Can foreigners buy property in Thailand?
The short answer is 'yes!'
But, you cannot own the freehold land in your personal name.
However, the building structure can always be legally owned and registered in a foreigner's name.
A freehold land title must be registered at the land office in a Thai person or company name.
So what can I do?
Whilst the Property Ownership Laws might seem frustrating at first, in fact they are put in place partly to protect the real estate market from over-development, retain the country's natural beauty, and to keep property & land prices within reach of locals.
When you look at it this way... it sounds fair!
How would you feel as a first time buyer if you were 'priced out of the market' due to inflated property prices from overseas investment?
This is already the case in many more over-developed places around the world, such as of London, San Fransisco or Hong Kong.
"Home ownership within Thailand is very high at over 80%! Compared to places such as UK at 63.5% or America at 64.5%.
At first these ownership laws might seem like a dead-end discovery, but dig a little deeper and you find various options available.
So if your dream is to own your own piece of paradise don't despair...
Purchasing real estate in Thailand as a foreigner is still possible, and we have listed the top 5 options for you!
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 1979 'Thai Condominium Act' allows foreigners to own the freehold of up to 49% of the total unit space.
For example, if there are 100 equally sized condominiums in a project, 49 would be available for foreigners to own, with their personal name on the title deed/'Chanote.'
- Whilst the remaining 51% of other units would be available only for Thai nationals to purchase.
(*Note: A letter of guarantee must also be presented to the Land Department upon the transfer of property ownership.)
2. Leasing property or land in Thailand
Another easy option is to lease an apartment or piece of land.
"A leasehold is effectively a pre-paid rental agreement - whereby you secure the property or land price ahead of time."
A foreigner can lease property or land in their personal name for an intital 30 years with the land department in Thailand - this is the maximum single tenure.
According to the Civil and Commercial Code, the property lease can be renewed for a further 2 consecutive times i.e. allowing a leasehold of up to 90 years.
A 30 year lease can be renewed, but renewal is not always enforceable by law if the land owner or their heirs refuse. Or a further lease payment is often requested. So it is worth agreeing this in writing with a land owner in advance.
Alternatively or in addition, a 'declaration of intention' can be made in person at the time or shortly after the lease registration. Or an Usufruct can be signed instead.
In which ever case, a carefully worded contract is recommended and it is always advised to consult with a professional local lawyer to guide you through this process securely.
"What about a secured leasehold option?"
Another lease option is via a 'secured leasehold' structure, whereby a foreign project owner sets-up control of the freehold land title for the project via an offshore company.
(i.e. British Virgin Islands or Hong Kong - this method also often has considerable tax benefits for the project owner and purchasers.)
In this case, the owner of the project would sign the renewal of further leasehold 30 year tenures in advance (although these forms may be subject to change in future), to ensure they themselves or their heirs will renew the lease for owners after the intital 30 year period.
This form of 'secured leasehold' ownership is increasingly common with Luxury Apartments, where the properties are premium priced and minimizing risk is essential!
Also, depending on the structure of the company, in some cases the collective shareholders/owners of the properties in a 'secured leasehold' project, can control the renewal process themselves, providing a more enhanced security.
3. Purchasing land through a company
There are various different Land Title Options available within the Thai real estate market.
You may have heard people say a strange-sounding name 'Chanote' or 'Chanod' - this is the legal title deed to a freehold piece of land.
At the top of this document is a red rubber stamp called a 'Garuda' - if it is any other colour than red, then it is not a Chanote title deed.
"One way to control the 'Chanote' freehold title is via a Thai Limited Company, which can legally purchase 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.
Although the land can be owned by the company, the Managing Director & single majority foreign shareholder can still control the company.
Also, a mandatory 'threshold of 75% vote approval' can also be inserted in the company 'articles of association' to ensure control for the majority shareholder.
Alternatively a share-transfer document may be signed afterwards - whereby Thai shareholders 'sign-back' their rights over to the foreign Director of the company.
How can I securely set-up a Thai company to purchase land?
If a company is incorporated with a foreigner(s) name as a Director(s) since the formation of the company, with a minimum of two Thai nationals as shareholders, and also the transaction for the land purchase by the company shareholders can be 'proven' by a qualified accountant, then the company purchase is considered 'legitimate'.
Issues often only arise when 'nominees' are used. (i.e. Thai shareholders names with no knowledge of their name being used for a property purpose.)
You may for example choose to have two respected Thai friends or partners used as 'real' shareholders in the formation of your Limited Thai company.
Alternatively many legal companies will allow their senior colleagues to be Thai shareholders if needed.
What if I already own a Thai company?
In the case you already own a Thai company or are purchasing a property for rental investment, you may choose to have real Thai staff (i.e. a Villa manager) as shareholders.
Then of course it becomes easy to show ongoing activity in the accounts of the company. Hence it is no longer a 'sleeping shell company' but an active trading company.
However, in all these cases it is advised that a reliable local lawyer outline your options in detail and handle this entire process for you to ensure a smooth & secure transaction.
(*Note: A foreigner can set-up a lease or mortgage on the land back to themselves from their Thai company controlling the freehold land.
Thus the land cannot be sold with an ongoing lease. This is an additional safety measure that a qualified local lawyer can arrange for you.)
4. BOI Investment
This type of ownership is more uncommon, but it is still possible...
The Thailand 'Board of Investment' allows foreign investors to buy and own freehold land up to 1 rai (1600 square meters) under section 96 of the 1999 Land Code Amendment Act.
An investment of 40 million Thai baht is required, on the condition that the land is used for residential purposes only or can be claimed of substantial benifit to the country.
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 legally purchase land in Thailand if he or she is married to a Thai national.
This may sound obvious, but it is not something to rush into - just like overseas investment, take your time to get to know and trust your Thai partner!
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 land, though purchased by a foreigner, cannot be directly registered in their name but will be in the name of the Thai spouse.
- A married couple may be also asked to sign a declaration at the Land Department stating that funds used are the separate property of the Thai spouse. Issues may still arise during a divorce case.
- Proving the land is marital property can prove difficult, hence a reliable lawyer and a skillfully drafted prenuptial agreement may help to minimize risk to a Thai spouse.
As you can see there are many different ways for foreigners to purchase Real Estate in Thailand, but these restrictions are for the security of the property market and purchasers too.
However, if your dream is to own a piece of paradise don't give-up!
Purchasing property as a foreigner in Thailand is still possible...
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