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Owning Property in Thailand

Q.... How does a foreigner buy land or a house in Thailand?

Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.

Although you are able to own a house or structure in your own name, Thai law currently prohibits foreigners from owning the land that the building is erected on.

However there are a number of ways in which you can structure the purchase to own and invest in land:

  1. Become a Thai resident or citizen
  2. Be the principal investor in a new export orientated Board of Investment (BOI) approved company [the current maximum size limit of freehold ownership rights is one Rai of land (1600 Sqm.)]
  3. Make an approved investment of over 40 Million Baht for a minimum number of years [the current maximum size limit of freehold ownership rights is one Rai of land (1600 Sqm.)].
  4. Invest in a Thai private limited company. This involves the incorporation of a private limited company of which the foreigner holds 49% of the shares. The remaining 51% of the shares is held by Thai Nationals
  5. Enter into a long term legal lease agreement with the registered owner of the land. Some foreigners who 'own' land and houses (as opposed to condominiums, which can be owned outright) go for a leasehold agreement of typically 30 years, with two prepaid 30-year renewals. The lease will include clauses that automatically allow freehold ownership if the laws of foreign ownership change in the future, and the right to sell and/or transfer the property. This gives you 90 years with strong backup, making it effectively ownership. This option has the benefit of a quicker setup period as opposed to the formation of a company and is less costly.
  6. Thai Limited Company. In practice, the method commonly used by foreigners is to invest in a Thai private limited company which owns or intends to acquire freehold land. The Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. In effect it is the Ltd Company that is buying the land and not the individual entity. The freehold title to the land belongs to the Ltd Company.
    The individual would become the sole director of that company and would be the only person who can legally bind the company to any transaction including selling the house or the land that it is built on. This legislation is written into the memorandum of articles effectively gives the minority share holder control of the company. The maximum share holding by the foreigner is 49% and a minimum of 7 share holders are required.

This is a simple and straight forward method to obtain a secure title. One of the main benefits of buying land or property in this way is that in the event that you choose to sell your property all you have to do is transfer your shareholding to the new buyer.

Q.... What is the best way to buy a Condominium?

Buying a condominium is perhaps the simplest and easiest option to own property in Thailand. A condominium block would normally have its own swimming pool, sauna, fitness centre and restaurant.

Condominium ownership is much more straightforward, you simply buy it in your own name. There is a law that stipulates that foreign ownership may not exceed 49% of the total units within the block and that a certain percentage of that would be allocated to rental units.

Q...... Explain title deeds to me

Title Deed is the only form of evidence that an individual actually owns the property or piece of land he is trying to sell. Title deeds are given only for areas of Thailand which have been surveyed. 'Chanot ti din', more commonly refered to as simply “Chanot” are title deeds with land accurately surveyed. If you have a Chanot ti din title deed, it gives you incontestable possession of the land. It is worth noting only approximately 15% of land in Thailand is under this title. Most other titles around the country are 'Nor Sor Sam' or 'Nor Sam Or'. They are title deeds in as much as clear records of ownership are maintained, and that they may be sold or leased. The two titles mentioned here should give you ownership and are as good as a Chanot. Any other form of title is not recognised as legal ownership.

Q....... My wife is a Thai national, can she own land?

Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and is beyond his claim.

Q..... What tax's are likely to be due to the purchaser?

The taxes in Thailand are not comparable to the west where transfer of ownership is concerned. On all purchase/ sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 0.01%, a business tax of 0.11% levied against and owner who has been in registered possession of the property less than 5 years, and Income Tax. There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 1.0 and 3.0%) on property is the comparable replacement. It is usual but not necessarily always the case that the expenses are shared between buyer and seller in respect to stamp duty and transfer fee and should be discussed at a time early on in the negotiations.

Q..... What are these strange land measurements?

Land is measured as follows:

  • 1 Talang Met = 1 Square Meter = 10.7 Square Feet
  • 1 Talang Wah = 4 Square Meters = 42.7 Square Feet
  • 1 Ngan = 100 Talang Wah = 400 Square Meters = 4,277 Sq Ft
  • 1 Rai = 4 Ngan = 400 Talang Wah = 1,600 Sq M. = 17,109 Sq Ft
  • 1 Acre = 2.5 Rai = 10 Ngan = 1,000 Talang Wah = 4,000 Sq M = 42,772 Square Feet

Disclaimer

The information here is based on educated opinion and information provided by professionals based in Thailand. AsiaPropertyWorld.com or any of it's associates or representative accept no liability for any loss however consequential related to the above.