Land Office Fees Going Up March 26 or thereafter

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Land Office Fees Going Up March 26 or thereafter

 

A misunderstanding on verb tense in a translation caused several Thai to English translators working for major media to confuse a recent statement made by a spokeswoman for the Land Department in the Ministry of the Interior and a report on Channel 3 TV.

 

Whereas the fact is the land office fees will go up after Friday next month on the 26th, translations to English were made stating that the fees would go up after the 26th of this month which is also a Friday which meant the fees would go up March 2 because February 27 and 28 are a weekend and Monday, March 1 is a holiday.

 

So Friday the 26th of February was incorrectly reported to be the last day to transact property at the lower rates, according to translations of the spokeswoman’s statement and a channel 3 report.

 

However, the Land Department spokes women yesterday did say that in March, especially from Monday, March 8 to Friday March 26, there is expected to be a dramatic increase of transactions at land offices nationwide to avoid much higher fees.

 

Now that the land transfer fees are only about one and a half percent until March 26 it’s a good time to reevaluate property ownership alternatives. After March 26, the Land Office fees to sell the property held in a company name will be six and a half percent.

 

Anyone ready to complete a condo or land transaction should do so as early as possible, especially if held in a Thai company limited.

 

"Foreigners are urged to take this opportunity to unwind inactive Thai companies owning property while transfer fees are at a much lower rate than they will be," said one Land Office official.

 

T.I.T. (This is Thailand) so no one can guarantee what will happen and when and sometimes translations really get hard to understand, but it is certain land office fees are going up quite soon in Thailand and March 26 is set as a target date for raising the fees.

 

The link below was published on January 7 in the hard copy of the Pattaya Times newspaper following an interview with the Head of Chonburi Land Office.

At that time, officials had the feeling the increase would be implemented on a timetable at the discretion of the district land offices in each province and a follow-up interview this morning confirms this is still the feeling so the date of March 26 may be the earliest date and some land offices may delay implementation, authorities said.

 

Pattaya-Times.com - Land Office Fees Expected to Rise Next QuarterWith the new restrictions on foreign-managed or owned Thai companies, the risk of Thai nominee shareholders and the yearly, ongoing fees for closing balance sheets on Thai companies, many foreigners may want to consider transferring their property out of the company limited and into the name of a Thai.

 

The Land Department no longer allows Thai companies with a foreigner as the Managing Director or as a shareholder to buy property, record a mortgage loan agreement or leases over three years. However, these companies can still SELL property with a foreign Managing Director or shareholder.

 

This was previously reported in the Pattaya Times newspaper and posted on the website at Pattaya-Times.com - Land Office Requires Work Permit from Foreign Managing Directors

 

“This is to encourage foreigners to transfer properties out of Thai companies set up only to own property and do not conduct any business,” said one prominent Thai lawyer.

 

Another reason to take advantage of the low transfer fees and move property from Thai companies not conducting business is the risk to Thai nominee shareholders.

 

These people are listed on official company limited registrations, but have nothing to do with the company.

 

They are on the shareholder lists of Thai companies where the foreigner bought the property held by the company and no Thai made any investment and there is no business being transacted by the Thai company.

These Thais first came under scrutiny in October, 2006 following the military coup taking over the national government.

 

Under the military government, the databases for the District Land Offices under the Land Department and the Department of Business Development under the Department of Commercial Registration were merged for cross-referencing to indentify Managing Directors or shareholders with non-Thai surnames in Thai companies which also owns property.

 

Thais who have their names as shareholders or Managing Directors of companies used by foreigners only for the purpose to buy property would be designated as “Thai nominees” and are subject to prosecution for false statements since they really do not do any business sin the company, never attend company meetings required by law and did not invest any money into the company which bought property.

 

Nothing much has happened to use the information the cross referencing of companies with land office records in the database yet, but if the government has it, they may use it to force the closing of Thai companies not operating any business and make the companies sell properties held as assets.

 

If this happens, it is much better to sell the property now while the Land Office fee for a 10 million baht house is about 150,000 baht whereas after March 26 the land office fee will be about 650,000 baht.

 

Another reason to sell properties held in Thai company names and put them in a secured way into the name of a Thai person is the yearly, ongoing fees for closing balance sheets on Thai companies which averages 18,000 baht per year.

Also, there is a problem with Thai companies that do not conduct any business yet file a false tax return as advised by an accountant showing a profit for the company to avoid closure of the Thai company for inactivity.

 

Property in a Thai company can be sold to a Thai person and a loan agreement can be recorded at the Land Office against the title deed and a mortgage can be placed on the property to prohibit the sale of the property until the loan is paid.

 

Additionally a lease agreement between the Thai and the foreigner can be signed.

 

Property transferred between individuals will be charged three percent fees if owned for more than two years by the current owner. If owned less than two years the fee is higher, between five and six and a half percent.

 

Pattaya Times