International buyers often worry that Thai Property Laws are complicated and confusing. Rest-assured, buying property in Thailand is straightforward and the laws are easy to follow and understand.
This article will provide a brief overview of the laws, restrictions and details of foreign property ownership in Thailand.
Can Foreigners buy property in Thailand?
The simple answer is “Yes” it is legally possible!
Property ownership by non-Thai nationals is possible with certain restrictions. Foreign investors and homebuyers can own Condominium Freehold Titles (Condos); however, they cannot directly own land or landed property (I.e., Villas, Townhouses and Shophouses).
Foreign investors and homebuyers can follow these 3 simple rules of property ownership in Thailand:
- Foreigners can own Condominium Freehold Titles (Condos)
- Foreigners cannot own land in Thailand.
- However, they can own buildings and structures located on a plot of land.
Therefore, the easiest way for a foreign buyer to own real estate and have their name registered on the title deed (Also known in Thai as “Chanote”) is to buy a condo.
It is important to note that over the years, foreign buyers and legal professionals have formulated alternative ownership structures to circumvent Thai land ownership restrictions. These alternative methods offer ways to “indirectly control” investments and enjoy the benefits of land ownership.
Some of these ownership structures are briefly explored in this article!
So can foreign buyers own villas, houses, townhouses or land?
As explained above, foreigners cannot legally own land under their name in Thailand. However, Thailand’s legal framework does offer some alternative ownership and control options to foreign buyers!
While direct ownership and registration on the Title Deed (Chanote) is not possible, there are alternative holding structures that allow non-Thais to enjoy or “indirectly” control the use of land.
The most common ownership structures used for “indirectly” owning or enjoying the use of landed properties are usually:
- Buying Leasehold
- Buying Landed Property through a Thai Company
Let’s explore the 3 easiest ways for an overseas buyer to own property in Thailand:
1. Buying a Condo
As mentioned above, buying a condo is the most simple and hassle-free way for foreigners to own property in Thailand. Non-Thai owners of condos are registered on the chanote, and they benefit from a special type of freehold title known as a Condominium Freehold.
A Condominium Freehold Title, explained in simple terms is as follows:
It is the division of a residential building into individual condominium units; with each unit benefiting from a proportional co-ownership of the common areas and co-owner association (I.e., Land, Building Amenities, and Juristic Management Office.)
To comply with the Condominium Act B.E 1979 and its amendments, condos need to ensure the following:
Only up to 49% of the condo’s registrable area can be sold to foreign buyers (Also known as the “Foreign Quota”), the remaining 51% must be owned by Thai nationals or Thai entities.
If the Foreign Quota of a condo is sold out, foreign buyers can only acquire units in the building on a leasehold basis.
2. Buying Leasehold Property
One option is simply to acquire land on a leasehold basis; in Thailand the maximum lease on land is 30-years, with the possibility to have a contractual agreement for two subsequent renewals (Total of 90-years lease).
While a leasehold may not offer ownership rights, it does offer the leaseholder exclusive rights to the use of that property. Leasehold rights are registered on the chanote and can be a simple way to enjoy a property without the hassle of additional and ongoing paperwork.
Retirees looking for a holiday home, may find this solution attractive!
3. Buying Property through a Thai Company
Some buyers may prefer a holding structure, with more ownership rights than a leasehold title.
In this case, it is possible to set-up a Thai company for property acquisitions, this method sits in the “grey-area” of the Thai legal system. The Thai government and the Land Offices overseeing property transfers across the country, do not encourage this practice.
For a company to be classified as a “Thai Entity”, at least 51% of the shareholding needs to be held by Thai Nationals. The main concern of the authorities is the unauthorized use of “Nominee Thai Shareholders”, that are essentially “fake investors” used to facilitate property acquisitions.
However, provided foreign buyers comply with the law (Using “real” shareholders/ Thai partners), this option offers a good degree of indirect ownership and control. This ownership structure is commonly used by investors to purchase landed property such as villas with their spouse or foreign developers looking to acquire developable land plots!
Other Ownership Options
The 3 options above are the most common ways for foreign buyers to own property in the Kingdom. However, this is not an exhaustive list of foreign ownership options.
Other options include buying landed property and putting it under the name of a Thai spouse, partner or friend. However, this option requires a high degree of trust and in effect does not offer direct ownership or control of the real estate asset.
Affluent investors looking to buy under 1 rai of land with a minimum value of 40 MB can also seek special approval from the Thai Ministry of Interior to waive land ownership regulations. However, this method has been largely beyond the reach of retail buyers.
Why does Thailand impose these foreign property ownership regulations?
While these regulations may appear stringent and inflexible, these rules are in place to protect Thailand’s economic and social development.
Firstly, the regulations are in place to protect certain strategic national interests; notably agricultural land (To protect food supply) and land with natural resources (I.e., Mineral Deposits).
Secondly, the Kingdom’s real estate, even in the capital Bangkok, is relatively affordable and a potential influx of overseas investors could have an unintended inflationary effect on property prices.
To avoid a situation like in London, Hong Kong or New York where property prices have skyrocketed because of international buyers, Thailand enforces these laws to maintain balance and minimize disruption. Ensuring that Thais are not displaced and “priced out” of their housing needs.
Possible changes to Thai foreign real estate ownership laws?
The COVID-19 pandemic and the economic shock it has created for the Thai economy has reignited the possibility of changes in foreign ownership laws in 2021. With the proponents of change seeing it as an opportunity to reinvigorate and stimulate Thailand’s battered real estate market.
While there has been no official announcement by the Thai Government, numerous rumors have been circulating in the Thai national press:
1. Changes to the 49% Foreign Quota Ratio of Condominiums
Foreigners could be allowed to own between 70% and 80% of a condominium; with certain restrictions on annual general meeting voting rights.
2. Foreigners could be allowed to buy landed property
These landed properties would likely need to be part of a “housing project” and would probably be subject to a Foreign Quota system; where only 49% of a low-rise housing compound can be sold to foreign nationals.
3. Land Lease Extensions
Land leases could possibly be extended from 30-years to 50-years.
While this is positive news for the Thai real estate market, it is important to note that these legal changes are currently only speculation. The topic of foreign real estate ownership is a contentious subject. Thailand is still battling a surging 3rd wave of COVID-19 and the Thai Government’s attention is likely to be diverted to more immediate and pressing issues facing the country.
Should foreigners buy condos or landed property?
The answer to this question ultimately comes down to the buyer’s personal lifestyle preferences or investment objectives!
Landed property oftentimes offers amazing value on a price per square meter basis; there is also the extra advantage of greater control over the land and the building. Comparatively condos due to their communal nature, can severely restrict refurbishments, renovations, general privacy and control.
On the other hand, condos offer the most straightforward and liquid property type, offering foreign buyers a hassle-free acquisition with a simple “exit strategy”. Due to the essential support services offered by condo building management (I.e., Security, key holding services and maintenance), they tend to be attractive turnkey rental investments. The ease and flexibility offered by condos make it an appealing choice for many overseas buyers!
*Fresh Property is a full-scope Property Agency specializing in Central Bangkok condos and homes. If you are looking to buy a property, you are welcome to browse our wide selection of resale condos, new projects or alternatively contact us on [email protected]