Unlike many other countries, Thai law is not very strict when it comes to the ownership of land and buildings. There are however a few important restrictions that must be taken into account when buying property in Thailand.
1. Foreigners cannot own land
The first restriction preventing foreigners from owning real estate in Thailand is that they are not allowed to purchase any land. This is a general rule under the Land Code and applies to individuals, companies and other legal entities. There is, however, a specific exception for condominiums whereby any foreigner residing in Thailand under immigration laws and permitted to do so can own condominium units within a building.
2. A Limited Company Can Purchase Land
If a person wishes to buy land they can establish a private limited company in which they have a majority of Thai national shareholders, ensuring that their business is based in Thailand. This is the simplest form of real estate ownership, but it does come with its own set of limitations.
3. Lease Agreement
One of the most common methods of possessory rights in Thailand is a lease. This allows a person to occupy the property for a fixed period of time, typically 30 years but longer if the parties are agreeable to renewals. This method of ownership can be used for the entire project, with a single lease for the whole project, or as a separate lease for each individual unit in the project.
4. Right of Habitation
The right of habitation in Thailand can be granted either by the owner through his last will and testament or by gift from the owner to a third party. This type of ownership is often referred to as “freehold” and the person granted the right of habitation gains full title upon registration at the Land Office.
There are several types of security interests in Thai property, but the most popular is a mortgage. This is a legally binding contract between the seller and buyer, whereby the latter is required to pay the former a specified sum of money in return for possession of the property. The amount of the mortgage can vary widely and is subject to tax considerations.
6. Secured Lease Structure
Another legitimate method of owning property in Thailand is through a secured leasehold structure. This is a way of transferring ownership of the freehold land title to an offshore company, thereby providing a safe and legal means of owning a piece of land in Thailand. The company would then contractually guarantee that the leasehold is renewed for a further 30 year term, to ensure that owners or their heirs have full and continued access to the property.
As with all financial transactions in Thailand, it is recommended to use a specialist real estate lawyer when purchasing any type of landed property. Without this, it can be easy to blunder into unnecessary complications and delays. It’s also important to carry out due diligence, such as checking the developer’s track record and investigating previous owners.