Can Foreigners Buy Property in Thailand?
Yes, foreigners can buy and own property in Thailand, but there are some regulations that restrict property ownership for foreigners.
One key regulation is the 49/51 rule, as outlined in the Condo Act, section 19. This rule states that foreign individuals are limited to owning up to 49% of the saleable floor area in a condominium freehold, while the remaining 51% must be owned by Thai nationals. Foreigners can still purchase part of the Thai quota under a leasehold agreement.
If a foreigner wants to buy a house or land in Thailand, there are more restrictions. Foreigners are not allowed to own land freehold under their own name, but they can enter into lease agreements for up to 30 years. If both parties agree, this lease can be extended for a total of 90 years.
Another option for foreigners who want to buy land is to set up a Thai company with a majority of Thai shareholders, as the 49/51 rule applies not only for condominiums, but all types of real estate.
This approach has become a very popular way for foreigners to invest in land and villas in Thailand, and while some extra costs are involved in setting up the company, they’re usually manageable. It’s important to work with a lawyer who knows the ins and outs of the process, and they can provide invaluable guidance on the set up to protect your investment.
Foreigners can buy a wide range of properties in Thailand, including condos, apartments, and houses. However, not all properties are available for purchase by foreigners. Some properties may be designated for Thai citizens only, while others may have restrictions based on factors such as work permits or retirement visas.
Technically, foreigners can only purchase Foreign Freehold condominium units 100% under their names. This means they don’t need to set up a Thai company or involve a Thai person. For any other type of property purchase, foreigners will need to either set up a Thai Company and buy the property through it or involve a Thai person in the process. Another option for foreigners is purchasing a property via a long-term Leasehold agreement.
In summary, in Thailand foreigners can own:
- Condos: Foreign freehold, Thai company freehold, leasehold
- Land: Thai company freehold, Leasehold
- Houses & Villas: Foreigners can own the structure built on the land freehold, registered at the land department, but can only own the land Thai company freehold or leasehold
Another option is to buy property via a Thai spouse to get around all restrictions.
To be able to understand the details better, first we should get into ownership structures in Thailand real estate sector.
What is a Freehold Property Title?
Freehold indicates that the property can be own 100% with a Title Deed in Thailand. The title deed can be held either under a person’s name or a Thai company.
1979 Thailand Condominium Act allows foreigners to own a condominium unit 100% under their name. Therefore if a property has Foreign Freehold title, a foreigner can own it without any regulation.
On the other hand, a foreigner wants to purchase a house, villa, townhouse or land, then they will need to buy it under a Thai person’s name or a Thai Company name.
Another way to purchase a property in Thailand as a foreigner is of course Leasehold Ownership.
What is a Leasehold Property Title?
Leasehold ownership in Thailand is a type of property ownership that allows a person to lease land or property for a specified period of time, typically up to 30 years. This type of ownership is available to both Thai citizens and foreigners and is a common option for those who want to invest in Thai property but do not qualify for freehold ownership.
How Long is the Typical Leasehold Period for Foreigners in Thailand?
In Thailand, renting property can be done with either a set end date or sa an ongoing arrangement. The longest you can rent a property is 30 years. If you want to rent for more than 30 years, you must renew the lease once the first 30 years are up. You can only renew the lease within the last three years of the initial 30-year period.
How Can I Ensure My Lease Agreement is Legally Enforceable?
A lease in Thailand is governed by the civil and commercial code and falls under the general Thailand contract laws. For a lease to be legally enforceable, it must be backed by written evidence. If the lease lasts longer than three years, it must be registered at the land office and noted on the land’s title deed, as outlined in Section 538.
Can Leasehold Agreements Be Transferred to Another Person?
Yes, it is possible to sell or transfer a lease agreement in Thailand, but there are some important considerations:
- The ability to transfer or sell a lease depends on the specific terms of the original lease agreement.
- If the lease allows for assignment or subleasing, the current lessee may be able to transfer the remaining lease term to another party. However, the property owner’s cooperation and approval is always required for a valid transfer.
- The transfer must be registered with the Land Department to be legally enforceable.
It’s advisable to consult with a Thai lawyer experienced in real estate to ensure the transfer is executed properly and to understand the rights and obligations of all parties involved.
What's the Cost of Transferring the Lease?
