Property Watch: Unanswered questions in the Thai property market

PHUKET: I will admit, to anyone who asks, that consultancy services often involve assisting people with the kind of matters for which they should perhaps go to the authorities to receive assistance and guidance.

Nevertheless, for one reason or another, consultancy services often involve providing advice to clear up uncertainties over laws, rules and regulations that are difficult to understand and implement.

This uncertainty can adversely affect or even permanently damage the property market. It causes fluctuations in the perceived value of the market, even though the actual tangible market values and assets keep their fundamentals as a constant.

One of the first principles of contract law in civil and common law jurisdictions is that a contract can be voided for uncertainty. You have to define what you mean before you can enforce something. That is just common sense.

Similarly, if a law is brought into effect and it governs the behavior of citizens and persons within a jurisdiction, then that law should be clearly defined, too. Unfortunately, laws can often be vague and uncertain, or just really out of date.

Sometimes I feel that we are living with increasing uncertainty. I hope the pendulum in Phuket is swinging more toward clarity about what is, and what is not, acceptable under the law.

Property investors surely get many different answers to the same old questions. I’m quite sure obtaining clear information can be frustrating.

Here are some of the issues of uncertainty often discussed around coffee tables and in consultations:

1) Isn’t it illegal for a Thai company that owns property and has foreign shareholders to do business?
2) What happens when a 30-year lease expires; can the renewals [3×30 years] be enforced?
3) Can foreign owners take shares directly or indirectly in a company that becomes their landlord?
4) Is the land I am looking at investing in through purchase of a property – a townhouse, a condo or villa – based on a legitimate title, or can the title simply be taken away?
5) If I buy a villa near a beach and restaurants, will the restaurants be bulldozed shortly after my purchase has been completed?

These questions never disappear, and the answers always remain illusive and confusing. I can’t say that the answers haven’t changed over the years, because they have. As governments have changed, so have the laws.

Phuket is currently experiencing an influx of large Thai developers investing in land with a view to building upscale projects for sale at reasonable prices in order to attract a new wave of potential buyers: investors emerging from the tourism sector and becoming property investors. Judging by the languages options on many of the broker websites, Chinese and Russian buyers are clearly the target audiences.

These investors will want transparent answers about what they can and can’t do. They are probably used to getting clear answers in their home countries, but won’t adapt well to living in a perpetual cycle of doubt.

The onus is upon all property professionals to communicate as honestly and as clearly as possible about the dos and don’ts in the local property market. Even to this day, I still hear agents telling their potential buyers that it is ‘easy’ to set up a Thai company and just ‘put some shareholders’ in there.

By now, though, most people should know better.

Ideally, it would be very helpful for professionals in the property industry to reach a consensus about the information disseminated to clients, to avoid confusing and damaging the market.

The problem is that regulatory measures are difficult to enforce, so many foreigners end up applying their own set of rules to communications without regard to local rules and laws, making it difficult to detect and filter misinformation.

Ultimately, the final issue to deal with is that if you do search hard for clarity and truth, you will find it, but you might not like the answers you get.

I do have high hopes for the future of Thailand’s property market, but developing any certainty in it is quite a long way off. Some investment of time and energy is, I believe, required beyond the glossy brochures.

Desmond Hughes has been an owner and operator of his law firm in Thailand for 14 years, and is a Senior Partner at the Hughes Krupica law firm (

— Desmond Hughes


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Legacy Phuket Gazette

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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