Thailand property - Legal FAQ

Ownership Options for Foreign Buyers of Thai Houses, Villas and Town Houses

Thai law states that foreigners cannot own land, they can own buildings only. So, if a foreigner wants to buy a house, (or duplex/townhouse), which includes land, he has two basic ownership options for acquiring the land.

1. Set up a carefully structured Thai limited company to hold the freehold of the land. The freehold of the land is put in the company name. The minimum requirement for the company is for two Thai shareholders. These Thai shareholders will be provided by the lawyer setting up the company. The foreign buyer is made a director, and a shareholder, in the company. You can also have more than one foreign shareholder or director but the total foreign shareholding must not exceed 49%. Crucially, there are a number of protective measures always put in place by the lawyer setting up the company to create a very safe structure for the foreign directors. These give the foreign directors complete control and they typically include, but are not limited to, the following: the foreign director(s) is the only officer who can commit or bind the company in any contractual dealings; the director’s shares are preference shares and hold 10 times the voting rights of the nominal shares, giving the directors 90% of the voting power; when the company is set up, all of the Thai shareholders sign an open dated share transfer form. This means that they can all be signed out and replaced with other shareholders whenever the foreign director(s) wishes.

The company owns the freehold of the land and the investor(s) is free to build on the land, sell or lease property and transfer their rights to next of kin.

Note: The Company must comply with the law and money should pass through the company books, shareholder meetings must be held, minutes of meeting prepared, and yearly accounting must be filed. But a good local accountant can take care of all of this for you. It is easy to put some expenses for running the property through the company books. The accountant will also submit annual accounts for a typical fee of around 20,000 THB.

2. Lease the land on a rolling 30 year lease. An alternative to setting up a Thai limited company is for the foreigner to purchase a 30 year lease for the land. Options to renew the lease for 2 further periods of 30 years are built into the contract to make a total lease period of 90 years. The contract can also include a fixed option to purchase the freehold whenever the foreigner wishes.

Note: The house itself (i.e. the building) can be owned directly by the foreign buyer. However, if the freehold of the land is held in a Thai company, then the house will typically be held in the same company. This is for reasons of tax efficiency and ease of resale.

Ownership Options for Foreign Buyers of Condominiums and Apartments

Condominiums in Thailand are distinct from ‘standard’ apartments in that they have a condominium license which means that up to 49% of the private living space of the condominium building can be bought by foreign investors on a freehold basis. The remaining 51% can be directly owned by Thai individuals, held in a Thai company or leased to foreigners.

Apartments (i.e. where the development has no condominium license), these can only be leased on a rolling 30 year lease. Options to renew the lease for 2 further periods of 30 years are built into the contract to make a total lease period of 90 years.

Obtaining Construction Permission

Construction permission may be obtained at the Local Administration organization (Aor Bor Tor), or the Municipal Office, where your land is located. Structure Plans submitted shall be certified by an architect or an engineer. A building must have the specifications indicating in the permission.

Buying a Property in Thailand at my Absence

Yes. A person wishing to buy a land, including a foreigner, may purchase a land without being present at the time of registration of ownership at the Land Department. This shall be done by appointing, by a power of attorney, a lawyer to act on your behalf.

Nevertheless, if you are married to a Thai, you, a foreign spouse of a Thai, is required to declare in a written agreement that a fund, of a purchase of land, is purely of your Thai spouse as her personal affair before marriage. This procedure may be done by signing such declaration abroad, and demand for a certification at the Consulate of Thailand in your country.

Legally Rent Out a Property in Thailand

Yes. A foreign-owned property may be rented out. Some banks may allow you to open an account to collect the rents. You, as a non-resident, must be aware that personal income tax shall be deducted from your income earning in Thailand.

Visa Options for Long Term Stay in Thailand

There are 3 types of visa that allow long term stay:

Tourist Visa - issued by a Thai embassy abroad. These are valid for 60-90 days depending on the country of issue. You can simply leave the country when the visa expires and come straight back in another 60 or 90 days. Many quasi resident visitors to Thailand use this approach to stay for years. This approach is fine as long as you are solvent and not engaging in business in Thailand.

Non Immigrant Visa - issued by a Thai embassy abroad. These are for a maximum of 1 year but you have to leave the country every 3 months. There are 3 basic ways to qualify for a non-immigrant visa:

1. You are employed (or own a company) with at least 2 million baht capital value.
2. You have a Thai family.
3. You are retired and can prove adequate financial means to support yourself. We give you legal assistance to obtain a non-immigrant visa.

Resident Visa - Hard to get and rarely issued. To qualify you need to read and write Thai along with strong local financial status and influential Thai references.

Measurements Using for Land in Thailand

In Thailand, Land is measured in Rai, Ngan and Wah.

• 1 Rai = 4 Ngan (or 1600 Sq.m.) • 1 Ngan = 100 Wah (or 400 Sq.m.) • 1 Wah = 4 Sq.m. • 1 Acer = 2.5 Rai • 1 Hectare = 6.25 Rai

Land prices are usually expressed in Baht per Rai or Baht per Wah. Condominium prices are usually expressed in Baht per sqm (square meter)