Although restrictive, the Thai Law does permit foreigners to purchase Real Estate in Thailand. There are actually several ways to legally hold ownership that you can choose from, each with its own requirements.
Choosing the right kind of ownership is probably the most important decision after the choice of the property itself. Therefore one should be fully aware of the possibilities as well as their limitations before the purchase.
With its warm climate, friendly people and beautiful landscapes, it is a dream location for a second home or for retirement. Don't be discouraged by the very restrictive property laws for foreigners. As a matter of fact, it is possible for a foreigner to purchase Real Estate in Thailand, legally and safely, through one of the following procedures.
1. Foreign Freehold Condominium
If the property you are looking to buy is a Condominium unit (built or planned according to the Condominium Act), you may apply for Foreign Freehold ownership. This is the most sought-after ownership type, since it permits you to fully own the property in your own name.
The requirements involved are simple enough: The number of units sold as Foreign Freehold must not exceed 49% of the total units of the Condominium estate, and you must prove that the money used to purchase the property has been legally transferred from overseas. The latter is achieved by obtaining a Foreign Exchange Transfer Form from the receiving bank in Thailand, that you will also need if one day you decide to sell the property and transfer the money overseas.
It is essential that the sender and receiver account names match the buyer's name, and also to fill in the purpose of transfer as to purchase a condominium unit. Then you can register your purchase at the Land Department, with your own name appearing at the back of the Condominium Title Deed.
2. Company Freehold
If you are purchasing a house, villa or other kind of building that does not comply to the Condominium Act, the most popular type of ownership is the Company Freehold. This involves setting up a Thai Limited Company, and purchasing the property in the company's name.
Although the Law requires that the foreign held shares of a company must not exceed 49% of the total shares, it still allows a foreigner to be the Director of the company, and therefore have full control over it. Setting up a company does have some constraints, such as having to submit Financial Statements (even if the company has no activity), which can be handled by an accounting office.
When properly executed, this options provides substantial advantages. It is the easiest ownership method when selling the property for foreigners, and is a true freehold ownership.
3. Long-term Leasehold
Another way of purchasing property in Thailand is through Long-term Leasehold. Although in Thailand the maximum lease term is 30 years, it can be renewed up to 3 times for a total of 90 years. It is important to note that the Thai Law requires any property lease longer than 3 years to be registered at the Land Department.
Once the lease is officially registered, your rights over the property become fully protected. This is also true for your successors, since the Leasehold Rights can be inherited if the Lease has been registered. To ensure complete protection, this method requires a professionally drafted lease agreement, as well as proper registration at the Land Department.
4. Thai Board of Investment (BOI)
If you are an investor, and decide to invest at least 40,000,000 THB in a project approved by the Thai BOI (Board of Investment) for a purpose other than buying the property itself, you can legally purchase in your own name, 1 (one) rai of land (1,600 square meters). However this must be authorized by the Ministry of Interior beforehand. Other options may be available for high-profile investors dealing through the Thai BOI, on a case by case basis.
5. Thai Spouse
If you are married to a Thai Spouse you could decide to purchase real estate as a couple. However, the officers at the Land Department will require the foreign spouse to sign a declaration that all the money used to purchase the property comes from the Thai spouse, which would waive any ownership claims to it by the foreign spouse in the future.
In such case it is therefore necessary to plan ahead and discuss your personal situation with a Legal Adviser before making any decision. Drafting a prenuptial agreement before marriage that would take into account this kind of situation would protect you in case of divorce or conflict with the Thai spouse. Some cases may require supplemental legal protection methods as well.
Deciding which ownership type to choose will always depend on your personal circumstances and requirements. Therefore the safest way to make this decision is by seeking the advice of a professional Legal Adviser. Proceeding with a Due Diligence beforehand is also essential, in order to be aware of all the facts while choosing the most adapted ownership type for you, in the safest way.