One benefit of a leasehold over a freehold is the lower registration fee when buying or selling a lease. Registering a lease costs 1.1% of the total lease value. In Phuket, this amount is typically shared equally by the buyer and the seller.
What is a Protected Leasehold Title?
“Protected Leasehold” is a term often used when a property is owned through an offshore company. Here’s how this structure typically works:
- The development establishes an offshore company, usually in the British Virgin Islands (known as a BVI company).
- Each unit owner in the development holds an equal share in this BVI company.
- The BVI company, in turn, owns 49% of the shares in a Thai Land Holding Company.
- The remaining 51% of the shares are held by a Management Company, which is formed and controlled by the collective owners of the BVI company.
- The Thai Land Holding Company owns 100% of the land.
In this way, every property owner in the development has an equal share in the BVI company, which grants them the full legal right to renew their leases whenever they expire, without relying on a third party for the extension.
This arrangement is particularly common in older condominium projects in Phuket, where the Protected Leasehold system via BVI ownership is still in use.
Buying Property in Thailand Through a Thai Company
Foreigners often opt to acquire property in Thailand by setting up a Thai company. In this scenario the foreign buyer typically holds a minority share of 49%, in the company while Thai nationals own the remaining 51%. This arrangement aligns with Thai regulations that prohibit foreign land ownership but allow Thai companies to possess land.
When establishing a company for property ownership it is crucial to ensure that the Thai shareholders are genuine and actively engaged in the business. Using “nominee” shareholders who lack involvement in the company is against the law, and can lead to severe penalties, including losing ownership of the property. The Thai government has been cracking down on Thai Companies owning property in Thailand more frequently in recent years.
After forming the company it gains the ability to acquire land or property in Thailand. As a shareholder, the foreigner effectively manages the property through this company. This approach is commonly used in tourist areas like Phuket, where many foreigners aim to own holiday homes.
It is important to seek guidance from a law firm when following this path to ensure compliance with Thai laws and structure ownership in a way that safeguards the interests of foreign investors.
When properly handled, purchasing property through a Thai company can be a smart choice for foreigners looking to invest in Thailand’s real estate market.
Can Foreigners Buy and Own Villas or Houses in Thailand?
Foreigners cannot own villas, houses, townhouses, or land 100% under their name in Thailand. To be able to purchase one of these types of properties in Thailand, they need to go through a Thai Company or Thai person.
The most common way for foreigners to purchase a villa, house or land in Thailand is through Leasehold Ownership which allows them to get it for 30 years at a time.
Many foreigners purchase these types of properties under their Thai spouse’s name as well but of course it has its obvious risks.
Can Foreigners Buy and Own Apartments in Thailand?
If the apartment or condo is being sold under a Foreign Freehold title, foreigners can purchase and own it 100% under their name.
Each condominium building has to have 51%-49% quota scheme in Thailand where 51% of the units have to be sold under Thai Freehold which can be purchased by Thai citizens or Thai Companies, or simply under Leasehold title whereas the remaining 49% of the units can be sold under Foreign Freehold title.
Can Foreigners Buy and Own Land in Thailand?
No, foreigners cannot own land in Thailand. The only way to purchase land in Thailand for foreigners is to set up a Thai company and buy it through the company or simply lease it for 30 years at a time.
Step-by-Step Process of Buying Property in Thailand
The process of buying property in Thailand starts with you. Here’s the usual steps that required of the property purchase process;
- Find a trustworthy and knowledgeable real estate agent
- Choose the property you like
- Put an offer or ask your agent to do his magic for you
- Put the reservation fee and sign the reservation agreement to take the property off the market
- Hire a lawyer to check the legal documents, and permits as well as to conduct the full due diligence
- Read the Sales and Purchase agreement carefully and sign if everything is good
- Follow the payment terms
- Hire a company to do the survey and defect check on the property for you or do it yourself
- Do the handover at the land office to get the ownership of the property
Visa Types in Thailand for Foreigners
Foreigners don’t need a visa to buy property in Thailand. However, if you would like to stay in Thailand for the longer term, then you will definitely need a visa. There are different types of visas Thailand offers for foreigners to stay longer terms. Here they are;
- Retirement Visa
- Work Visa (Non-B)
- Thailand Elite Visa (Privilege Card)
- Thailand Long Term Resident’s Visa (LTR Visa)
- Destination Thailand Visa (DTV Visa)
- Investment Visa
- Tourist Visa
- Education Visa
- Marriage Visa
What Are the Transfer Fees and Taxes Associated with Property Purchase in Thailand?
