Visitors check out second home and condominiums at a fair held recently in Nonthaburi province. Experts say the new land and buildings tax would deal a heavy blow to bank's private banking clients. TAWATCHAI KEMGUMNERD

Landlords should join forces with property developers for new projects and set up real estate investment trusts to get relief from the additional burden of the looming land and buildings tax, says Kasikornbank (KBank).

These options would help landlords earn higher returns amid a low-interest-rate environment and uncertainty in the capital market, said Nont Buranasiri, private banking family management advisory head for KBank.

The land and buildings tax would deal a heavy blow to most of the bank's private banking clients, he said. Its private banking customers must have minimum assets under management (AUM) of 50 million baht.

The cabinet on Tuesday approved the long-delayed tax, which will be levied on first homes and land used for agricultural purposes with appraisal prices starting at 50 million baht, with the rate applied to the amount exceeding 50 million baht. First homes and land used for agricultural purposes appraised below 50 million baht will be free from tax liability.

The tax will also apply to second homes on a progressive basis, with rates of 0.03% for homes appraised at less than 5 million baht to 0.30% for those above 100 million.

A tax of 1% will apply to land left vacant or unused for one to three years, 2% for four to six years and 3% for over seven years.

Land for commercial uses will be taxed from 0.3% at appraisal values up to 20 million baht to 1.5% appraised at over 3 billion. The new tax is slated to take effect in 2017 after approval from the National Legislative Assembly.

The tax is expected to encourage new property development and the bank's lending and advisory services will take advantage of that trend, said Mr Nont, though clients will take time to study how to manage their assets.

New property development could be complicated for landlords without much expertise, though land sales would be landlords' last option, said Mr Nont.

KBank, the country's fourth-largest lender by assets, partnered with Swiss bank Lombard Odier yesterday to introduce family wealth planning. The Thai service will facilitate expansion of its private banking business, which KBank projects to grow in income by 22% this year, with AUM over 700 billion baht and 9,800 customers.

Jirawat Supornpaibul, KBank's executive vice-president, said the service would target Thailand's 50 richest families, whose total AUM is 100 billion baht.