Are Foreigners Allowed to Buy Property in Thailand?
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You may have read or heard information that Thai law does not allow foreigners to buy property in Thailand.
However, you may have noticed that many foreigners are buying beautiful houses or villas in well-known locations such as Phuket, Hua Hin, Koh Samui, Bangkok, Chiang Mai, or even in Issan in the North East.
This is because a person who does not have Thai citizenship can only own a freehold apartment or condominium (commonly called a “condo”) in Thailand, which is why condos for sale are so popular with foreign investors.
You may be wondering, why only flat units, and what other ways foreigners can legally own freehold property in Thailand?
How do I buy a condo or an apartment in Thailand if I am a foreigner?
According to the Thai Condominium Act of 1979, any type of property in Thailand can be owned by foreigners but with a maximum of 49%.
Let’s take the example of an apartment building with 100 units of equal size. According to the law, 51 of these units can be owned by Thai citizens and the remaining 49 units can be owned by foreign buyers.
There is an additional condition that foreigners must meet in order to obtain a valid title deed (called a “chanote”) to purchase a condominium unit, which is that the funds used to purchase the unit must be sent to a bank account in Thailand from abroad (this is obviously a very good way for the country to attract foreign currency to its territory).
Upon receipt of the funds transferred from abroad, the bank that received the money is obliged to issue a foreign currency transaction form (called FETF) which must be presented to the land registry upon transfer of ownership.
Generally speaking, in a condominium (condominium building) that is in a location sought after by foreigners, the 49% quota available for foreign customers will be sold first.
Foreigners can eventually buy a unit in the Thai quota (the 51%), but the title deed of the purchased unit will remain with the property developer (usually a Thai company) who will then lease the flat (the so-called LEASEHOLD) for a period of 30 + 30 +30 years.
A 30-year lease is the longest period currently allowed under Thai law, so each 30-year lease must be renewed.
Most property developers offering new condos for sale charge a premium to the buyer who wishes to purchase a unit under a freehold title.
This is done mainly for two reasons:
1) Developers want to discourage foreign buyers from buying freehold apartments in some way, as otherwise they are forced to keep the units that are usually in lower demand and have no alternative but to lease them to foreign buyers.
2) The resale value of a freehold condo to a foreigner on the Thai property market is higher than that of a leasehold condo.
Can foreigners buy a house or a villa in Thailand?
If you prefer to buy a house or a villa as a foreigner, you can do so by creating a Thai company, which is a way to buy a house and land in Thailand.
In order to comply with the law, the company’s shares can only be held to a maximum of 49% by foreigners and a minimum of 51% by Thai nationals.
The acquisition of real estate in this way is comparable to a freehold purchase, as the company by definition is Thai (as a Thai citizen) and owns the property as an asset.
The company is set up in such a way that the foreign shareholders can have full control of the company, when in reality they only own a minority (49%) of the shares.
This is a common way for foreigners to do business and own property, and it is perfectly legal.
Even large multi-billion dollar international groups operate in this way in Thailand, and not just in terms of property.
There are many thousands of plots of land and properties held under this type of corporate structure.
Many specialist law firms or legal consultancies offer this type of service to foreigners at relatively low cost.
With this arrangement, you can acquire any type of property in Thailand under the name of your company that you control.
The fee for setting up a company in Thailand is approximately THB 45,000.
The fee per year is about 20,000 THB for a company that has been established solely for the purpose of owning property and does not do any other business.
You can also use this company to set up a real business, apply for a work permit or an annual visa that will allow you to reside and work in Thailand legally, this allows you to kill two birds with one stone.
Owning an asset will also increase the credibility of the business for future business transactions.
Another way for a foreigner to own real estate is to use a Thai citizen, such as a spouse or trusted business partner. This solution obviously has disadvantages and risks and is a personal decision.
What is a "Leasehold" purchase or 30 year lease?
As briefly explained above regarding condominiums, another way for a foreigner to own property in Thailand is to buy on a leasehold basis.
This is the cheapest and easiest way to buy property in Thailand. But the law prohibits leasing a property for more than 30 years but it is possible to sign an extendable lease for 90 years, that is 30 years renewable twice. It is strongly advised to use the services of a specialized and reputable lawyer to prepare this type of contract.
It is very important to make sure that all the data and information on the title deed is correct and that the land for which you are going to sign a long term lease has the right title.
It should include the exact and legal term of the lease, the rights that are granted to the buyer for a possible resale and also the registration fees.
According to official statistics, more than one billion Thai baht is invested in Thailand every year by buyers from all over the world. Of course buying property in Thailand is a big decision to make and a big step in life, but if it makes you feel better, remember that thousands of other people have bought before you.
Thai law is very clear about property rights for foreigners. We advise you to do your due diligence, get all the necessary information, use the services of a good real estate agent established in Thailand and a reputable lawyer to help you in the final acquisition process.