A Brief Guide for Overseas Buyers
Foreigners generally may not own land in Thailand. However they can own buildings or improvements on the land and they can lease land, which is how most foreigners acquire their dream home. There are some exceptions to this prohibition on land ownership, but these exceptions generally are of no assistance to those requiring land to build a villa for personal use or rental.
Leases
Foreigners may lease land, or apartments, for a maximum initial period of 30 years. It can be registered in their name(s) or in the name of a foreign company. It is common for the lease to be held under an offshore corporate vehicle, such as a BVI company, which can enhance security of tenure and provide options in the event of re-sale. Lease contracts typically provide for two or more renewals of 30 years each. Foreigners leasing should obtain competent local legal advice, with particular attention to issues concerning survivorship, termination, and lease renewal. Acquisition of leasehold property remains the 100% legal way for foreigners to have a stake in the Thai property market, and is easier to transfer.
Condominium Apartments:
Thai law does allow foreigners to own condominiums freehold, with a current 49% ceiling relative to the total floor area. The other 51% must be taken by foreigners as leasehold. A leasehold condominium when resold would generally be transferred or assigned as leasehold. “Condominium” here refers to an apartment building with a common area that has been registered as a condominium under Thai law. In order to qualify for the freehold title, non-resident foreigners must submit proof that they have remitted foreign currency into Thailand to purchase the condominium.
Owning land via a Thai corporation:
Thai corporate structures are very similar to that used in overseas jurisdictions, and they are referred to as Juristic Persons. Until July 2008 seven (7) promoters or shareholders were required. Now only three (3) promoters or shareholders are required. Thai companies with a majority of Thai shareholders who in turn own a majority of the equity, are qualified to own land in Thailand. However particular care is required to ensure that none of the Thai nationals are “nominees” or acting as a “front” for a foreign shareholder. The authorities expect a Thai company to trade and to pay company tax, and they discourage the establishment of a company with foreign participation for the sole purpose of owning land. Control of the company is preferably exercised via the quorum threshold rather than via “ordinary” and “preference” shares. If the investment warrants it, it is possible to structure a qualifying corporate land owning vehicle.
Title due diligence:
Title due diligence is indicated for all freehold and leasehold property acquisitions in Thailand, as the law does not guarantee or warrant land titles. Foreign property purchasers should generally confine themselves to developments on land titled Chanote (freehold) or Nor Saw Sam Gor (upgraded certificate of use). With a thorough due diligence effected by a competent law firm, foreigners should have no title issues with their property.
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