Investigation in Bangkok Affects 33 Properties
Thai authorities have begun inspecting 33 luxury houses in Bangkok with a total value exceeding 1.27 billion baht, allegedly purchased by foreigners through nominee companies. The investigation is part of a broader campaign to identify illegal land ownership structures prohibited for direct foreign ownership under Thailand's Land Code. The inspections covered districts of the capital with high concentrations of elite real estate, where the practice of registering land through Thai companies with nominee shareholders has been common for many years.
According to sources in the real estate market, the use of Thai companies to purchase land and houses on behalf of foreigners has existed for decades. The scheme is particularly widespread in markets with high demand from overseas buyers: Bangkok, Pattaya, Phuket, and Chiang Mai. Until recently, enforcement in this area remained selective, but current inspections indicate a change in approach by regulatory authorities.
What is a Nominee Structure and Why is it Illegal
A nominee ownership structure involves creating a Thai company in which a foreigner formally owns no more than 49% of shares, with the remaining 51% distributed among Thai citizens. On paper, the company complies with legal requirements for predominance of Thai capital. The problem arises when Thai shareholders are nominees: they do not invest their own funds, do not participate in management, and receive shares merely to meet formal requirements.
According to the Land Code, a foreigner cannot own land in Thailand directly, except in rare cases of investments from 40 million baht with Ministry of Interior approval for plots up to 1 rai (1,600 m²). The Companies Act also prohibits the use of nominee shareholders to circumvent restrictions on foreign ownership. Penalties for violations include fines, cancellation of company registration, and forced sale of land.
Scale of Practice and Geography of Risk
Nominee schemes have become widespread in regions with developed villa and house markets for foreigners. Agents, lawyers, and developers for years offered this structure as a standard solution, assuring buyers of its safety. A typical chain included at least seven participants: a real estate agent, a lawyer for company registration, two or more nominee shareholders, a developer, a land office employee, and a Department of Business Development representative.
In Bangkok, inspections targeted houses in prestigious districts where the price of one property exceeds 38 million baht. Pattaya, Phuket, and Samui also fall into high-risk zones due to the high proportion of foreign villa buyers. Market participants estimate that tens of thousands of properties across the country may be registered through similar structures.
Market Reaction and Industry Position
The real estate industry is watching the situation unfold with concern. Developers are already facing weak domestic demand, tightening mortgage lending conditions, and pressure on sales volumes. Increased scrutiny of nominee schemes could further reduce the purchasing power of foreigners, who have traditionally constituted a significant share of the villa and house segment.
Industry commentators point to a contradiction: for many years the practice was tacitly tolerated, and now responsibility is placed exclusively on foreign buyers, while Thai participants in the chain remain without consequences. Agents, lawyers, and officials who facilitated registration are rarely held accountable.
Some observers predict a collapse of the villa market for foreigners if enforcement becomes systematic. Alternative legal structures, such as 30-year land leases, are perceived by many buyers as insufficiently reliable for large investments.
Legal Alternatives for Foreign Buyers
Foreigners wishing to purchase property in Thailand have several legal options not involving nominee structures.
Condominiums in Full Ownership
The most transparent method is purchasing an apartment in a condominium with freehold ownership rights. The Condominium Act of 1979 allows foreigners to own up to 49% of the total registered area of all units in a building. The buyer must provide proof of foreign currency remittance from a Thai bank (Foreign Exchange Transaction Form, FETF, or similar document).
According to the Land Department, this quota is verified at the time of ownership transfer registration at the land office. If the foreign quota is exhausted, the transaction cannot be registered until the quota is freed up.
Land Lease with Building Ownership
For villas and houses, a common scheme is long-term land lease (leasehold) with registration of ownership rights to the structure itself. The maximum lease term under the Civil and Commercial Code is 30 years with possibility of renewal. The lease is registered at the land office and entered into the Chanote document (Nor Sor 4 Jor), providing legal protection.
A foreigner can own a building erected on leased land as movable property. Ownership rights to the structure are also registered separately. This structure is legal and recognized by courts, but depends on lease agreement terms and landlord reliability.
Superficies and Usufruct
Less common but legal instruments are superficies (the right to erect and own a structure on another's land) and usufruct (the right to use and derive benefit from another's property). Both rights are registered at the land office and can be granted to foreigners for up to 30 years. Usufruct terminates upon the death of the right holder, limiting its application for inheritance planning.
Investment Visa and 1 Rai Exception
The law permits a foreigner to acquire up to 1 rai of land for a residential house when conditions are met: investment of at least 40 million baht in Thailand, Ministry of Interior approval, and compliance with Board of Investment or Bank of Thailand criteria. The procedure is complex, requires significant funds, and is rarely used by ordinary buyers.
Consequences for Nominee Structure Owners
Foreigners who purchased houses through nominee companies face several risks. If an inspection reveals a violation, authorities may demand restructuring of ownership, sale of the asset, or cancellation of company registration. Legal costs and loss of property control become a real prospect.
