Ownership rights for foreigner nationals
Becoming a property owner in Thailand. If you intend to buy a property in Thailand, the first thing you should know is that, with regard to the law, foreign nationals do not have the right to own a plot of land. However, they do have ownership rights to specific buildings on plots of land in certain types of apartment block, known as condominiums. This is the Freehold (or joint ownership system that is common in Europe). But there is also a long term lease system (90 years), which allows you to own this type of property, whether it be a villa or a house. This is the Leasehold. (equivalent of a lease in France).
Purchasing a joint ownership property in Thailand - Freehold
Becoming the owner of a condominium
Since the 1980s, foreign investors have had the chance to become owners in their own right of a condominium or apartment
in a legally registered apartment block. Initially set at 40%, the shares that foreigners now may own have been increased to 49% in this type of apartment block in the framework of
the 2008 law on condominiums (The Condominium Act – N°3 – B.E. 2542). The remaining 51% must be owned by Thai nationals. As the owner of a condominium, you will also be a joint owner
of all common areas (reception, hallways, car park, gym, swimming pool, etc...). Other than the price of the condo, you will also have to cover the cost of transfer fees, sinking fund
overheads and administration costs, and maintenance. The amount will depend on the surface area of the property expressed in m2.
You may use your property to live in or to rent out, and thus achieve rental returns on it. You may use this property as you see fit, and may resell it at any time and at your discretion.
Upon transfer of the property, the developer will grant you the title of the property or Chanote, as well as the House Registration Book or Tabien Baan. You will also be given a copy of the joint ownership regulations (Rules and Regulations of the Condominium), which will provide you with information about:
- - the name of the legal entity representing the condominium
- - the office address
- - the amount of the sinking fund
- - a description of the common areas and their use
- - a table of the bonuses allocated to each property
- - the rules relating to joint ownership general meetings
- - community fees
This document also stipulates the general rules of communal life in many domains such as the authorisation of pets, restrictions around using communal areas (times, age, etc.), use of the car park, noise disturbances, and neighbourhood disturbances...etc.
Foreign Exchange Transaction Form
A foreign investor who buys a condominium must transfer the funds, in a foreign currency, from a bank account outside Thailand to a Thai bank account. This account must be opened in
Thailand in the same name as the debit account domiciled abroad. A Foreign Exchange Transaction Form (FETF) or Thor Tor Sam
will be sent to you by the Thai bank as proof for the land registration services, or Land Office. This certificate allows the foreign origin of the funds, and the fact that
they are in a currency different to that of the Thai currency, to be controlled.This bank document explicitly certifies that the funds transferred are going to be used to buy
a condominium in Thailand and are not destined for any other use.The name and address of the apartment block, as well as the number of the apartment, must also be mentioned.
This form is also necessary so as to avoid any complications, in particular transfer taxes, should you decide to repatriate the funds upon sale of the joint ownership property at a later date.
NB: You may only obtain a FETF form for a transfer of money above or equal to the equivalent of 20,000 USD.
One year visa, renewable each year, for the benefit of the owner of a condo worth at least 10 million bahts
According to the Bureau of the Royal Thai Police, a decree (Order No. 327/2557) dated 30th June 2014 has been in force since 29th August 2014. This decree allows any foreign national who owns a freehold condo worth at least 10 million bahts to stay in Thailand thanks to a one year visa, renewable each year. You just need to provide proof of the following:
- - a non-immigrant visa granted by a Thai embassy or consulate
- - a copy of your Foreign exchange Transaction Form proving the transfer of at least 10 million bahts
- - a copy of the sales contract, Chanote and Tambien Baan.
Long term lease of a condo - Leasehold
In big cities like Bangkok and seaside resorts like Phuket, condominiums are regularly sold to foreign nationals as 90 year leases (30 years, twice renewable). In effect, if a foreigner may become the owner of a condominium in their own right, the proportion of bonuses held by foreigners must not legally exceed 49%. The remaining 51% must belong to Thai nationals. However, that does not mean that 51% of the occupiers must be Thai. Condominiums attributed to Thai nationals must be offered to foreign nationals as rental properties by property developers. A long term lease contract will be established for 30 years, mentioning the clause "twice renewable".
Becoming the owner of a villa or house in Thailand
Purchasing a villa or house in Thailand is comprised of general particularities, it is a legal act similar to the purchase of a house in other countries like Germany, Australia, or the United States, with the exception of land ownership. In Thailand, a foreign national may not legally become the owner of a parcel of land. However, property ownership may be distinguished from land ownership. As such, a foreign national who wishes to invest or purchase a house in Thailand may do so by leasing the land in the framework of a 30 year lease, twice renewable, for a total of 90 years, and build their property, or buy this land through the creation of a limited liability company.
Long term lease of land - Leasehold
The purchase of a villa or detached house therefore lies in two combined systems. A foreign buyer will become the owner of the building and, at the same time, the tenant of the land by means of a very long term lease. The lease contracts recorded are guaranteed and clear. These long term leases may be structured in dates of full ownership. In general, the land is leased for a period of 30 years twice renewable, or for a total of 90 years, and the lease will be published in a register which is equivalent to our land registry and mortgage file at the Land Department Office. This official formality represents a solid guarantee with regard to use of the land for longer than a whole lifetime. You will be the owner of the house and may use the property as you so wish: renting it out, living in it or even reselling it. Upon resale, your purchaser will become the owner of the building and will replace you in land leasing rights for the remaining period of time. Ownership of the land is guaranteed by the fact that you are the legal owner of the buildings which occupy the land. The lessor may not take possession of the property upon expiry of the lease, as the property is separate from the land and will not constitute a component in the framework of civil law.
Limited liability companies
Another alternative exists if a long term lease is not deemed appropriate in your eyes:
the creation of a Thai limited liability company -
limited company. You shall have control over this company and, as such, may purchase the land and record it in the company's assets so as to build your
property on it. As a foreigner, you may possess 49% of the shares of a Thai company. The remaining 51% of the shares must be held by Thai legal persons.
However, you will be named as "sole executive director" in the company statutes and all Thai shareholders shall sign a contract on the transfer of
undated shares. They will have no power and shall not be consulted for any decisions. You will be 100% in control of the company. This
company, however, must have a real economic activity and will be subject to minimal accountancy fees and taxes.
NB: The Thai government recently announced that it would begin to investigate the origin of the money of Thai co-shareholders who own 51% of the shares of a company in order to check that they are not just figureheads but that they are actually co-shareholders.
Other ways in which to become a landowner in Thailand
Foreign nationals married to Thai women
Before 1998, a Thai woman who married a foreigner would lose her right to buy a plot of land in Thailand. She could, however, retain what she owned before her marriage to a foreign national. But a ministerial decree was voted for in 1999 and now allows Thai women who are married to foreign nationals to buy plots under certain conditions. The Thai wife must provide proof that the money used to buy the land through full ownership is legally hers and that no foreign debt is attached to it. This takes the form of a declaration signed by the wife which certifies that the funds used to purchase the property already belonged to her before the marriage and no claim can be made on them. With a solicitor's assistance, you may then establish a rental contract (use of the property, inheritance in the case of resale, death...) to avoid any potential risks.
Providing 40 million bahts in Thailand
The Thai Ministerial Code allows foreign nationals who invest or place 40 million bahts in a bank for a minimum duration of 5 years to buy, at most, a 1 rai (1,600m²) plot of land for residential purposes. This may take place only after authorisation is granted by the Ministry of the Interior if the purchase fulfils the conditions and rules defined in article 96 of the Land Code.