What does the new law say about land acquisition in Thailand?
This new law is quite revolutionary for Thailand. Until now, it was very complicated for foreigners to buy property in Thailand because of very strict legislation. On October 25, the Thai government announced that foreigners would soon be able to buy land and houses. The key condition is a minimum investment of 40 million baht (a little more than one million euros or dollars) per year in the Thai economy over a period of at least three years. After 5 years, there will be a reassessment.
According to this new law, foreigners can invest in real estate, infrastructure, mutual funds, government bonds, or in the share capital of a legal entity. The new bill is expected to lay down the details of the organizations targeted by such investments. Expatriates will be required to provide proof of their investment prior to committing to a land purchase plan. The size of the plot or property shall not exceed 1600m² (one rai), and the latter should be located in a "residential zone". These zones are established by Thai urban planning laws. Most of them are found in tourist cities such as Bangkok or Pattaya. Expats are not allowed to buy property in a military zone. Moreover, the property should serve as a private residence and shall not be used for any other purpose. Foreigners who are looking to become landowners in Thailand also have to abide by the country's laws and customs.
To purchase property in Thailand, prospective expat buyers will need to send an application to the General Directorate of the Land Department, which will forward it to the Ministry of the Interior. If the application is approved, the foreign applicant will have 60 days to inform the local land department. Similarly, if they finally give up on the idea of investing in property in Thailand, they will have to notify the local authorities within 60 days.
Why is it a controversial law?
Not everyone in Thailand is happy with this new law. The government is hoping for economic revival (+3.5%), thanks to investors like digital nomads, wealthy expat retirees, or entrepreneurs, who are expected to contribute some additional 800 million baht to the economy. Since the Covid pandemic, Thailand has left no stone unturned to attract wealthy expats. The new measures include the introduction of the long-term resident visa (LTR), the 10-year visa for wealthy foreigners, and other benefits for these so-called "high potential individuals". Still, the question is: "Will they ever turn up?"
Expatriates are puzzled by the small size of their potential new Thai property. According to many, it is quite unlikely that such a small surface area, as described in the proposed bill, will attract wealthy foreigners. They also point out the too-restrictive conditions of purchase, which are unlikely to encourage investment. To avoid real estate speculation, the government would require that the resale of acquired property be made only to Thai citizens. Moreover, skeptics fear the rise of inequalities between the super-rich and the rest of the population through a surge in land prices. Enhancing access to property for Thai people would be a better solution, according to expats. They believe that this new law would only benefit the richest, making it difficult to consider it a positive measure for the country.
With all that said, it's quite difficult to consider the impact of this law on the Thai economy in the long run. Here again, the figures put forward by the government need to be put into perspective. Some speak of a strategic error. Nipon Puapongsakorn, a distinguished researcher at the Thailand Development Research Institute (TDRI), believes that the country is not short of funds but lacks the necessary stability to attract investors. For him, “The country needs to regain investors' confidence instead of granting them short-term benefits.”
