Phuket villa owners face scrutiny over foreign-linked land companies

Phuket villa owners using Thai companies to hold land face increased scrutiny under a 2026 enforcement programme that has brought foreign-linked land-holding structures under review.

On 29 April, 23 agencies signed an enforcement agreement at Government House under the Deputy Prime Minister and Commerce Minister. On 21 May, the Department of Lands sent a circular to provincial governors dividing land-holding companies into four risk groups based on 14 factors.

The fourth group covers companies that remain within foreign shareholding limits but show signs of foreign control or benefit through arrangements including leases, loans, mortgages, powers of attorney or management agreements.

By September, the Department of Business Development had placed 36,277 foreign-linked companies holding Thai land in a screening pool. The department has stressed that screening does not itself establish wrongdoing.

Phuket was among the areas targeted by the inspections. In July, the Interior Ministry expanded inspections to more than 361 potentially high-risk businesses across the island.

Potential consequences

The Land Code does not provide for confiscation in these cases. Under sections 94 and 96, land held through a company treated as foreign must be disposed of within a period set by the Director-General, ranging from 180 days to one year. If it is not sold, the Director-General can arrange the sale, with the proceeds going to the person entitled to them.

The company-related consequences are separate. Section 36 of the Foreign Business Act applies to Thai shareholders holding shares for a foreigner's benefit and to foreigners who fund or control the company. Penalties can include up to three years in prison and a fine of B100,000 to B1 million. A court can also order the shareholding to end, with daily fines of B10,000 to B50,000 until it does so.

The article says both sets of consequences can apply at the same time.

For owners, its central question is how many of the Department of Lands' 14 risk factors would apply if an officer examined the company.

Registered rights and proposed alternatives

The article says Thai law continues to offer foreigners registered rights such as a lease of up to 30 years, a mortgage registered at the Land Office and a pledge over shares. It argues that the issue is whether those rights are used instead of arrangements that give a foreigner hidden control of land.

It describes a structure branded Better-than-Freehold™ involving a 100% Thai-owned property holding and management company, Thai-funded paid-up capital and no foreign funding or control. Under the proposed arrangement, the company grants a registered 30-year lease and a registered first-priority mortgage, alongside an option agreement and a share pledge. A corporate trustee holds the rights for the buyer, while an independent Thai lawyer-led security agent handles mediation and enforcement, with arbitration as a backstop.

The article acknowledges that such a lease-and-mortgage structure could still be reviewed under the Department of Lands circular, which names long-term leases and mortgages among the agreements officers should examine. It says the distinction is that the Thai lessor genuinely owns the asset while the foreign lessee holds rights registered against the title.

It advises existing company-held villa owners to obtain their shareholder register and funding records, assess their position before any disposal decision is imposed, and seek advice on possible divestment. Prospective buyers are advised to identify where each right is recorded on the title.