Property Ownership in Thailand for Foreigners

Posted on 18 October 2012 by ABPC

If you are planning on purchasing real estate in Pattaya or a any property in Thailand as an investment, you should seek the services of an independent and fully qualified lawyer, just as you would do in your own country, as the Thai property laws relating to land ownership are very different to those commonly encountered in the West

If you are planning on purchasing real estate in Pattaya or a any property in Thailand as an investment, you should seek the services of an independent and fully qualified lawyer, just as you would do in your own country, as the Thai property laws relating to land ownership are very different to those commonly encountered in the West

Can I Own a Condominium in Thailand?

Yes, you can. Under Thai Law, 49% of the internal area of a condo building, excluding the common areas, can be assigned to be owned by foreigners.

Buying a condominium, is the simplest option available to foreigners. The only restrictions on purchasing a condominium, are that the funds used for purchase were remitted from abroad and correctly recorded as such by the receiving Thai Bank on a Tor Tor Sam. Purchases of condominiums by foreign individuals come under the jurisdiction of the Condominium Act B.E. 2535 (1992).

The owner of each condominium is issued with a certificate of unit ownership. The certificate also has a statement
saying exactly what percentage of rights over the common areas of the building each owner has.

Can I Own a House and Land in Thailand?

Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.

Although Thai law prohibits foreigners from owning land in Thailand, there are various ways in which you can structure establish a controlling interest in a Thai company that owns the land, or own a lease for the land in your own name, all complying with existing Thai laws:

Nominee with Lease and Option to Buy

– you can use a Thai Nominee to purchase the house/land and have a 30 year lease with a 30 by 30 year option from the nominee. In order to be enforceable, any lease for a period of longer than three years must be registered, which involves a modest payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. The drawbacks to a lease include the fact that the parties can contractually agree to renewals, but this right cannot be registered and is not effective against a purchaser of the property, and that the lessee cannot (without the lessor’s consent) sublease, sell or transfer his or her interest.

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. However, in some circumstances the Thai courts have ruled that this was not a bona fide mortgage, but rather it was a mortgage contrived to circumvent the existing laws of Thailand prohibiting foreign ownership of land. 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.

Usufruct Interest (Sidhi-kep-kin)

– gives you temporary ownership rights to things on or arising from the land. In practice, a usufruct is limited to a 30 year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, a usufructury interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited.

Limited Liability Company

– this form of purchasing property is the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. 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 will 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. This results in the foreign ownership of the company being limited at 39%, but with the recommended changes to the Articles of Association, the foreigner can be the only director of the company, and the only officer of the company who can commit or bind the company in any contractual dealings – effectively giving the minority shareholder control over the company.

What is a Tor Tor Sam (3)?

A Tor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Tor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Tor Tor Sam must specify that the remittance is solely for the purpose of purchasing a property – Code 5.22.

Can my Thai Wife Own Land?

Yes. Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, 1999 a new Ministerial regulation changed that to allow Thai national’s married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim.

Do They Have Land Title Deeds in Thailand?

Yes, the Title Deed (Chanote) is the purest form of land ownership. It ensures easy transfer, one original set is kept in the District Land Office where the registration of land transfer takes place, and the other original set is given to the owner of the land. Look for the red coloured crest at the head of the certificate.

Confirmed Certificate of Use (Ngor Sor Saam Gor)

This document certifies the right to use land and is often issued pending title deed. Transfer of the certificate is mainly completed at the District Land Office or Branch District level, as the case may be. Look for a green coloured crest at the head of the certificate.

The 2 documents above are the easiest titles to transfer ownership of. Avoid any other form of ownership documents.

How is Property Appraised and Valued in Thailand?

There are generally three different appraisal values; the government value, the appraisal company’s value and the market value of the property. The government value is calculated every 5 years, the last update was in 2004. Over the last few years all of these rates have begun to come closer together.

How is Land Measured in Thailand?

Thai land measurements are a combination of imperial and metric measurement systems. Title deeds in Thailand include all land measurements using the Thai system and are also written in Thai, therefore it is beneficial for you to have a translation if you are thinking of buying a property. Below you’ll find a comparison between the Thai and Western sytems which hopefully will help you gain a better understanding.

1 Wah = 2 Metres
1 Sq Wah is called a Talangwah = 4 Sqm
100 Talangwah = 1 Ngan = 400 Sqm
4 Ngan = 1 Rai = 1600 Sqm = 400 Talangwah
1 Acre = 4047 Sqm = approx 2.53 Rai
1 Hectare = 10000 Sqm = 6.25 Rai

Are there any Taxes and Costs Payable When Purchasing a Property?

Yes, on all purchase/sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 2%, a business tax of 3.3% levied against an owner who has been in registered possession of the property less than 5 years, and withholding tax of 1% of the Government price or the declared value whichever is the higher. There is no Capital Gains Tax in Thailand, There are no set rules on who pays these fees and taxes, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership.

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