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Thailand’s government recently announced a series of legislative amendments aimed at stimulating foreign investment and revitalizing the real estate market in Thailand. The proposed changes include increasing the foreign ownership cap in condominiums and extending land lease periods.

These new amendments to the Thai real estate sector are expected to offer new opportunities for international investors and homebuyers looking to relocate to Thailand.

What are the new Amendments?

The new amendments announced by the Thai government includes:

Increased Foreign Ownership in Condo Developments
Under the proposed new amendments, the ratio of foreign ownership in condo developments will be increased from 49% to 75%. This has been warmly welcomed by Thai property developers, especially in areas outside of Bangkok like Phuket, Pattaya and Samui etc where there is a large demand for foreign owned condos. This large demand means developments reach their foreign ownership quickly, and developers miss out on a lot of potential sales.
It is important to note that under these proposals, foreign condo owners will not be eligible for additional voting rights in relation to the condo ownership committees beyond the current 49%.
For more information about how to purchase a condo as a foreigner in Thailand, please see our article here.

Extended Lease Periods
In addition to the increase in the foreign ownership ratio in condos, the maximum length of a rental agreement is set to be increased from 30 years (50 for commercial) to 99 years.

Why Have These Amendments Been Introduced?

In recent years the real estate market in Thailand, especially for condos, has significantly slowed down. The condominium market in Thailand, particularly in Bangkok, has been dealing with a substantial backlog of unsold units, valued at approximately ฿370 billion.

Addressing the Condominium Oversupply

By expanding the foreign ownership quota, the Thai government aims to attract foreign investment to the condominium sector. The increased accessibility for international buyers is expected to drive demand, potentially helping to deal with the existing oversupply and stimulating new development activity.

Extending Land Lease Periods
The government hopes that by increasing long term leases, more foreign investors will consider investing in Thailand e.g. building a villa on land held under a long term lease. By attracting more foreign investment, the Thai government hopes to see an overall increase in revenue generated from the property market. This can benefit the economy through taxes, construction activity, and increased spending by foreign residents.

Why are these Amendments Good for Foreign Investors?

By increasing land lease periods from the current maximum of 30 years to 99 years, foreign investors will have more security when looking to build a villa or house on a rented plot of land.
The proposed increase in the length of long term leases is a welcome development for many expats who live in Thailand. Due to land ownership restrictions in Thailand, it is not possible for a foreign expat to own land themselves. As a result, those who wish to own a house, rather than a condo, use long term leases on a piece of land, and then build a house upon this land.
By having 99 year leases, which must be registered at the land office, foreign investors will have more protection on their investment as they don’t need to worry about having to deal with lease renewals every 30 years.
This proposed lease extension has also been welcomed as it will provide extra security for foreign investors. Currently, foreigners who wish to have a long term control of land are either using a company with a nominee shareholder (which is illegal) and/or a more complex structure which allows them to have control of the land and/or a 30 year lease with an option to renew. Each of these options comes with their own problems, most notably for long term leases, which if they are not well drafted, are in practice difficult to enforce, meaning investors basically face legal uncertainty on maintaining their property for long term. The possibility of a 99 year lease could remove this burden.

However, there are certain implications arising from the possibility of 99-year leases, with the most significant being that having a 99-year lease could essentially be considered quasi-ownership of the land. This quasi-ownership could raise concerns, especially among Thai people who are deeply attached to land ownership and may fear that foreigners could gain control over their lands, potentially driving up land prices. It is a possibility that the availability of 99 year leases may be restricted to certain locations or situations. Please make sure to follow us as we will update you with any information when it comes.

What Challenges and Considerations Face the New Amendments?

While the proposed reforms offer a lot of advantages, the government must perform a balancing action between the interests of both Thai nationals and international investors.
The introduction of these proposed reforms is expected to have significant implications on the Thai real estate market, both in the short and long term and there are a few potential issues arising as a result of this.
The increased foreign ownership quota and extended lease periods will likely result in a significant increase of international investment in the Thai property market. This increased level of foreign capital can drive up demand, particularly in the condominium sector, potentially leading to a reduction in the existing oversupply.

However, while an increased foreign participation can stimulate market activity, there are concerns about the potential for price distortions.
After the announcement of the amendments, many Thai people shared their concerns about the potential for foreign buyers to outcompete Thai nationals and price them out of the property market, particularly in popular areas such as Bangkok, Phuket and Chiang Mai.

Another potential issue was the fact that by increasing the foreign ownership cap to 75%, this would mean that foreigners would hold the majority share in the ownership of the condo development. To ensure a balanced approach, the proposed amendments include provisions to safeguard the interests of Thai nationals. While the foreign ownership limit will be raised, Thai control over condominium management and decision-making processes will be maintained. Foreigners acquiring units beyond the 49% threshold will not be granted additional voting rights, preserving the decision-making ability of Thai owners.

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