Buying a property in Thailand, a country with a very different culture and language than most of us are used to, can be a daunting prospect and you should arm yourself with as much knowledge as possible and always seek expert advice whenever available. This is where we aim to help with a series of articles to help make sense of it all.
4 ownership options: Freehold, Leasehold, Thai company, Thai spouse
As non-Thais cannot own land in Thailand, condominiums are the most straightforward properties to buy because they can be purchased freehold (foreigners can own one completely in their own name). At least 51% of the units in any given condo complex must be owned by Thai nationals (Thai quota). The remaining 49% can be owned by foreigners (foreign quota). Especially in the case of ‘re-sale’ (used) units, before committing, you should have a lawyer do a title check (to make sure the seller is the real owner, and there are no loans or liens on the unit) and draw up a sales purchase contract (S.P.A.). If the unit is brand new or off-plan, usually the developers will have their own S.P.A. The juristic person at the condominium office will also have to sign a letter to the effect that the specific unit is available to the foreign quota, and there are no outstanding charges (utilities/common fees, etc) on the unit. There is always a transfer fee (tax) when buying a condo and it is part of the negotiations to determine how much of this fee is paid by the seller and buyer, often this is split 50/50 between buyer/seller, but this can vary case by case. (Note, if you wish to purchase a condo in a building where there is no available foreign quota, you would have to obtain a 30 year lease for the unit– see below.)
If you choose to buy a house/villa/land plot, it would be a leasehold property. Foreigners can obtain a legal and registered 30 year lease on the plot of land, with the option to renew the lease at the end of that time (typically there is a separate contract guaranteeing 2 further renewals). If you build a house on the land, you can own the house by registering ownership at the local land department, but you would still be leasing the land it sits on. If later you wish to sell, you can either transfer the lease to the new owner (who will get 30 years less the number of years used already) or depending on the original lease structure, the original land owner/lessor will grant them a fresh 30 year lease (this would have to be specified in the original lease agreement signed by the lessor). If you sell to a Thai, they will take full ownership of both the house and land. A good lawyer is a must in such transactions- we can refer you to qualified, native English speaking lawyers to advise you in every step of the process.
Forming a Thai Company
If you come to Thailand with the purpose of starting up a company to do business, you can purchase a home and land in this way. However, it is vitally important that it be a bona fide company actually doing business, NOT a “shell” company, organized with the sole purpose to allow a foreigner to own land. This is strictly forbidden in Thai law. Also, keep in mind that you must have a minimum of 3 Thai shareholders, who own at least 51% of the company. Books must be kept by an account and taxes paid. If you plan on a legitimate business operation, we can assist you in the setting up a Thai company and refer you to lawyers who are experts in the process.
Owning Property through a Thai spouse
Foreigners can ‘own’ property in Thailand in the name of a Thai spouse. The land plot would be registered fully in the name of the Thai spouse and then it is usually advised that the foreigner then have their spouse lease the land back to him for 30 years, renewable for up to 90 years. In the case of being married to a Thai, a usufruct can be registered on the property- the holder of a usufruct, known as “usufructury”, has the right to use, possess and enjoy the property, as well as the right to receive profits from the fruits of the property so long as they shall live. Once you register a usufruct at the land department where the title deed is located, your name will be registered (written in Thai) on the title deed. After this registration, the land/house can only be sold provided the buyer respects this usufruct. This is why it will be difficult for the owner to sell the land/house after a usufruct is registered: nobody wants to buy a property where they can’t live. Be aware land departments in Thailand have different rules and requirements (even between Hua Hin and Pranburi). Some will ask to see your visa, some will ask for the father and mother’s name of the usufructury, etc. A prenuptial agreement should be drawn up that is satisfactory to both parties, in case of divorce.