Foreigners Buying Land in Thailand: A New Opportunity or Selling the Nation?
The social issue of the past week regarding the sale of homes to foreigners has led many to question whether <\/span>foreigners buying land in Thailand is a new opportunity or a threat to the nation? <\/span>What is the reality of the situation? <\/span>TerraBkk <\/span>summarizes the opinions of <\/span>Mr. Meesak Chunharakchot, President of the Thai Real Estate Association <\/span>and <\/span>Associate Professor Trairat Jarutthasathien from the Department of Housing, Faculty of Architecture, Chulalongkorn University, <\/span>who shared their perspectives on the program "Clear Cut, Clear View." <\/span><\/strong><\/p>
Mr. Meesak Chunharakchot, President of the Thai Real Estate Association <\/strong><\/span>stated that the Thai real estate market has been slowing down for the past 10 years, and the COVID-19 pandemic in 2020 has exacerbated the situation. Regarding the draft ministerial regulation on land acquisition for foreign residents as part of economic stimulus measures to attract high-potential foreigners to Thailand, he personally supports this legislation. The impact of COVID-19 has been significant, and Thailand, which relies heavily on exports, is still seeing signs of economic slowdown this year. The number of tourists may not return to pre-COVID levels, as many countries are also eager to attract tourists. Therefore, we need to focus on domestic economic management through consumer spending. Thailand continues to face issues of inequality, with citizens struggling with purchasing power. Thus, we need to adjust to ensure that grassroots groups and low- to middle-income earners have increased income. A good push for real estate should involve attracting more foreigners to live and spend in Thailand, thereby enhancing purchasing power and generating income for Thais.<\/p>
Regarding concerns that selling homes to foreigners will drive up property prices, it should be noted that Thailand has already allowed foreigners to purchase up to 49% of condominiums, and prices have not surged excessively. The preferences for residential areas between Thais and foreigners are vastly different. The main factor preventing citizens from buying homes is primarily their income. From another perspective, the income generated from foreigners spending in Thailand will increase the income of locals and enhance their purchasing power.<\/p>
Although the draft law has raised concerns in society, the government has been open to feedback. It should be clarified that foreigners have already been purchasing homes through nominees, primarily buying homes sized 40-50 square wah for vacationing 3-4 months a year. Some of these foreigners are Chinese who send their children to study in Thailand. This group of foreigners tends to adapt well to living in Thailand and absorb Thai culture effectively.<\/p>
Currently, the Chinese government is still promoting its existing policies, leading to an increase in Chinese buyers wanting to move abroad. Thus, this is an opportune time to use this draft law to attract foreigners to purchase Thai real estate. It would be prudent to limit foreign purchases to specific development projects, as allowing foreigners to buy land in municipal areas or residential zones of one rai seems overly broad. If foreigners enter the market and convert their purchases into businesses, it would be challenging to control. However, if they are confined to development projects, it would be easier to prevent them from conducting business, as there would be legal entities and Thai neighbors to monitor these foreigners.<\/p>
The Thai Real Estate Association has been advocating for this issue since 2020, believing it will become a problem in the future. They urge the government to push this forward for the benefit of the citizens, especially grassroots groups. At the same time, they request time to review and study the details to help the public understand better.<\/p>
Associate Professor Trairat Jarutthasathien, Department of Housing, Faculty of Architecture, Chulalongkorn University <\/strong><\/span>mentioned that without this draft, foreigners could already own Thai real estate under the 2002 law. The advantage of this draft is that it allows for the formalization of ownership through nominees and addresses illegal holdings from the gray market, a long-standing issue. It also helps filter out foreigners with good qualifications, such as retirees, skilled workers ready to contribute to the country's development, and investors willing to invest in Thailand.<\/p>
Many countries worldwide allow foreigners to purchase land. Notably, countries that permit land purchases are typically developed nations with high-income populations, aiming to attract skilled individuals to aid in national development. Neighboring Malaysia also allows foreigners to buy homes but requires taxes and usage rights. If Thailand can implement this, it would be the first country in ASEAN to allow foreigners to purchase land.<\/p>
The draft ministerial regulation on land acquisition for foreign residents as part of economic stimulus measures should clearly define price frameworks. For instance, if one wishes to purchase one rai, the total investment should be 40 million baht; for 100 square wah, it should be 10 million baht; and for 50 square wah, it should be 5 million baht. This would provide options for foreigners to invest, with a quota of no more than 500 rai per year and a prohibition on purchasing more than 10 contiguous plots. Initially, areas such as Bangkok, Chonburi, Rayong, Chiang Mai, Udon Thani, Phetchaburi, and Prachuap Khiri Khan should be opened for consideration, with further evaluations for other areas in the future.<\/p>
This adjustment to the ministerial regulation will ensure that real estate transactions in Thailand are more legitimate, addressing the long-standing issue of nominee ownership. It will also create a tax system where foreigners pay more, and if they sell their homes for profit, they will incur a 30% income tax. These taxes can be used for local development.<\/p>
Simultaneously, this will reduce issues related to the gray market by implementing a payment system for purchasing homes in development projects, allowing for better tracking of the source of funds, thus preventing money laundering or involvement from the gray market. An online verification system should be established to confirm the identity of foreigners from their home countries, ensuring they are genuinely qualified individuals. If the government decides to proceed, it should consider a blue zone with no restrictions except for border land and implement a systematic tax collection.<\/p>
However, many may misunderstand that if this draft is rejected, it will end the sale of the nation or the sale of homes to foreigners. It must be acknowledged that this could be a misconception, as we would revert to the broad regulations of the 2002 law, which would reopen avenues for nominees to engage in traditional buying and selling.<\/p>
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