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FAQ
.......INFO ABOUT:
GRUNDSTUECKSBESITZ IN THAILAND
TO WHOM IT MAY CONCERN ?
LAND OWNERSHIP RIGHTS FOR ALIENS
LAND OWNERSHIP IN THAILAND
A. How can a foreigner acquire a land in Thailand ? |
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Though Thai Property Laws does not allow a foreigner from owning land in Thailand , there are four alternatives for a foreigner acquire land, as follows
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1.In a name of company
A foreigner may own a land in a name of Thai company (at least 51% of shares are Thai and 49% are foreign).
2. Investment (BOI)
A foreigner who invests 40 million Baht for no less than 5 years, for some other than ownership or real estate itself, is entitled to buy up to one rai (1,600 square meters) of land for residential purposes. Permission from the Ministry of Interior must be obtained.
3. Married to a Thai
In 1999, Thai property law, concerning a Thai whose spouse is foreign, has been amended for a favor of a Thai with a foreign spouse. Such couple may now legally own a land in Thailand . Nevertheless, a land must be registered under a name of a Thai. Also, a foreign spouse must sign a declaration stating that the funds using to buy a land is of a Thai spouse, so that he/she waives his/her right to the ownership of land.
4. Lease
Leasing is one option for a foreigner to acquire land. The maximum duration of a lease under Thai property law is 30 years, with a possibility to renew again if agreed. This is the least complicated option for a foreigner to have a right of usage of land. Investor shall ask the Seller for this option by purchasing a House with Land that he has to pay only one time for the 3x30 years leasing.
5. Structure Ownership
A company or the Thai spouse of a foreigner may grant a Right of Superficies in favor of the foreigner, giving him the right to personally own all constructions situated on the land. By using this possibility, a foreign individual can be registered as the owner of a house without owning the land. The Right of Superficies can be conceded for a period of 30 years and can be renewed for another 30 years (but not automatically).
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Before buying land, an essentil step to the process is to conduct a “ Title Search ”. Since there are different levels of land title deeds, it is recommended to verify with the Land Department the type of title deed of a land in which you are interested to acquire and its legality. This step would provide more information about a land; for instance, whether it is under any obligation. Also, due to a real estate boom in Thailand , some counterfeit title deeds have been noticed. It is strongly recommended to conduct a “title search” to avoid any unappreciated surprise in the future. |
B. Categories of land title deed |
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Land title deeds in Thailand may be mainly divided into 4 categories as follows: |
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1. Freehold Title Deed (Chanote or Nor Sor 4)
This type of title grants the holder of this document the full rights over the land. Thus, if you are planning to buy land in Thailand , this type of title deed is the best option.
2.Nor Sor 3 Gor
A land awaiting a full title deed is granted the document Nor Sor 3 Kor. The land is measured by the Land Department; therefore, it has its exact boundaries. The owner knows exactly what he owns. This type of land may be sold, transferred, or mortgaged, as a land with freehold title deed (Chanote). The owner of the land may file a petition to the Land Department demanding to change it to a full title deed (Chanote), and the Land Department may do so if there is no opposition made against the petition.
3. Nor Sor 3
A difference between this type of land title deed and the previous one is that a land with Nor Sor 3 has never yet been measured by the Land Department; hence the land has no exact boundaries. However, Nor Sor 3 may later be switched to a Nor Sor 3 Gor, then a freehold title deed (Chanote) in the future.
4. Possessory Right
This type of title deed is least recommended. A land with a possessory right has never been substantiated by Department, but is only recognized by tax payments at the Local Administrative Office.
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Property Ownership for Foreigner
Many foreigners want to buy real property in Thailand . The reasons are various. Some wish to purchase for investment purposes, some wish to purchase a home for themselves. Thus the real estate market, especially the high-end sector, is still booming.
Under the current laws of Thailand , foreign ownership of land is highly restricted. The Land Code of Thailand generally prohibits the ownership of land by foreigners, including both individuals and juristic entities, in the Kingdom.
However, there are different ownership structures which allow a foreigner to acquire real estate in Thailand . The structures are as follows: |
Since 2002, a foreigner is permitted by the Ministry of Interior to purchase land up to one rai (1600 square meters) for residential purpose on condition that he invests 40 million Baht in Thailand , for some purpose other than ownership or real estate itself. Actually, this option is troublesome for the majority of the foreign investors because of the legal restrictions involved and is relatively seldom used. |
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Leasing
Leasing is a popular and straightforward option to acquire a property in Thailand . The maximum duration of a lease permitted under Thai law for non-commercial usage is 30 years , (for commercial usage 50 years), renewable for two additional terms of 30 years (commercial usage 50 years), if contractually agreed.
The land lease over 3 years must be registered at the Land Department or it is only enforceable for the first three years.
Self-evident it's possible under Thai law either to lease land as an individual or through a Thai company, which may be advisable if a foreigner is going to operate multiple investments. |
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Co-operate Ownership
A further option is to establish a Thailand-registered company, preferably a Thai limited company, to acquire land.
