Can foreigners legally own property in Thailand?
To keep it simple, “Yes, it’s possible”!
People 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.
Investors and homebuyers can follow these 3 simple rules:
1. Foreigners cannot own land.
However, they can own and control:
2. Building and structures located on a plot of land.
3. Condominium Freehold Titles simply called “condos”.
Therefore, the easiest way for a foreign buyer to own property and have their name registered on the title deed (Also known in Thai as “Chanote”) is to buy a condo.
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. 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!
Let’s explore the 3 easiest ways for an overseas buyer to own Thai property:
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. Building Amenities, Land 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.
So how about buying villas, houses, townhouses or land?
As explained above, foreigners cannot legally own land under their name in Thailand.
Good news, Thailand’s legal framework does offer some alternative ownership or control options to foreign buyers!
While direct ownership and registration on the “Chanote” is not possible, there are alternative holding structures that allow non-Thais to enjoy or “indirectly” control the use of land.
Here are some ownership options for landed property (I.e. Villas, Townhouses and Single Detached Houses…) and land:
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, 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!
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, you are welcome to browse our wide selection of properties or alternatively contact us on firstname.lastname@example.org.