Thailand’s Finance Minister, Pichai Chunhavajira, has announced initiatives to stimulate the country's economy, with a particular focus on the real estate sector. One proposal involves revising laws to make long-term property leasing more attractive to foreign investors.
Addressing Economic Challenges
The Thai economy has experienced slow growth, coupled with rising household debt and diminished domestic purchasing power. This stagnation has impacted sectors like real estate, which plays a vital role in driving economic activity and supporting various industries.
Proposals for Foreign Investment in Real Estate
Historically, Thai laws have prohibited foreigners from owning land, making this a politically sensitive issue. The government is revisiting past proposals, such as transferring land ownership to the state, which would then lease it to foreigners for up to 99 years. This approach, initially suggested by Thaksin Shinawatra, seeks to alleviate public concerns over "selling the nation" while encouraging foreign investment.
Another initiative involves amending the ‘Rights Over Leasehold Assets Act’, extending lease terms from the current maximum of 30 years to as long as 99 years. Such changes aim to provide foreigners with greater flexibility and security in property investments.
Rights Over Leasehold Assets Explained
The ‘Rights Over Leasehold Assets Act’ allows for long-term leases tied to the property rather than the individual tenant, enabling transferability and use as collateral. Unlike older leasing laws, this act permits modifications and additions to the leased property, providing more options for residential and commercial use.
Comparison of Lease Laws in Thailand
Thailand’s lease laws vary significantly:
- Civil and Commercial Code; Limits leases to 30 years, does not allow transferability or mortgaging, and prohibits modifications without the owner’s consent.
- 1999 Lease Act; Permits longer leases (up to 50 years) with transfer, inheritance, and collateral options but excludes residential use.
- Rights Over Leasehold Assets Act (2019); Offers maximum flexibility, including transfer, subleasing, and collateral use, and applies to residential properties.
International Comparisons
Countries like the UK, France, and Cambodia have enacted laws that grant tenants extensive rights over leased property. For example:
- In the UK, leasehold agreements have no legal time limits and allow full transfer and mortgage rights.
- In France, leases can last 18 to 99 years, with tenants enjoying full control over the property.
- In Cambodia, lease terms range from 15 to 50 years, with tenants granted significant flexibility.
By aligning Thailand’s leasing laws more closely with international standards, the government hopes to attract greater foreign investment, boost economic growth, and reinvigorate the real estate sector.