When purchasing a freehold property in Thailand, transfer fees and taxes are around 6.8% of the property’s appraised value by the Land Department. In contrast, buying a leasehold property incurs significantly lower costs, approximately 1.1% of the property’s estimated value.
Here’s a breakdown of the typical taxes and fees involved in property transactions in Thailand:
- Transfer Fee: 2%
- Business Tax: 3.3%
- Withholding Tax: 1%
- Stamp Duty: 0.5%
Stamp duty is not charged if the business tax is applicable. The business tax is only levied if the property is owned for less than five years. If owned for more than five years, the business tax is waived, and the 0.5% stamp duty applies instead.
What Are The Advantages of Buying Property in Thailand?
Thailand offers a unique investment opportunity where your investment can also provide you with a suntan. Stunning locations like Phuket, Samui, Pattaya, and Hua Hin are some of the world’s best holiday resorts, ideal for retirement, living, or owning a property to generate substantial passive income.
Many foreigners own properties in Thailand that they use during visits and rent out when they’re away, earning residual income. As Thailand is a top holiday destination, consistent annual capital gains make this investment even more appealing.
Beyond being a fantastic place to live or invest, Thailand also allows foreigners to own property. The Condominium Act of 1976 permits foreigners to fully own condominium units in their name.
Compared to other countries, Thailand is quite affordable in terms of living costs, and property prices are also competitive. Easy and low tax laws, straightforward legal processes, numerous affordable property options, and an incredible lifestyle make buying property in Thailand a wise choice.
Pitfalls and Things to Consider When Buying Property in Thailand
Buying a property in Thailand can be a fun process. Often it becomes a nightmare for those who are not considering some steps.
Here are the main steps to follow to avoid any pitfalls along the way;
Find a Solid Real Estate Agent: Hiring a local real estate agent is beneficial. They bring local market knowledge, and language skills, and can help you navigate the complexities of property transactions in Thailand. Stay away from the big companies. They have monthly sales targets they need to hit. They will do everything to make sure you buy something that they get the most commission out of and you won’t find them after the sale. You are just a number for them. Support local agencies, and get the face and name behind who you’re dealing with. Stay away from big portals with obscure names.
Hire a Lawyer: While purchasing property without a lawyer is possible, it is risky. Thai contracts can differ significantly from what foreigners are used to. Consulting a local lawyer ensures you understand the legal implications and protects your investment.
Conduct a Price Analysis: Compare the property price with similar developments in the area. Thailand is making progress in property valuation transparency, but discrepancies between assessed value and actual prices still exist.
Do the Title Search: Before committing to a property, ensure a thorough title search is conducted. This process verifies the seller’s legal ownership and checks for any encumbrances like liens or mortgages. It’s crucial for uncovering zoning or environmental restrictions that might affect the property’s value.
Do the Due Diligence: Always perform due diligence on the property and the developer. Research the developer’s history, and if possible, consult with previous buyers to gauge satisfaction. A local lawyer can assist in verifying the legitimacy of the developer and the project’s details.
Check the Neighbourhood: Consider the surrounding area and potential future developments. Ensure that your chosen plot or unit will not be negatively impacted by nearby construction or changes in the neighborhood. One good example is floodings due to heavy rain in many parts of Thailand. You may end up buying a property on a sunny day, but make sure the property and the area aren’t effected by heavy rains.
Protect Your Reservation: Be cautious when placing a deposit. Ensure the agreement includes exit clauses, such as “subject to due diligence” to protect your deposit in case the property doesn’t have clear titles or necessary permits in place.
Estate Planning: Include your Thai property in your estate planning. Draft a will in Thailand to simplify the transfer process for your heirs, as local laws and procedures may complicate inheritance if only a foreign will is in place. While Thailand does not have an inheritance tax, certain fees may apply when transferring property titles.
How to Make Sure of Getting The Best Deal When Buying Property in Thailand?
The rule of thumb when buying property is to “make a profit when you buy, not when you sell.” To achieve this, you need to focus on a few key aspects.