It needs a minimum of 7 different shareholders at all times, but only one director who can be a foreigner. At the beginning this director may have to be Thai in order to apply for the Tax ID and VAT registration of the Company.
Thai law (Land Code) requires that at least 51 % of the shares are held by Thai and maximum 49 % of the shares are owned by foreign shareholders because the Land Code prohibition on foreign land ownership includes not only foreign individuals, but also Thai-registered companies in which foreigners own more than 49 % of the shares.
Because there's no restriction under Thai law that one share must equal one vote, it is allowed to issue classified shares:
The A-shares (“Ordinary Shares”) where the holder of one share is entitled to one vote and the B-Shares (“Preferred Shares”) where a shareholder must have multiple shares in order to obtain one vote.
The foreign shareholders will subscribe to all A-shares, whereby the B-shares are held by Thai holders. This structure enables the foreign minority shareholders to hold fewer number of shares, but in fact control the company by voting rights.
..…..Since the foreign shareholder of the Thai Company can be a natural or a juristic person, it is possible to use an off-shore entity, e.g. a BVI ( British Virgin Island ) Company, for tax efficiency. |
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Manage Estate
Currently, managed estates are very common. They all vary in structure. Normally the managed property is offered as freehold purchase through Thai companies or with a leasehold structure concerning the buildings in combination with subscribing a certain number of shares in a Thai company, which owns the land underneath the properties that are leased. This structure
is advisable because the lessees of the buildings are more secure when they are also indirectly the “joint-landlords”. With a land owning company which effetely becomes a lessor jointly controlled by the owners, there is the added protection that a lease is protected from being terminated by requiring typically at least 75 % of the owners to vote to terminate |
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Condominium
Acquiring a condominium is gaining in popularity amongst foreigners. A condominium is a building that can have its separate portions sold to individuals or groups for personal property ownership.
Foreign investors as well as other foreigners are allowed under Thai law to purchase and own condominiums in Thailand .
There are five classes of criteria which alternative qualify foreigners as owners of condominiums:
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a) Holding a residency permit under Thai Immigration law, or
b) Permitted to stay in Thailand under the Investment Promotion law (BOI), or
c) A Thai registered entity with at least 51 % of shares held by Thai shareholders, or
d) Foreign juristic entity in receipt of a promotion certificate under the Investment
Promotion law (BOI), or
e) A foreigner or foreign legal entity remitting a foreign currency into Thailand , or withdrawing money from Thai Baht account of the persons residing abroad, or withdrawing money from foreign currency account.
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Fortunately the last criteria apply to most foreign condominium purchasers and therefore it is the most typical way for foreigners to buy a condominium in Thailand .
According to the condominium act, foreigners or a foreign legal entity normally can acquire up to, but not exceeding 49 % of Condominium Block (direct freehold).
If a foreigner wants to register the purchase at the Land Office he has to submit a letter of guarantee from the condominium juristic person which proofs the proportion of foreign ownership among other documents. If the quota of 49 % is already used, he can set up a Thai company to purchase a condominium. A Thai Company can purchase a condominium without restrictions. Another option is leasing. Condo-minimum leases, like land leases are generally prepaid for 30 years with options of renewing for two additional 30 year periods. In effect, the pre-paid rent is the same as a freehold or purchase price.
A further restriction according to the Condominium Act is that a foreigner must remit foreign currency into Thailand to finance the purchase of the condominium. However, experts which are working in Thailand can use funds earned in Thailand on condition that their funds are paid into a non-resident account.
Further, the purchaser must obtain a Foreign Exchange Transaction form (FET) from the bank as proof of the remittance. This form will be issued by the receiving bank and is filed at the Land Department when the foreign purchaser registers the purchase.
The amount of money fixed in the FET form must cover the whole of the condominium price. Should the remittance be less than $20000 USD, the bank will issue a “credit advice” in English which is not acceptable by the Land Office as proof of remittance for the condominium purchase. In case of this, the purchaser has to ask the bank to issue a “letter of guarantee” as evidence of remittance. |
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Thai Elite Membership
Thailand Elite is the world's first country membership. This exclusive club offers it's members several benefits and privileges (e.g. golf-, spa-, healthcare-, visa- and hotel privileges, airport services etc.). The membership fee is US$ 25000 for individuals. This is a one-off payment and the membership is valid for life.
Originally Thailand Elite offered also a property investment benefit which should make it possible to “purchase” 10 rai land as a foreigner for residential use. The structure of this benefit was that Privilege Card Company Limited, a Government Enterprise, holds the title deed for the land on the member's behalf and lease the land to the members for 90 years.
Unfortunately, at the moment Thailand Elite don't offer any benefits to buy and own land yet. There are no regulations to facilitate this privilege but the government plans to issue a relevant regulation in the near future. |
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The information and opinions expressed on this web site are not intended to be a comprehensive study, nor to provide legal advice, and should not be treated as substitute for specific advice concerning individual situations. Indigo is not responsible for the content of external internet sites which link to this site or which are linked to from it.
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