Thai Property Laws
March 21st, 2014
Property & Land Ownership Rights
If you are considering buying property in Phuket, the first thing you should know is that under Thai law, foreigners are not allowed to own land. However, foreign nationals do have the right to the ownership of buildings distinct from the land such as condominiums.
Foreign nationals may own:
- A unit in a registered Condominium.
- A building distinct from its land.
- A registered leasehold of up to 30 years for all types of titled land or buildings.
Foreign nationals may not own:
- Freehold land.
- More than 49% of the shares in a Thai company that owns freehold land.
Purchasing a Condominium
Under the Condominium Act (1979) foreigners can own the freehold of 49% of the total unit space in any legally registered condominium building. The purchaser must request a letter of guarantee from the condominium juristic person setting out the proportion of foreign ownership which must be submitted to the Land Department upon transfer of ownership.
Foreign Exchange Transaction Form
A foreign purchaser must bring in 100% of the funds from overseas in foreign currency and will need a Foreign Exchange Transaction Form (FETF) from the Thai bank in order to provide evidence of this to the Land Department. Due to strict money laundering regulations, a FETF is also necessary to avoid complications and remittance tax when repatriating funds should the foreigner sell the condominium at a later date.
Note: You can only obtain a FETF for any inward remittance for amounts not less than the equivalent of USD 20,000. You should clearly indicate the payment purpose on the payment order form in the field for a message for the beneficiary, including the name of the condominium and the unit number.
The two most popular ways for foreigners to purchase land are:
Registered leaseholds are secure and relatively straightforward. Long term leasehold can be structured to be tantamount to freehold ownership. Typically, the land is leased for a period of 30 years, renewable a further two times giving a total of 90 years. Security of the possession of land is assured by the fact that you are the legal owner of the buildings which occupy the land. Therefore, the lessor cannot take possession of the property upon expiration of the lease as the property is separated from the land and will not be a component part under the Civil Law.
Limited Liability Company
If you are not comfortable with the leasehold method, the alternative is to set up a Thai company that you control, and which can legally purchase land. Put simply, as a foreigner you are allowed to own 49% of the shares in a Thai company. The rest of the shares must be held by Thai juristic persons (which your lawyer can arrange), who will sign over control of their shares to you. The land will be owned by the company. However, as managing director of the company, you control the voting of the other shares, and therefore you have control over the ownership of the land.
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