Thailand real estate covers condominiums, houses, villas or land.
On Buying a House in Thailand
Buying a house on Thailand is not like buying a condominium, wherein any foreigner can purchase a condo unit up to 49% of the total number of condo units 1. With regards to buying a house, Thai law has put a restriction on this: a foreigner cannot own a house in his name.A foreigner can only own the structure, example a building, but not the land itself. This is one of the most common real estate challenge.
As a general rule, foreigners may not own a land in their name, thus there is no simple way of owning a house in Thailand.
However, there are two options available for you:
1. Freehold through a Thai Limited Company
A foreigner can set up a Thai Limited company and buy land in the name of that company. A limited company must have at least 3 shareholders and majority of shares must belong to Thai national or juristic person. There are number of vehicles available for foreigners to control their investment in land in Thailand.
It is possible for a foreign shareholder to be issued with Preference Shares which give them increased voting power and allows them to control the Thai Company thereby controlling the assets of the company i.e. the land. Another option is to appoint foreigner as a sole director of the company, although in this case a foreigner should obtain work permit.
Even though land ownership by a partly (up to 49%) foreign owned Thai company is as such not illegal under Thai land laws, the legality and land ownership by most of these partly foreign owned companies is controversial if not illegal. In addition new laws and regulations may affect foreign control in a Thai company. The Thai government is since 2006 restricting and discouraging the misuse of Thai companies to circumvent foreign property ownership restrictions in Thailand. Thus, we recommend our clients to register a Thai holding company only if they are intending to conduct real business in the Kingdom.
A foreigner may acquire land in Thailand through leasing for the maximum duration of 30 years. This is the least complicated option for a foreigner to have a right of usage of land. The lease agreement may grant two renewal periods of 30 years each. However, renewal clause is just a promise of the landowner. The lease can be renewed only when the owner is willing to renew it, and legally renewal is not enforceable in a court based on a promise made in a lease signed 30 years ago. This renewal of the lease must be re registered at the Thai local land office to make it effective. This is the least complicated option for a foreigner to have a right of usage of land. The land lease will be registered at the Land Department, and we also would recommend to conduct a title search before the transaction. This will involve conducting a search on the relevant property to determine whether the property is capable of being sold legally, that is to say that the seller is the current owner of the land, the title document is in order and to ascertain whether there is any registrable encumbrance on the title document of the land.
Contact qualified attorneys who would be able to assist you with a variety of matters related to your real estate transaction such as company registration, title search, due diligence, contract review or drafting, and assistance with the registration of the lease and ownership.
1 Condominium Act B.E. 2522 (1979) as amended 2008.