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Further Reading:

50 Year Leases Reported?

Kamala Resident writes - I am a frequent reader of your column in the Phuket Gazette :-) and now I have a question for you: I read in The Nation last month that the government has "committed itself" to the IMF's proposal to extend the maximum period for land leased to foreigners from 30 years to 50 years, renewable for an additional 50 years. Does this mean that all current 30-year leases held by foreigners will now automatically be good for 50, and that the prepaid (and pre-signed) extensions for an additional 30 will now automatically be amended to 50?

I too read the same article at the end of August. They referred to cabinet proposals to implement lease amendments as you describe. We have seen a lot of similar reports of cabinet decisions on proposed land code amendments (and of course a whole host of other issues) over the last ten years and more than the usual number during the last year but I would stress that none of them will become effective (most don’t) until they are passed into law.

Generally speaking new laws can be implemented in three ways. Resolution of parliament, Ministerial decree or Royal decree.

Resolution of parliament (upper and lower houses) is just as it sounds - a cabinet proposal will be debated in parliament then typically be referred back to review committees and drafting committees before finally being put to a vote. Given the highly political nature of any decisions regarding land code and the coalition structure of most Thai parliaments, it can be extremely hard to get a consensus.. The comparatively short and infrequent sessions when parliament sits doesn’t make it any easier. Matters are further complicated because they have to be completed within the term of office of a single government, if a government falls (all to frequent in Thailand) the process usually has to start all over again from scratch since new governments (political animals as they are) don’t want to be seen to be exercising a previous governments proposals.

Once a bill has passed in parliament, it will only become effective three months later when it is published in the Royal Gazette. Ministerial decrees which are put into effect without a resolution of parliament are intended for the implementation of code previously passed by parliamentary that due to their nature need to be carried out in several stages. The overhaul and refinement of the planning codes region by region would be a good example of code changed by Ministerial decree.

Royal decrees are the only way for the government to bring a new law into effect without a resolution of parliament. Such decrees typically used only for emergency measures, will be proposed by the government and as the names suggested decreed by the King and then come into force immediately. Once issued they are required to be debated and approved (modified or rescinded) within the next session of parliament. In the event that they were rescinded, any transactions undertaken while the decree was valid will remain forever valid.

It is highly unlikely that an amendment to the land code, would be effected by any other means than an act of parliament, the current session of which will have ended by the time this article is in print.

However to answer the second part of your question, if the land code was to be amended to allow registration of leases longer than the current maximum term of thirty years, it would not (unless - and this seems unlikely - the act so decreed) have any effect on the private contractual agreement already made between the two parties to a lease. Those parties might mutually deem it appropriate to proceed to effect a cancellation of an existing thirty year lease and the registration of a new fifty year lease, but given the costs in registration fees and taxes it might well prove mere efficient to wait until the thirty year renewal became due to effect such changes.

The only significance I can see arising from the current proposals is that there might now be value to include a clause in land leases that laid out procedures for steps that the parties to the lease would commit themselves to implement if the land code was amended at some future date to allow longer registered leases,