Starting with a solid, experienced local real estate agent is crucial. They often have strong relationships with owners and developers, which can secure you a great deal. Developers, in particular, value good agents who bring them clients, creating a win-win situation.
Many buyers overlook the importance of price per square meter. If you’re familiar with Phuket, you’ll have a good sense of the average price per area and recognize growth potential. Keep in mind that some areas may have already peaked, making it unwise to buy at the highest price.
Always allow your agent to negotiate on your behalf, whether it’s for a price discount or added perks like a free furniture package or an upgrade to freehold ownership. While these may seem like small things, they are valuable and save you future concerns.
What Documents Needed When Buying Property in Thailand?
You don’t need a visa to own property in Thailand, but if you plan to stay in the property, you’ll require a long-term visa.
If purchasing a property with freehold ownership, you’ll need to open a Thai bank account to receive future rental income. The Thai government requires funds for freehold purchases to come from abroad, which is documented through a Foreign Exchange Transaction Form (FETF) from the receiving Thai bank. When transferring money, specify the purpose as “property purchase at [address].” Other than this, all you need is your passport.
Do I need a Lawyer When I Buy Property in Thailand?
At Storm Real Estate, we always encourage our clients to hire a lawyer to avoid any unpleasant surprises down the road.
While contracts and legal documents from reputable developers are usually secure, investing a bit more to ensure everything is in order can save you significant time, money, and hassle in the long run.
Remember, Thailand’s legal system differs from what you might be used to in your home country. It’s better to be prepared than sorry.
What Are The Steps of Due Diligence When Buying a Property in Thailand?
- Ensure the land has a Chanote title, as it’s the most secure form of ownership in Thailand.
- Verify the seller’s legal right to transfer ownership without restrictions.
- Check that all necessary building permits and certificates are valid for the property.
- Investigate the neighborhood and any upcoming developments that may affect your investment.
- Make sure the property is free from any liens, mortgages, or legal disputes.
- Understand the tax obligations, including transfer fees and ongoing property taxes.
- Verify that the foreign ownership quota in a condominium hasn’t been exceeded.
- Plan ahead by considering the resale market and potential restrictions on selling.
- Hire a professional inspector to assess the property’s condition and identify potential issues.
- Evaluate the quality and reliability of essential utilities like water, electricity, and internet.
- Research the developer’s reputation and track record, especially for off-plan purchases.
- Review the management fees and maintenance costs for ongoing investment profitability.
- Understand the local zoning laws to ensure your property complies with regulations.
- Assess potential environmental risks like flooding, erosion, and storm surges in the area.
- Have all legal contracts reviewed by a qualified Thai lawyer to avoid potential issues.
Can Foreigners Get a Bank Loan in Thailand?
Foreigners can obtain a mortgage in Thailand, but the process is challenging. Mortgages are primarily available for purchasing completed foreign freehold condominiums, with restrictions limiting these loans to specific areas like Bangkok and Phuket. Additionally, banks require applicants to have a valid work permit, a stable income, and sufficient documentation, which can complicate the process further.
To increase the chances of approval, having property in Thailand or in your home country as collateral can be beneficial. Alternatively, some developers offer in-house financing and extended payment terms, especially for off-plan properties.
The Best Areas to Buy Property in Phuket, Thailand
5 Key Steps to Ensure Success When Buying Property in Phuket
Find a Solid Real Estate Agent:
Choose a real estate agent with deep local knowledge and a strong track record. A good agent can navigate the complexities of the market and protect your interests.Do Your Own Research:
Don’t rely solely on others; research the property, location, and market trends yourself. Informed decisions stem from understanding every aspect of the investment.
Get a Lawyer:
Hire an experienced Thai lawyer to ensure all legal aspects are handled correctly. A lawyer can safeguard you from potential legal pitfalls and ensure a smooth transaction.Pay Attention to the Developer and the Management Company:
Investigate the developer’s history and the management company’s reputation. These entities significantly impact the property’s quality and your long-term satisfaction.Negotiate to get the Best Deal When You Buy:
Don’t hesitate to negotiate for a better price or favorable terms. Skilled negotiation can lead to significant savings and more beneficial contract conditions.
Contact Us
Do not hesitate to contact us if you have any further questions on the subject, or if you would like to know more about property in Phuket in general.
