Thai housing lobby wants transfer fees cut to 0.01% and 60‑year usufructs — what buyers must know

Industry groups press Bangkok to extend support for the Thailand property market

Thailand property buyers, investors and developers are watching a set of policy proposals from the Housing Business Association that could reshape transaction costs, ownership structures and the flow of offshore capital. In our analysis, the association’s push to extend fee cuts and loan-to-value (LTV) relaxations together with changes to usufruct terms is pragmatic in the short term but raises important legal and fiscal questions for the medium term.

Sunthorn Sathaporn, president of the Housing Business Association, told regulators the current suite of measures is helping to keep the property sector on a recovery path while the broader economy deals with headwinds. The trade body has formally asked the Finance Ministry, the Bank of Thailand (BOT) and the Land Department to consider a package of temporary and structural changes.

The headline proposals

• Extend transfer and mortgage registration fee reductions at a rate of 0.01% for another one to two years.
• Ask the Bank of Thailand to extend the relaxed LTV measures for one to two years (the measures were due to expire mid-year).
• Increase the legal term for usufruct-style rights from 30 years to 60 years.
• Introduce higher taxes on foreign buyers with the aim of drawing more offshore funds into Thailand’s economy.
• Cut the land and buildings tax by 50% for one to two years.

These are described as short- to medium-term steps to support market demand, strengthen liquidity and give developers room to absorb rising costs without immediate price hikes.

Why these measures matter to buyers, investors and developers

The proposals touch on three levers that materially affect the cost and clarity of buying property in Thailand: transactional cost, financing terms and legal ownership structures.

• Transaction costs: Transfer and mortgage registration fees are a fixed percentage taken at the point of sale and mortgage registration. A cut to 0.01% reduces upfront cash outflow for buyers and can make deals feasible that were marginal before.
• Financing: Relaxed LTV rules mean buyers can borrow a higher share of a property’s value, lowering the initial deposit requirement. That directly affects housing affordability and the pace of sales.
• Ownership clarity: Extending usufruct terms from 30 to 60 years would stretch a commonly used right that gives long-term use of land, which could reduce reliance on nominee arrangements and bring greater legal clarity for buyers who want long-term control without fee-simple ownership.

From our perspective, these changes can increase near-term transactions and relieve liquidity pressures across the development chain. But they are not a cure for structural imbalances in supply, elevated construction costs, or tighter global financing conditions.

How each proposal would work — and what to watch for

Transfer and mortgage registration fee cut to 0.01%

The Finance Ministry reduced transfer and mortgage registration fees to 0.01% as a temporary stimulus. The Housing Business Association has asked for this reduction to be extended by one to two years. For buyers, the immediate benefit is clearer: lower transaction taxes mean a smaller cash gap at closing.

What this means in practice:

• Lower upfront cost can bring some aspirational buyers into the market earlier.
• Developers can advertise lower effective prices or provide incentives while the fees remain low.
• Public revenues from registration fees will fall, which policymakers will weigh against the aim of jump-starting housing activity.

Extension of relaxed LTV rules

Loan-to-value rules determine how much banks can lend relative to a property's price. The BOT earlier relaxed LTV ratios to stimulate the market; those measures are also set to expire mid-year. The association wants the BOT to extend them for one to two years.

Implications:

• Buyers face lower deposit requirements and can enter the market faster.
• Higher LTV increases household leverage, which can raise default risk if economic conditions deteriorate.
• Banks must manage credit quality carefully; regulators will watch non-performing loan ratios.

Extending usufruct rights from 30 to 60 years

The association proposes lengthening usufruct-style rights from 30 years to 60 years. A usufruct grants the right to use and earn income from land owned by someone else, for a fixed term.

Why the association wants this change:

• It aims to clarify ownership arrangements and reduce the use of nominee structures that obscure true ownership.
• A longer legal term makes long-stay or buy-to-let investments more attractive because the right to occupy or earn income lasts longer.

Risks and legal questions:

• Extending the term affects land valuation and inheritance or succession planning tied to the land title.
• Legal harmonisation with other property and tax laws will be necessary to avoid loopholes or unintended consequences.

Higher taxes on foreign buyers and a temporary cut to land and buildings tax

The association has also suggested introducing higher taxes on foreign buyers as a tool to attract more offshore funds into the economy. At the same time it proposes a 50% reduction in land and buildings tax for one to two years.

How these two proposals could work together:

• Higher purchase-related taxes on foreigners would raise immediate fiscal receipts and may require funds to be repatriated or transferred through formal channels, bringing capital into Thailand’s financial system.
• A temporary cut to the land and buildings tax lowers ongoing holding costs for property owners, which can ease developers’ and homeowners’ cash flow while construction costs remain high.

Potential downsides:

• Higher foreign-buyers’ taxes can deter cross-border investment flows, depending on the tax design and comparators in neighbouring markets.
• Temporary tax cuts reduce government revenue precisely when long-term fiscal buffers may be needed.

What this means for different types of buyers and investors

Domestic buyers

If the LTV and fee measures are extended, domestic buyers will see shorter time to purchase and lower cash requirements at signing. That helps first-time buyers and upsizers who are cash-constrained.

But watch out for:

• Higher household indebtedness if extended LTVs encourage borrowing beyond borrowers’ realistic repayment capacity.
• Price adjustments down the line if developers and banks fail to address overhangs in supply.

Foreign buyers and overseas investors

The association’s suggestion to raise taxes on foreign buyers is a double-edged sword. On one hand, higher, targeted taxes can bring revenue and may be structured to force funds onshore. On the other, they can make Thailand less competitive versus other Asian markets that court foreign capital with lower acquisition taxes.

Key considerations for foreign investors:

• Tax incidence: Will the higher tax be applied at transaction, annually, or via withholding? Each design alters investor calculus.
• Usufruct change: If usufruct terms extend to 60 years, longer use rights could make buy-to-let and long-stay projects more attractive without transferring full freehold.

Developers and lenders

Developers will welcome temporary tax relief and extended fee cuts because these measures can keep sales volumes moving and improve working capital.