed the rules prohibiting Thais
with foreign spouses from purchasing land.
Under a new amendment
to the Land Act, foreign investors who bring at least 40 million
baht into Thailand to invest in a business which
benefits the Thai economy, promotes social welfare, or is a business
promoted by the Board of Investment, are now allowed to
own up to one rai of land for residential
purposes. The money must be invested in Thailand for a minimum
of 3 years.
The land which foreigners may
own is limited to Bangkok, Pattaya, municipal areas
of all provinces, and areas designated as residential under
the City Planning Act.
In one version of the amendment, foreigners
married to Thais would have been permitted to own land
in Thailand without needing to bring in funds for investment.
However, this provision was deleted in the amendment
passed by Parliament.
|
|
Before recent changes to the Condominium Act, foreigners could
own up to 40 per cent of the units in a condominium building.
Under the recent amendment,
foreigners can now own up to 49 per cent, and for the next 5
years can own up to 100% for condominium buildings located
on less than 5 rai in Bangkok, municipal areas in other provinces,
or other areas specified from time to time.
In another change, foreigners with bank
accounts in Thailand can now use funds from their local accounts
to purchase condominiums. In the past, funds used by
a foreigner to purchase a condominium had to be brought
in from a foreign country specifically for that purpose.
For some long-time foreign
residents whose banking and investments were primarily
in Thailand, this created an obstacle to buying a condominium
here.
This obstacle was sometimes overcome
by the foreigner remitting funds from local accounts
in Thailand to a foreign country, then transferring the money
back into Thailand and designating it specifically for purchasing
a condominium.
Under the new Commercial
and Industrial Leases Act, land which is used for commercial
and industrial purposes can be leased for 50 years, rather
than the 30 year period generally allowed for leasing land
under existing law.
Under one ground-breaking provision
of the new law, a long- term lease of commercial and
industrial land can be used as security. For the
first time it will be possible to obtain a loan with a mortgage
covering leased land.
The Land Department has long prohibited
Thais who are married to foreigners from purchasing land,
pursuant to an internal Land Department regulation. This
has been widely viewed unfair, as well as inconsistent
with the current constitution.
The Land Department has modified
its position and Thais married to foreigners may
now buy land. The Thai spouse must prove that the
purchase money for the land is the Thai spouse's separate
property. A written confirmation of this from both spouses is
required at the time of the transfer of land.
Anongporn
Thanachaiary is
Senior Director,
Legal Affairs
Division, Tilleke & Gibbins; Timothy Wales
is a consultant at the same law firm.
|
