Buying Land and Property in Thailand - FAQ

Can a foreign national buy land in Thailand?

The answer straight out is No. Furthermore, they cannot own more than 49% of the shares in a Thai company that owns freehold land. Recent press reports concerned certain parties who tried to find loopholes in this system: loopholes that it is expected will be closed in the future.

Can a foreign national own a building in Thailand?

Yes! A foreign national is allowed to own a building distinct from the land which, coupled together with a renewable registered 30 year lease, is regarded by many as being as good as owning the freehold land itself.

Why should I leasehold land?

If you want to buy a house - buy the house outright, in your own name, then lease the land. This way you do not need to open a Thai company. Please make sure that the lease agreement allows for freehold transfer, if and when the law permits. Leaseholds can be registered at the local land office, to give absolute protection. At present, 30 years is the maximum length for a legally permitted domestic lease and 50 years is the maximum for commercial leaseholds. Renewals are at the discretion of the land owner or his/her heirs. What this method allows is a period of thirty years to await a law change on foreign ownership or, your decision to open a Thai limited company, and take the option of the freehold. It may also be possible to further extend your lease for another 30 years, but this is not guaranteed in Thai law. Registered Leaseholds are safe, uncomplicated and easy to setup.

How can I secure freehold land ownership in Thailand?

You need to set up a Thai company, of which you can own no more than 49%. For those of you who are not comfortable with Leasehold, the Freehold method of ownership means that the Thai company that you control owns the property. The Land Code of Thailand along with the Foreign Business Act (FBA) prohibits foreign control (voting and management) of a Thai majority owned company that owns land in Thailand. Therefore, it is of paramount importance that a proper legal structure is adopted to retain effective control over a Thai majority owned company whilst at the same time avoiding anti-agency and anti-nominee provisions.

What are the safeguards of owning freehold land, and what are the responsibilities?

As an additional safeguard, you may set up a company to control the freehold land which you, as an individual, then lease. Further, you may also have the company register a mortgage over the land in your favor.

If you choose to purchase your property Freehold you should consult with professionals who will adopt the proper legal structure to protect your interests and who are able to explain the same to you in detail, in your own language or at least in a language that you understand well.

There are legal responsibilities and tax implications with respect to the owning and running of a Thai company.

If choosing the Freehold method of ownership and control you should appraise yourself of these costs, responsibilities and implications by consulting a professional lawyer.

What is the best way of paying for land and property in Thailand?

If you are purchasing property in Thailand and you want to pay in Thai Baht, ensure that your funds are transferred into Thailand in foreign currency and converted to Thai Baht here.

The reason for this is that the receiving bank will issue a Thor Tor 3 Certificate confirming the transaction.

The relevance of the Thor Tor 3 Certificate is that it is one of the documents you will need in the future if you wish to repatriate funds without incurring tax penalties.

Also, please be aware that banks will only issue Thor Tor 3 Certificates for individual inward transfers exceeding 10,000 US$.

Repatriation of investment funds and repayment of overseas borrowing in foreign currency can be remitted freely upon submission of supporting evidence.

One of these documents would be the Thor Tor 3 mentioned above, or in respect of a foreign currency loan, the loan contract. Remittance of funds without proper documentation could be regarded as income and become liable for tax.

Most real estate agents and property developers on Koh Samui prefer to simplify the process by allowing you to purchase your property in foreign currency. Your money is usually transferred directly into one of their offshore accounts. They will setup the freehold or leasehold for you directly on remittance of this money.

When the time comes that you wish to sell your property you simply sell it on in foreign currency.

Which property taxes will I be required to pay in Thailand?

There are two different types of Tax levied on property in Thailand. They are called:

1. Land Tax and
2. Structures Usage Tax.

Land Tax is a very small tax levied on land ownership equivalent to just a few Baht per Rai per year. This amount is so small that the land office rarely bothers to collect it and if they do, they may wait a few years before the amount is worth the effort of collecting. In any commercial sense this tax can be largely discounted.

Structures Usage tax is applicable at the rate of 12.5% on the actual (or assessed) gross rental value of the property. Lessees are not subject to this tax but may be required by the Developer to pay an "annual ground rent" instead.

Buying a condominium

Purchasing a condominium is the simplest process for overseas buyers as Thai law allows foreign freehold ownership of condominiums. It states that 49% of a condominium block may be owned by non-Thais, some blocks may even allow 100% foreign ownership if the developer has aquired the appropriate condominium license.

Developers will usually offer a choice of two ownership options, “freehold” or “leasehold”.
A freehold may be purchased if a condominium block is within its' quota for foreign ownership i.e 49% . The freehold will give you rights over the building but not the land.
A leasehold will be offered if the condominiums have had their freehold quota to foreigners fully subscribed. The initial lease duration with an option to renew for two additional 30 year terms effectively giving the buyer a 90 year lease.

The land on which a condominium sits is owned collectively by the individual condominium owners with a majority Thai shareholding. It is governed by a coporate body which is usually set up by the owners.

To qualify for freehold ownership of a condominium in Thailand overseas buyers must send the funds for the purchase in foreign currency from a bank outside of Thailand. They must be accurately recorded as such by a Thai bank in the form of a Foreign Exchange Transaction Form, “FET”, This certificate provides evidence of the sale or deposit of foreign currency in an authorized local bank. This form must bear the bank's authorized signature and seal in the authorized bank column. The FET must specify that the purpose of the remittance of foreign currency is for the purchase of a condominium unit or units and must in total equal or exceed the price of the condominium. FET certificate is readily available from all major banks in Thailand.

The other circumstances in which a foreigner can purchase the freehold to a condominium are;

1. Individuals who are permitted to have residence in Thailand under the Immigration Act.
The documents required are either a passport, residence permit and house registration.

2. Individuals who are permitted to enter Thailand under the Investment Promotion Act.
The documents required are a passport plus a letter from the Board of Investment of Thailand certifying permission to live in Thailand under the Investment Promotion Act.