The question of whether foreigners can buy property in Thailand often arises, and while it is possible, it is essential for buyers to conduct thorough research to understand the available options. Foreigners have different ownership rights and restrictions on land compared to Thai nationals, making it crucial to grasp the allowable parameters before entering into a purchase agreement.
One straightforward option for foreign ownership in Thailand is purchasing a condominium in foreign freehold. Another safe approach for foreigners interested in buying property, such as villas or stand-alone homes on a parcel of land, is to do so through a holding company. Leasehold options are also available, and many foreigners have successfully utilized this arrangement in Thailand. This is the most straightforward answer of the question of Can Foreigners Buy Property in Thailand?
Each option has its own advantages and disadvantages, typically dependent on the type of property being acquired. Let’s explore each type of property ownership mentioned above.
Can Foreigners Buy a House in Thailand?
Foreigners cannot directly own the land on which a dwelling is situated. However, if they wish to purchase a villa or house in Thailand along with the surrounding land, they can do so by establishing a Thai company. This is known as “Thai company freehold,” where the property is owned by the Thai company as an asset.
Although a foreigner is restricted from owning more than 49% of a Thai company, legal professionals often set up a company structure where the remaining 51% is distributed among multiple Thai nationals, allowing the foreigner to retain control of the company. It’s important to note that the foreigner, as the sole director, maintains full authority over all company actions, ensuring control over the property.
This method is a common way for foreign buyers to acquire property in Thailand. It is entirely legal, and even large international businesses operate in this manner within Thailand. Additionally, purchasing property already owned by a foreigner under Thai company freehold can result in significant savings. The transfer of ownership involves changing only the name of the company director, bypassing property sales tax and transfer fees. Although legal assistance is required for paperwork filing, the overall cost is considerably lower.
If the property is not already owned under Thai company freehold, the buyer will need to establish a new Thai company. The associated costs can be as low as 45,000 THB (approximately US$1,500), with annual running costs around 20,000 THB. This company can also be used to obtain a Thai visa and work permit, providing legal residence in Thailand. Furthermore, owning an asset enhances the company’s credibility for future business transactions.
How to Buy a Condo in Thailand as a Foreign Freeholder
According to the 1979 Thai Condominium Act, foreign nationals can own up to 49% of a condominium block in Thailand. This allocation, known as the “foreign quota,” is based on the total available living space rather than the number of units.
For example, if a condo project has 100,000 square meters of living space, foreigners can own up to 49,000 square meters, regardless of the number of units. Demand for foreign freehold space is typically high, resulting in a higher market value. Therefore, developers often sell foreign freehold space at a premium price. The premiums for foreign freehold quota can vary, but a reasonable range could be between 100,000-500,000 THB per unit.
One crucial requirement for foreign freehold property is that the funds used for the condo purchase must be transferred into Thailand from abroad. Upon receipt of the funds, a Thai bank will issue a Foreign Exchange Transaction (FET) form, which needs to be presented at the land office during the transfer of the land title (cha-note).
Offsetting the high demand for foreign freehold space, developers employ strategies to make their Thai freehold and leasehold units more competitive by offering them at lower prices. This approach aims to attract buyers who may not qualify for foreign freehold ownership.
Foreigners have the opportunity to occupy Thai quota living space in a condominium complex by acquiring a lease on the property. This form of ownership is commonly known as leasehold ownership and applies to both land and buildings. Foreigners can also own land through a Thai company, which provides an alternative avenue for property acquisition.
A leasehold title presents the cheapest and easiest way for foreigners to obtain property in Thailand, regardless of the type of property. Under this arrangement, foreigners can apply for a construction permit to build on the leased land and register the structure under their name.
Officially, the lease term can span up to 30 years. However, it is widely accepted that the lessor and lessee can negotiate an agreement to renew the lease twice, resulting in a total duration of 90 years. It is crucial for all parties involved to ensure the accuracy of the information stated in the lease agreement. The leased land should possess the appropriate title deed (cha-note), specify the correct contract duration, outline the purchaser’s rights for resale, and include the registration fee.