On 24th March 2008, the Ministry of Interior announced that the cabinet had resolved to reduce the registration fees payable upon the registration of the transfer of certain interests in real estate as a measure to stimulate the real estate sector of the Thai economy. The reduced registration fees came into effect on 29th March 2008 and have been frozen at the lower rate for a period of one year ending on 28th March 2009.

The reduced registration fees are applicable to land and building transfers, condominium unit transfers, the registration of buildings as condominiums and the registration of mortgages. The registration fees in relation to these transactions have been reduced from 2 percent to 0.01 percent (except mortgage registrations which have been reduced from 1.1 percent to 0.01 percent). In addition to the reduced registration fees, certain taxes payable upon the transfer of real estate have also been reduced. It is important to note that the reduced registration fees do not apply to the registration of leases or the transfer of land which has no buildings or structures built upon it. The reduced registration fees and taxes, which may (depending upon the value of the interest transferred) amount to a saving of several thousand U.S dollars, provide a valuable opportunity and incentive to prospective buyers to buy now rather than wait until post 28th March 2009 and risk substantially higher fees and taxes.

At the present moment in time, it is unclear whether the reduced registration fees will continue beyond the one year concession period or be increased or decreased on 29th March 2009. It is clear, however, that whilst there is considerable scope for the registration fees and taxes to be increased, there is very little scope for the registration fees and taxes to be further reduced.

Accordingly, potential buyers may find that their interests are best served in buying now rather than risk a potentially substantial increase in registration fees and taxes from 28th March 2009.

This article was co-written by Desmond Hughes (Partner) and Christian Glanville (Associate) based in the Phuket office of Belmont Limcharoen International Law Firm (www.belmontlimcharoen.com).