What We Do
SPH has been established by long term foreign investors to enable our members to enjoy secure investments in Thailand thriving real estate market where co-investment alongside a genuine Thai shareholder is a prerequisite if you wish to ensure compliance with the countries law on foreign ownership.
For those unfamiliar with Thai real estate law these are the basics:
- A foreigner can legally own a condominium unit.
- Can invest in a secure long lease with a maximum 30-year term.
- Can invest in a Thai company that owns a land and villa provided a majority (51%) of the shares are owned by a genuine Thai investor.
If you’re investing in a condominium unit then you can own the freehold of this directly, you may find some our resources helpful, but you won’t need to access our unique investment guarantee.
Investing via a long lease is a popular and secure way to enjoy Thai property but the asset will fall in value and may be difficult to sell, renewal options also may not be enforceable. SPH offers leaseholders a route to collectively controlling the land and buildings they invest in much like a UK apartment where owners enjoy a share of the freehold. For developers this our solution offers an excellent way of providing freehold type ownership rights to buyers. For individual buyers considering long lease a Thai company investment will provide better value for money and enable control over the freehold; this is our recommended route to ownership.
Owning a property via a Thai company investment is popular but more often than not it is constructed in such a way as to make it illegal and insecure. This is the problem SPH can solve for its members. We offer a legal, cost effective and secure route to invest in property through a corporate structure. To learn more about this please read on.
Avoiding the Pitfalls
Unless you are investing with your Thai wife or husband then it’s likely any corporate structure recommended to you will be illegal. This is because your Thai shareholder must be a genuine investor in the company you use and must control 51% of the voting rights. If you’ve been persuaded to use a “Thai Friend”, Lawyer’s staff, rent-a-name local Thai’s then think again because Thai authorities realise the law is being floated and have set up special task forces to identify “Nominee” companies.
SPH has a solution that involves genuine investment by a Thai shareholder with cast iron guarantees they will abide by the contracts you enter into with them. This is not only the safest way to invest, but it’s the only way also that is legal under Thai law. If you believe you don’t have a Thai nominee structure, then take the Thai land office test outlined here (use link to jump to test)
The Problem: The Thai Civil and Commercial Code “CCC” and Foreign Business Act “FBA” which prevent direct foreign ownership. Whilst you can own land and property in a Thai Company you must have a genuine Thai shareholder investing alongside you with majority 51% voting rights, who is involved in the day-to-day management of the company and has a genuine financial interest. These are the hard facts, so don’t be fooled.
The Solution: Quite simply “Co-Invest” a genuine Thai shareholder or don’t invest at all. Achieving “near freehold” rights is not only possible but absolutely legal and in line with both the spirit and letter of the Thai CCC and FBA. The hard part is finding a genuine Thai partner and then obtaining guarantees from them that are cast iron and enforceable. This is where SPH membership provides the answer.
Corporate Investors: Rather than “Finding a Friend” you need to have shareholders who you can provide a guarantee of performance; individual Thais can’t do this because they can die, in this case the shareholder changes and any agreement you had, or personal connection can be lost.
Once you have a consistent shareholder then you can have them “Pledge” their shares as security with an independent ESCROW AGENT that allows their voting rights to be transferred to your Thai lawyers. This means control of the shares can change instantly and without recourse to the Thai courts. Your legal team can then perfect the contractual terms.
A share pledge can only be given to one person or entity because the pledge must include a majority of the voting rights (say 99%). This means a professional investment group must provide a pledge to another group if multiple investors are to be protected, and this is how SPH and our preferred Thai shareholders work together for the benefit of our members.
A Collective Guarantee
Our Thai shareholders are a corporate investment group that invests in individual Thai property SPV’s (Special Purpose Vehicles). The SPV is a company that owns your target land and villa, land, development project.
The Thai shareholders invest their funds in the SPV as required by Thai Law. They have Pledged 99% of their shares with our lawyer; they remain fully in control of the shares and maintain 100% ownership rights over them provided they comply with the contracts that we and our members have with them. If they breech a contract, control of the share’s changes and our Thai lawyer’s “Step-in” instantly to remedy the situation.
To achieve this type of guarantee requires a professional investment group whose business (or a large part of it) is co-investing with foreign investors. They must have a large enough capitalisation to co-invest in multiple companies and a professional team of directors who manage their business and manage the SPV which is another requirement of the Thai CCC if your investment is to remain legal.
Co-Investment and Control
When you co-invest you do not need to be a shareholder in the Thai company, in fact it is more advantageous for you not to be because share capital ranks as the lowest priority debt in a company. If your investment is a loan or lease payment, then it will rank higher than the equity of the Thai shareholders in priority order so this is how you should structure the investment.
If you take a long lease and an option to buy or sell 100% of the shares, then you have the right to enjoy the property as if you owned it and to sell the shares in the SPV as if you owned 100% of them which is a substantial improvement on 49%!
As an investor, you can also legitimately have rights to manage, and for any company the shareholders divest the management rights to a board of directors. In our agreements with the Thai shareholders, our investors have the right to manage their company and enjoy the support of a professional Thai director from the shareholders’ side. This keeps the entire agreement in line with the law, ensures the company is run correctly and submits accounts, etc. whilst leaving you to enjoy the property safe in the knowledge that your investment is structured legally, your partners have provided a cast iron performance guarantee, and the Thai authorities can be satisfied that the company is complying with their requirements.
Cost
The cost of setting up an illegal company structure or having Thai shareholders who decide to defraud you can be 100% of your investment. So, this is what you need to consider. To join become a member of SPH and access our group guarantee is £400 per annum. This provides absolute certainty that your Thai shareholders will perform as agreed.
Your shareholders will invest in the property, and you will need to purchase an option to buy the shares and pay a premium when you do. Typically, this a fraction of the purchase price and we provide a calculator in the login area which you can sign up for here
Other Resources
We provide members with a huge resource library and also a personal Q&A which we incorporate in our FAQ. Other services include personal advice on structuring your deal to minimise tax on rental, acquisition and sale which can be done face-to-face in Thailand or via a personal zoom call. You can also book a personal zoom call or discuss your requirements.
The Benefits of Investing in Thailand
Thailand is one of the World’s favourite tourist destinations, with an amazing culture, stunning islands and beaches and wonderful people. We certainly don’t want to put you off buying property and living there because there’s nowhere else, we’d rather be.
Apart from the people, food, weather, culture and beaches there are multiple sports and leisure pastimes to keep you occupied and a thriving economy with exceptional opportunities in business. For wealthy and well qualified investors Thailand’s new Long Term Residence Visa “LTR” offers a 10 year pass and 17% Flat Tax Rate, you can find out how to apply for that here and get personalised advice from an expert agent. This reflects the dynamism and forethought the Thai Government are showing; other visas for digital nomads, retirees (over 50’s), marriage visas, students and workers are also available providing plenty of options to buy, live and stay. Our resource section has full details and requires a simple login
Summary
Thai property investment can be extremely enjoyable, profitable and secure provided you abide by the law. SPH is here to help you and provide the most comprehensive security available at the fraction of the cost that you could establish it for yourself; quite simply this s because all our members share the cost
As a member led organisation you’re always in control, whether its collectively with fellow members in the guarantee or individually with your property, but with SPH you are never alone. We provide multiple resources including legal assistance, property sourcing or even personalised advice from members to members. You can join are blog area and access this or contact you directly for confidential assistance.
