Thailand Real Estate Ownership
Thailand Real Estate Ownership – The Fundamentals
Can I buy and own property in Thailand? How easy is it? What is Freehold? What is Leasehold? What is Thai Company Ownership?
Can a Foreigner own Real Estate in Thailand?
Thailand does not allow foreigners to own land freehold, this practice is common in many countries in Asia. However, Thailand is more progressive than many of its neighbours because there are laws which allow foreigners to legally own property here. Foreign nationals who purchase real estate in Thailand can hold property through a variety of ownership structures
The three most common forms of ownership used by foreigners to hold real estate are freehold through a condo title, leasehold and freehold through acquisition by a Thai company.
Freehold - A property can be owned outright in your name as long as you own the property. Individual units in a condominium building may be owned freehold by foreign nationals.
Leasehold - A building or land is leased from the land or building owner. Leases are permitted by Thai law for 30 years and they are registered at the Land Department. Options to renew the lease for additional extensions beyond the initial 30-year period is common with a 30x30x30 lease extension for a total of 90 years.
A Thai Company – This is an indirect means of foreign ownership usually for land and villas, however this method can use utilized for condominiums as well. There are strict rules in setting up and maintaining a Thai Company when foreign nationals are involved.
The type of property ownership will depend on what you are interested in purchasing and what is available, either condominium or house or villa.
Freehold versus Leasehold
Is a foreign freehold unit or a leasehold property easier to sell?
In the long run this will be determined on the property and the demand on the project. There are some projects, especially properties that operate under a hotel license, that may only be sold as a leasehold ownership. This is the only ownership option available and many buyers and investors totally understand.
One of the benefits of buying leasehold is that the transfer fees on leasehold property is much lower than freehold. The leasehold registration fee is 1.1%, whereas freehold transfer fees can range from 2.5% to 6.3%, this can save a lot of money depending on the price of the property.
Foreign freehold ownership is more commonly used in many countries around the world. This type of ownership offers an official title deed (ownership document) and buyers have confirmation of their name on the document. Some considered this a more recognized form of ownship and could be easier to sell to other foreigners.
There is a 49% foreign quota in a condominium project in Thailand. Once that is fully sold out, foreign buyers can look at the leasehold options that is offered on a 30-year lease with the option to extend every 30 years. Leasehold condominium pricing is usually slightly reduced from the freehold foreign quota unit prices. This is due to the more favourable and recognized freehold structure that exist in many established international property markets.
Ownership by Property Type
The easiest and simplest transactions is to purchase a condominium. Thai real estate law allows foreigners to hold 49% of the units in a condominium freehold and in certain condominium blocks foreigners can own a full 100 % of the units on a freehold basis. It is important to note that in order to qualify for freehold status the foreign currency funds for the purchase must come from abroad and correctly recorded as such by a Thai bank. The foreign freehold is definitely the preferred structure for purchase of a condominium apartment.
The fact that you can't acquire freehold land should not be a deterrent if you wish to purchase a house or villa. You may own the building freehold and together with a well-constructed leasehold (typically a 30 year lease with two prepaid 30 year renewals) and a purchase option for the land. By utilizing ownership by this method, you will have effective ownership, yet still remain within the laws of Thailand.
There are two options if a foreigner wants to purchase land. Land can be purchased with a 30-year leasehold, with an option to extend the lease for further 30-year periods, or commonly called a 30x30x30 lease. Possession of the land is assured by the distinction that the property occupies the land.
If a foreigner is going to operate a business in Thailand then he may purchase the freehold of the land through his Limited Company. The land will be owned by the Company, not the individual.