On 30^th April 2019, the Act on Property Attributed to Right B.E. 2562 (2019) (the “PAR Act”) was promulgated in the Royal Gazette and will become effective on 27^th October 2019.

Property Attributed to Right (“PAR”) is a new asset class created to enhance and promote investment in immovable property. The release of this new asset class is aimed supporting the expansion of the country’s economy. The lease of immovable property under the Thai Civil and Commercial Code (“CCC”) is a contractual right enforced between parties with certain limitations towards economic benefits and the lease of immovable property under Act on the Lease of Immovable Property for Commercial and Industrial Purposes B.E. 2542 (1999) (“CIP Act”) has a restrictive reach, the PAR Act is brought in to tighten the gap between the two Acts.

The PAR can only be created on immovable properties which the applicant owns i.e. land which a title deed (a chanote) is issued for, land with construction on such land which a title deed is issued for and condominium unit(s) as per the Condominium Act. The beneficiary to which the PAR is created is called the holder of the PAR. The PAR is limited to a term of 30 years and must be created in whole. PAR can be created on immovable properties under mortgage or used as security with written consent from the mortgagee or the security holder.

Examples of benefits provided by the PAR Act include:

• once the PAR is created, the holder of the PAR can transfer such PAR to a third party without obtaining consent from the owner of the immovable property. This is in contrast to the lease under the CCC where the lessee cannot sublease the leased premises without obtaining consent from the lessor while it is true that the CIP Act allows the lessee to sublease without obtaining consent from the lessor but it is restricted to commercial and industrial purposes; and
• the PAR can be transferred in the form of succession unlike a lease under the CCC. Again, despite the CIP Act allowing transfer in the form of succession, it is limited only to the commercial and industrial purposes.

In essence, the PAR Act transfers most ownership rights to the holder of the PAR for a period of no more than 30 years enabling the holder of the PAR to virtually do as he please (within such ownership rights, of course) during such term.

Once this Act comes into force, we believe that it will provide greater benefit for all investors, Thais and foreigners. The concerned Ministerial Regulation will provide more details regarding procedures to create the PAR as well as forms, fees, specific requirements and others. According to the Department of Land, the Ministerial Regulation is anticipated to be promulgated within 90 days from the date the Act takes effect.