Selling such property is also difficult: potential buyers and their lawyers during due diligence will identify the nominee structure, which will reduce value or make the transaction impossible. Banks are reluctant to accept such properties as collateral.
Owners are advised to consult with licensed lawyers to assess risks and possible legalization of the structure. Options include restructuring to registered lease, sale of the asset, or actual involvement of Thai partners with documented investments.
Real Estate Market Support Measures in 2026-2027
Despite increased scrutiny of nominee schemes, the Thai government continues to stimulate legal real estate transactions. The Cabinet of Ministers on June 30, 2026, approved an extension of the registration fee reduction program until June 30, 2027. The measure was published in the Government Gazette on July 1, 2026, and took effect immediately.
The program reduces the ownership transfer registration fee to 0.01% of assessed value (instead of standard 2%) and the mortgage registration fee to 0.01% of loan amount (instead of 1%), if the mortgage is registered simultaneously with the transfer. Application conditions:
| Parameter | Requirement |
|---|---|
| Property type | Houses, townhouses, commercial buildings, land with such structures, condominium units |
| Purchase price | Not exceeding 7 million baht |
| Assessed value | Not exceeding 7 million baht |
| Mortgage amount | Not exceeding 7 million baht per contract |
| Buyer | Thai citizen (individual) |
Foreign condominium buyers do not fall under this program, as the condition restricts the benefit to Thai citizens. Standard fee rates for foreigners remain unchanged.
The Ministry of Finance estimates that the measure stimulates transactions worth approximately 540.81 billion baht per year, increases investment by 305.81 billion baht, and adds 1.06% to annual GDP growth compared to a scenario without benefits.
Mortgages for Foreigners: Availability and Conditions
Despite tightened scrutiny of nominee schemes, some Thai banks continue to provide mortgage loans to foreigners for condominium purchases. As of 2026, most buyers still plan cash payments, as access to financing is limited.
Lenders working with foreigners typically offer loan-to-value (LTV) ratios from 50% to 70% depending on borrower profile, project, and bank. The main requirement is stable, verified income. Having a Thai income source or residency significantly simplifies approval.
Interest rates for foreigners in 2026 range from 5.5% to 8% per annum for available condominium mortgage programs. The rate depends on down payment size, credit history, and borrower citizenship.
The Bank of Thailand from July 1, 2026, also eased restrictions on loan-to-value ratios for housing loans, which may improve mortgage accessibility, although direct impact on foreign borrowers is not yet confirmed by official data.
What This Means for Buyers in Pattaya
The Bangkok investigation directly affects the Pattaya market, where the proportion of villas and houses registered through nominee companies is traditionally high. Areas of East Pattaya, Huay Yai, Mabprachan, Bang Saray, and Na Jomtien are saturated with properties acquired by foreigners through Thai companies. Increased enforcement creates risk for current owners and changes strategy for new buyers.
Villa buyers in Pattaya should avoid nominee structures and choose legal alternatives. Registration of long-term land lease with building ownership rights remains the most reliable option for landed property. The lease agreement must be registered at the Chonburi land office and entered into the Chanote document, ensuring legal force and protection against unilateral termination.
For those considering condominiums in Jomtien, Wongamat, Naklua, Pratamnak, or Central Pattaya, the key requirement is verification of foreign quota availability at the time of transaction registration. A lawyer or agent should request a certificate from the land office on current quota distribution in the specific building before deposit payment.
Buyers already owning property through a nominee company should conduct a legal audit of the structure. If nominee shareholders did not contribute real funds and do not participate in management, the risk of violation recognition is high. Consultation with a licensed lawyer will help assess options: restructuring with real partners, conversion to lease, or sale of the asset before intensified inspections.
The Pattaya market may also see price reductions for villas with nominee structures, as buyers will demand discounts for legal risk. Properties with clean lease structures or condominiums within foreign quota will become more competitive.
Investors planning purchases in 2026-2027 are advised to focus on condominiums in projects with confirmed foreign quota or villas with registered leases. Due diligence should include requesting a land office extract, confirmation of absence of encumbrances, and verification of ownership history.
The situation underscores the importance of working with professional agents and lawyers familiar with current enforcement practices. Saving on legal support when buying property in Thailand can result in loss of the entire investment.
Forecast and Recommendations
Increased scrutiny of nominee schemes reflects a broader trend toward greater transparency and compliance with legislation in Thailand's real estate sector. The likelihood of further inspections in Pattaya, Phuket, and other regions with high proportions of foreign buyers remains high.
The market is adapting slowly. Developers are beginning to offer projects with built-in legal lease structures, and lawyers are developing more complex but legal ownership schemes. Buyers are becoming more aware of risks and require documentary confirmation of structure legality.
For sustainability of investments in Thai real estate, it is critically important to follow the letter of the law. Nominee schemes, however widespread they were in the past, are no longer an acceptable risk. Legal alternatives exist, require more effort in structuring, but provide long-term security and asset liquidity.
