Thailand nominee crackdown exposes property law loopholes

The accelerated crackdown on nominee businesses and foreign ownership of real estate in Thailand throughout 2025-2026 reflects the state’s efforts to bring order to the property market, especially in key tourist areas such as Phuket, Koh Samui and Koh Pha-ngan, destinations for foreign investors from many countries.

However, even as enforcement has become more intensive, experts and related agencies still view the main problem as lying not only in detecting offenders, but in the “structural loopholes” in the law and regulatory system that continue to make nominee investment an economically attractive activity.

The problem covers issues ranging from Section 94 of the Land Code, the use of nominee companies to circumvent restrictions on real estate ownership, tax avoidance through share transfers, and constraints in checking the foreign condominium ownership quota, which the law caps at no more than 49%.

Section 94 questioned over its “deterrent effect”

One issue under question is a legal loophole in Section 94 of the Land Code, which provides that if a foreigner unlawfully acquires land, the Director-General of the Department of Lands may order the disposal of that land within a period of not less than 180 days but not more than one year.

If the order is not complied with, the state can put the property up for auction.

In practice, the measure may appear to be a clear penalty, but from a law-and-economics perspective, Thai law still does not impose financial penalties severe enough.

The key reason is that even if a holder is found to have bought land illegally, after the property is sold, the offender can still recover the principal as well as any profit from the land price increase in line with market conditions.

In other words, if land prices rose throughout the holding period, the investor may still receive returns even though they are ultimately forced to sell the property out of the system.

From a legal perspective, the approach is therefore viewed as conflicting with the principle of “unjust enrichment”, or the principle that offenders should not benefit from unlawful acts.

Compared with other countries, the difference is clear, with some countries adopting stronger measures to remove incentives for wrongdoing.

For example, the Philippines treats landholding that breaches the law as void and allows asset seizure measures, while Canada follows an approach under which only the original investment is returned, and profits from real estate transactions fall to the state.

The result is that investors have no incentive to use legal loopholes to speculate on assets.

By contrast, Thailand still faces the question of whether current penalties are sufficient to prevent speculation in the land market, particularly in tourist areas where land prices are rising rapidly.

Koh Samui-Koh Pha-ngan-Phuket: high-risk areas for nominee networks

World-class tourist areas are becoming a major arena for foreign capital.

Data from the Department of Business Development (DBD) show that Surat Thani province has 11,649 companies with foreign shareholders, reflecting a high level of foreign investment inflows.

A deeper look at individual areas finds that Koh Samui has 8,213 companies with foreign investment, with French investors forming the largest group at about 24%.

Koh Pha-ngan has 3,213 foreign-shareholding companies, with Israeli investors holding the highest share at about 22%.

Although these figures do not mean all such companies are acting unlawfully, state agencies view the areas as high risk and requiring intensive scrutiny.

In 2026, the state raised the level of proactive inspections, using AI technology to analyse over 40,000-50,000 company registration and land transaction records to identify irregular patterns.

The system is designed to detect risk signals such as multiple companies using the same address, concentrated shareholding patterns, or Thai shareholders whose financial status does not match the value of the shares they hold.

One major case occurred in May 2026, when officials inspected a group of pool villas and luxury hotel businesses on Koh Pha-ngan before expanding the inquiry into shareholding structures and money trails.

The operation led to the freezing and seizure of assets linked to a nominee network with a combined value of more than THB200 million.

The case reflects that the nominee problem is not merely about property ownership, but is linked to business structures, avoidance of the law and impacts on local economies, especially the issue of continuously rising land prices, which has made housing increasingly difficult for many local people to access.

The major issue of the “49% condo quota” remains hard to check

Another issue discussed continuously is the requirement under the Condominium Act that limits foreign ownership of condominium units to no more than 49% of the total saleable area in each project.

Although the law sets a clear proportion, in practice, there are concerns that actual ownership may be higher than shown in the registry.

A key channel is the use of Thai companies as intermediaries to hold condominium units, because companies with Thai shareholders holding no less than 51% are regarded as Thai juristic persons and can buy units under the Thai quota.

The problem is that, in many cases, Thai shareholders may be shareholders in name only, while foreigners provide the funding, control management and receive all economic benefits.

As a result, the registered ownership proportion remains in line with the law, but in reality, the true beneficiaries may be foreigners.

A key obstacle to inspection is that Thailand still does not have a complete Beneficial Ownership database linking data from all agencies.

In the past, inspections often relied on company registration documents, which can be prepared to appear legally compliant fairly easily.

For this reason, current inspections are beginning to move from looking only at 49:51 share structures towards examining money trails, the sources of investment funds and the actual power to control businesses.

Tax avoidance through “share transfers” costs the state billions

Beyond real estate ownership problems, law enforcement agencies have also found behaviour that directly affects state revenue.

Data from the Department of Special Investigation (DSI) indicate that some nominee-company groups transfer assets through share transfers rather than directly transferring ownership of land or real estate.

The mechanism works through the establishment of companies to hold land.

When an asset changes hands through a sale, the land transfer is not registered with the Department of Lands; instead, the company’s shareholders are changed.

Although assets change hands in practice, such transactions are not recorded as normal real estate ownership transfers.

As a result, the state loses revenue from fees and taxes that should be collected from land sales.

The DSI estimates that the damage from such behaviour is worth several billion baht a year.

A case that drew attention was a search of a law office and an accounting office in Phuket in late 2024, where the establishment of more than 60 nominee companies for foreigners was found.

The case became the starting point for expanding inquiries into business networks linked to landholding and several types of restricted businesses.

Integrated agencies move to close regulatory loopholes

However, responding to the nominee problem today does not rely on any one agency alone, but on cooperation among several organisations.

The Department of Business Development (DBD) screens high-risk companies and examines shareholder structures; the Department of Special Investigation (DSI) is responsible for cases involving high-value damage or broad impacts; the Department of Lands examines ownership histories and takes measures under Section 94; the Anti-Money Laundering Office (AMLO) is pushing for nominee-related offences to be designated predicate offences to increase its authority to freeze and seize assets; and the Revenue Department checks the consistency between the income of Thai shareholders and the value of shares they hold.

Although proactive measures are beginning to show more results, the key tasks remain closing legal loopholes, creating a Beneficial Ownership database and increasing penalties so they create genuine deterrence.

For as long as wrongdoing still offers the possibility of economic returns, the use of nominee structures to acquire Thai real estate may remain a long-term problem in terms of economic fairness, state revenue and Thai people’s access to housing, which remains a concern for the future.