Koh Samui Looks to Alternatives

by Frank Page

After an extended period of unprecedented triumph, the Koh Samui property market has recently been suffering from a sales slump. The government´s planned crackdown on foreign companies with nominee shareholders, combined with a number of high-profile land encroachment investigations have caused a significant drop in investor confidence, although the construction and tourism sectors continue to boom.

Most of those involved in the property sector see the slow down as temporary, but many also feel that new approaches to foreign ownership are needed to re-establish investor security.

An email circulated to the local press and business community on Koh Samui last month claims to offer exactly such a new option for foreigners that want to invest in property on the island. In what appears to be an extension of existing laws and exclusive to Samui, a Thai company known as Thailand Long stay Management (TLM) is offering perpetual 30-year leases through a special government-backed programme.

Although the firm is privately owned, one of its main shareholders is the Tourism Authority of Thailand (TAT). TLM says the TAT wants to promote and develop legitimate long-term stay in Thailand in order to "increase investment and spur the country’s economic growth." It is therefore offering a "Vacation Investment Program" (VIP), through TLM, which purportedly allows private foreign investors to enjoy perpetual leasehold on a residential property.

In addition to these benefits, foreigners accepted on to the long stay programme will be eligible for a one-year visa and other privileges such as fast track immigration procedures at the airport.

Even more importantly from an investment point of view, according to the company´s website, "when MR. A sells his property after 20 years to Mr. B, Mr. B gets a new 30 year lease and not 10 years as with the previous lease hold set-up."

The company’s Chief Executive Officer, Pol. Col. Ruamnakorn Tubtimthongchai, plans to launch the new scheme this month at Government House. According to the published information, licenses to offer VIP services on Samui will then be granted to a selected number of agents who match certain criteria. Only licensed firms will be permitted to manage the service on Samui and although VIP is open to any individual who wishes to purchase property for residential purposes, interested parties will only be accepted onto the scheme after a thorough background check.

Once accepted, investors sign a lease agreement with the Thailand Long stay Management Property Company via one of their agents. Unlike a normal 30-year Thai lease, the lessee puts his or her own name on the back of the land title. According to TLM, this guarantees a permanent contract and means that when an investor sells the property, the new buyer takes on a new 30-year perpetual lease and transfers his or name onto the land title.

As with any real estate purchase, a full understanding of the exact legal implications will require assistance from an independent legal expert. However, if the scheme is legitimate, it will certainly boost the Samui property sector.

For more information, visit www.thailongstay.co.th

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