New property law stuns foreigners

Bangkok (dpa) - Thailand's booming property sector has been thrown into
confusion by a new regulation issued this month that requires all partly
foreign-owned companies to prove the source of their funding before
purchasing land, industry sources said Tuesday.

The new Interior Ministry regulation that went into effect on May 25 2006
has already started to slow sales of housing estates in Thailand's popular
seaside resorts, such as Pattaya, Phuket, Hua Hin and Samui Island, which
have been specifically targeting well-to-do foreigners as vacation
getaways or retirement homes.

Thailand has strict laws prohibiting foreigners from directly purchasing
property themselves although loopholes in the law allow them to own land
and their houses through long leases or a "nominee company,"
providing the company is majority Thai-owned.

It is common practice for such "shell companies" to include Thai
nationals who have been paid to act as nominees to facilitate the deal and
who have invested nothing in the purchase. The new regulation, signed by
Suraart Thoingniramol, deputy permanent secretary of the Interior
Ministry, is designed to halt the use of such companies for property
purchases in the future.

"If it appears that an alien holds shares or is a director or it is
reasonable to believe that a Thai holds shares as a representative of an
alien, the officers shall investigate the income of Thais holding shares,
delving into the number of years [they have spent] in the current
profession and monthly salary," reads a translation of the law.
"The provision of necessary evidence is required."

The new regulation is actually an enforcement of Thailand's existing laws,
legal experts said. "It's not a radical change. It's a radical
implementation," Ronachai said.

The regulation has already started to stall home sales to foreigners,
sources said.

"There's a lot of confusion," said Simon Landy, managing
director of the Primo Co, a property-development firm. "Some land
offices don't know what to do with it, and many have simply stopped
transferring land." Source Bangkok Post