Foreign Ownership of Property in Thailand

How to buy land/property (Koh Chang specific)

How to lease land/property ( Koh Chang specific)

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Land ownership by foreigners in Thailand

By far the most common way for a foreigner to own land/property in Thailand is to buy it under the name of a Thai spouse. This is the simplest method but it also has it's obvious risks. The main one being the foreigner invests a lot of money to buy real estate and then the couple split up leaving everything of value in the Thai spouse’s name.

However, there are a number of legal ways that a foreigner may follow to own freehold land:

• Become a Thai resident/citizen. Possible . . . all that you require is to be on speaking terms with numerous entries in the ‘Who’s who’ of Thai politics and an act of God.

• Be the principal investor in a new export orientated Board of Investment (BOI) approved company, the current maximum size limit of freehold ownership rights is one Rai of land. A feasible option if one rai is all you require and you have millions of baht lying around just waiting to be invested in a Thai company.

• Make an approved investment of over 40 Million Baht left for a minimum number of years, the current maximum size limit of freehold ownership rights is one Rai of land. Again feasible, but obviously more a benefit to making a large investment than a practical route to owning land.

Other, more practical, legal ways:

• Acquire the land through a Thai private limited company. This involves the incorporation of a private limited company of which the foreigner holds 39% of the shares. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land could be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land. Hence the remaining 61% of the shares is held by Thai Nationals. The foreigner retains full control by being the sole director of the company with executive powers.

** Note that as of mid-2006, the above method became increasing difficult as the Thai shareholders are now required to show where the get the money to pay for their allocation of the company shares. Something that a nominee shareholder would have difficulty doing. As of 2007, this method is rarely used.**

• Acquire the land in the name of a nominee Thai national who then grants a registered 30 year lease (residential) to the foreigner in the foreigner’s own name with pre-paid option to renew for a further two periods of 30 years each. The foreigner may also be given the option to purchase the land should the law in respect of foreigner’s land ownership rights change.

• Nominee with Mortgage. You can use a Nominee to purchase the house/land and have a mortgage (registered with the appropriate land department office) on the property in your favour. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege. The property cannot be sold until the mortgage lender signs the title documents declaring the mortgage cleared. This once again give 100% control over the future sale of the property although not ownership. The buyer may remove the nominee should any problems arise and transfer in a new nominee at any time.

Under Thai law, the foreigner can own the structure (for example a house) erected on the land. Additional safeguards (if required) include personal loan agreements and/or the creation of a registered mortgage and an agency agreement. Certainty of possession of land and house is assured by being the owner of the house. If arranged as above, the house will be separate from the land, and will not be a component part under the Civil Law. Ownership of buildings can be confirmed and the lessor cannot seize the house upon expiration of the lease.

In practice, if the foreigner isn’t buying the land/property in the name of a Thai spouse or significant other, the method now advised by lawyers is to lease. Although there are debates over the legality and enforcability of the common 30+30+30 year lease - you will find that well known, reputable, international law firms based in Bangkok will draw up this type of lease for clients. Therefore, they must be confident of enforcing it and of having it stand up in court. The main reason for the debate is that as the idea of foreigners owning property on long term leases is relatively new there have been no legal precedents set for the enforcement of such contracts. However, it is reassuring to know that a great deal of property on Phuket and Samui has been sold using this method for prices far in excess of those for land or property here on Koh Chang.

Other less popular methods of 'ownership'

Leases, Usufructs & Superficies