To invest in any land or business venture it is essential to carry out due diligence to ensure the seller has clear title and that the documentation
is correct and filed properly. However in Thailand this is not as simple a process as you would encounter in the USA or Europe which can
leave the process open to confusion and corruption.
It is not unheard of for foreign investors to be sold land here which has already been sold to someone else. Because very few of those investors
caught out in this way pursue the return of their money through the courts it has caused some unscrupulous landowners along with corrupt
lawyers to continue the practice.
Being mislead is also fairly common as all the contracts are written in Thai it is very easy for the seller to omit information that might prevent the
sale going forward with the help of a suitable rewarded translator and lawyer.
All of these problems are easily avoided by working through an experienced intermediary who understands the Thai system and only offers land
and businesses for sale where the due diligence has already been completed and uses a reliable legal team.
Restrictions pertaining to foreign ownership in Thailand depends on the type of property which a foreigner wants to acquire. Below are the top
real-estate investments in Thailand and its ownership restrictions:
1. LAND
Foreigners are generally not allowed to own land in Thailand. But there are alternatives through which a foreigner can own land.
a. Through a Thai Limited Company - A foreigner can set up a Thai Limited company and buy land in the name of that company.
b. Investment (BOI) - A foreigner, who invests 40 million Baht for no less than 5 years, is entitled to buy up one rai (1,600 square meters) of land
for residential purposes. Permission from the MInistry of Interior must be obtained.
c. By marriage to a Thai - A foreigner with a Thai spouse can purchase land in Thailand but the land should be registered under a name of the
Thai spouse. The foreign spouse also has to sign a declaration stating that the funds come from a Thai spouse, so that he/she waives his/her
right to the ownership of the land.
d. Lease - A foreigner may acquire land in Thailand through leasing for the maximum duration of 30 years, with a possibility to renew again
(for another 30 years) if agreed. This is the least complicated option for a foreigner to have a right of usage of land. Land leases over 3 years
must be registered at the Land Department.
e. Structure Ownership - A company or the Thai spouse of a foreigner may grant a Right of Superficies in favor of the foreigner, giving him the
right to personally own all constructions situated on the land. The Right of Superficies can be conceded for a period of 30 years and can be
renewed for another 30 years (but not automatically).
2. CONDOMINIUM
A foreigner or foreign company can acquire up to, but not exceeding 49 percent of the total space of a condominium project. The money used to
fund the purchase of the condominium must come from abroad and should be deposited in a Thai bank account if the foreigner is not a resident in
Thailand. This is called a Foreign Exchange Transaction form or FET. Upon registration, the foreign buyer will obtain a title deed for the unit.
Condominium units can be owned through freehold and leasehold. Condominium units may be leased to foreign nationals without restriction but
will still need to show that money has come from abroad.
3. HOUSE AND VILLA
Foreigners can only own a house and villa in Thailand through a Thai Limited Company or under lease agreement. Foreigners may own the
structure or building but not the land.
Leases
Foreigners may acquire a lease freely in Thailand for any property including condominiums or land. Leases can only be registered for a maximum
period of 30 years at a time but renewal clauses can be included in contracts allowing for further extension of another 30 year period. It may be
possible to include another extension of 30 years if required.
Transfer and Registration of Ownership Fees
Transfer fee 2% (currently 0.01%) of the appraised value of the property
Stamp duty 0.5% of appraised value. Only payable if exempt from Specific Business Tax
Withholding tax 1% of appraised value of the property or the market value whichever is higher
Specific Business tax 3.3% (currently 0.1%) of the appraised value of the property or market value whichever is higher if selling within 5 years
Lease 1.1% registration fee of the total appraised rental amount or actual amount whichever is higher
Financing
Bangkok Bank and UOB in Singapore grant loans to help you finance your property purchase in Thailand. It is possible to borrow up to 70% of the
total purchase price of the property; however, the normal rate is around 60%. The loan should also not exceed a period of 10 years.
Property tax
Building and Land Tax is charged on a property which is used for any commercial purposes. This means a house, building or structure that is not a
place of residence. Leased properties are automatically subject to this tax. The rate is 12.5% calculated on actual or assessed annual rental value
of the property.
Local Development Tax is charged by the local administrative body based on the appraised value of the property on a varied rate. Normally, such
taxes are quite nominal.
One thing you need to be aware of is the title status of the land you are purchasing. In much of up country Thailand, including favorite places to buy
for foreigners like Phuket, Ko Samui, Pattaya and Hua Hin, most land has not been surveyed or has been dubiously titled.
Land is titled depending on its survey status. Make sure of the land title before you buy, often prices vary greatly depending on the type title, or you
might find someone else laying claim to your rai after just after you finish building your investment.
"Chanott ti din" are title deeds with land accurately surveyed. If you have one, it gives you incontestable possession of the land. The most developed
areas of provinces have these titles. But even in farang friendly Phuket, for example, only 10 per cent of the land is under this title.
As it stands, most "titles" around the country are "Nor Sor Sam" or "Nor Sor Sam Kor". They are land title deeds in as much as clear records of
ownership are maintained, and that they may be sold or leased, but they tend to be less accurately surveyed than Chanott titles.
If purchasing Nor Sor Sam-titled land that lacks clearly defined physical boundaries, ask the owner to stake out the boundaries and then ask
neighboring landowners to confirm his work.
And there are more. Sor Kor Nung, Tor Bor Tor Hoc, and Tor Bor Tor Ha are essentially squatter's rights registered at the district office for a small
fee. Unlike the Chanott and the Nor Sor Sam Kor, they cannot legally be sold, nor can you build on the land if you are foolish enough to buy it. So be
prudent and ignore the Sor Kors and Tor Bors.
Finally: the Sor Bor Kor. These are true title deeds, accurately surveyed and pegged (like a Chanott). They can be mortgaged and developed. But the
big but is they cannot be leased, sold or transferred. So, also ignore Sor Bor Kor.
Chanott and the Nor Sor Sam Kor are the only titles over which a registered right of ownership or lease occurs. Stick to them!
Please note! This information should only be seen as general guidance. Since laws, taxes and fees often change, a buyer must always inform
himself of the latest rules and regulations.
Sitemap |
