Owning Property in Thailand
You may be wondering if foreigners can own Real Estate in Thailand? The short answer is ‘yes.’
There are many ways for foreigners to purchase Real Estate in Thailand, however a foreigner can own a property in Thailand, but not freehold land. This is mainly a measure to control foreign ownership of land and keep the control and prices within reach of the locals. However, if your dream is to own a property in paradise don’t despair as purchasing property as a foreigner in Thailand is still possible. Ownership options for foreigners to purchase real estate in Thailand generally fall into the following 5 categories as below:
1.) Buying a Condominium
This is one of the easiest and most clear-cut methods of owning real estate as a foreigner in Thailand. The ‘Thailand Condominium Act’ allows foreigners to own the freehold of up to 49% of the total unit space. They must request a letter of guarantee, which must be presented to the Land Department upon transfer of ownership.
For example if there are 100 condominiums in a single project, 49 would be available for foreigners to own in their personal name on the title deed or ‘Chanote.’
2.) Leasing land in Thailand
A foreigner can also lease land in their personal name for 30 years and afterwards renew the lease. According to the Civil and Commercial Code, sections 537 to 571 the property lease can be renewed for 3 consecutive times i.e. allowing a leasehold of up to 120 years.
A 30 year lease can be renewed, but renewal is not enforceable by law if the land owner or their heirs refuse. Hence a carefully worded contract is recommended. It is a safe option for purchase, but it is always advised to consult with a professional local lawyer to guide you through this process securely.
Another option is via a ‘secured leasehold’ structure, whereby the developer/owner of the project (if foreigner) controls the freehold ownership of the land title of the whole project via an offshore company (i.e. BVI, or Hong Kong, which often has tax benefits for the owner and purchasers).
In this case, the owner of the project would contractually secure the renewal of further leasehold 30 year tenures, to ensure themselves or their heirs’ duty ensure renewals for owners in the future. Also depending on the structure of the company, in some cases the collective shareholders/owners can control the renewal process themselves.
3.) Purchasing land through a company
A Thai Limited Company can legally purchase freehold land in Thailand. Foreigner(s) can hold up to 49% of the company’s shares, the rest of which must be held by Thai juristic persons. The land can be owned by the company, but the Managing Director and majority shareholder can control the company, thus have authority over the land ownership. A threshold of 75% vote approval can also be inserted in the company ‘articles of association’ to ensure control for the majority shareholder. This is a legal method of ownership for a company to purchase real estate, providing the correct legal measures are followed by a Thai lawyer.
If a company is incorporated with a foreigner(s) as a Director since the formation of the company, along with a minimum of two Thai national shareholders, and transactions for the land purchase by the company shareholders can be shown by an accountant, then the company purchase is legitimate.
A foreigner can also choose a 30 year lease or mortgage on the land back to themselves, for added security, however there are tax implications, so be advised to check with a reliable thai lawyer.
4.) Foreign Investment in Freehold Land (exemption)
Thailand Real Estate law allows foreigners to buy and own land up to 1 rai (1600 square meters) under section 96 of the Land Code Amendment Act (1999) with an investment of 40 million Thai baht, on the condition that the land is used for residential purposes only. This investment must be specified in assets or government bonds deemed beneficial to the Thai economy. It is important to also note this ownership is not transferable by inheritance and is therefore limited to the lifetime of the foreign owner.
5.) Foreign Husband & Thai Spouse
A foreigner can purchase land in Thailand if he is married to a Thai national. However there are the following limitations: the non-Thai spouse needs to state that they have no rights on the land; essentially waiving their right to claim the property. The property, though purchased by the foreigner cannot be in their name but will have to be in the name of the Thai spouse.
A married couple may be asked to sign declarations at the Land Department stating that funds used are the separate property of the Thai spouse. Problems may still arise during a divorce case. Proving the land is marital property can prove difficult, hence a skillfully drafted prenuptial agreement may help to minimize risk to a non-Thai spouse.