Is it possible to own a house and land in Thailand?

Although at this moment Thai law prohibits foreigners from owning land in Thailand, there are various ways in which you can structure your affairs so that you can own land, and still comply with existing Thai laws:

Nominee with lease and option to buy - you can use a Thai nominee to purchase the house/land and have a 30 year lease with a 30 by 30 year option from the nominee. In order to be enforceable, any lease for a period of longer than three years must be registered at the land office, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. The drawbacks to a lease include the fact that the parties can contractually agree to renewals, but this right cannot be registered and is not effective against a purchaser of the property, and that the lessee cannot (without the lessor's consent) sublease, sell or transfer his or her interest

Nominee with mortgage - you can use a nominee to purchase the house/land and have a mortgage (registered with the appropriate land department office) on the property in your favour. However, in some circumstances the Thai courts have ruled that this was not a bona fide mortgage, but rather it was a mortgage contrived to circumvent the existing laws of Thailand prohibiting foreign ownership of land. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege

Usufruct interest (Sidhi-kep-kin) - gives you temporary ownership rights to things on or arising from the land. In practice, an usufruct is limited to a 30 year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, an usufruct interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited

Limited liability company - this form of purchasing property is the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organised in an attempt to circumvent the prohibition against foreign ownership. These result in the foreign ownership of the company being limited at 39%, but with the recommended changes to the Articles of Association, the foreigner can be the only director of the company, and the only officer of the company who can commit or bind the company in any contractual dealings - effectively giving the minority shareholder control over the company.

Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.

Do they have title deeds in Thailand?

A title deed (called a Chanote) is the purest form of evidence that an individual owns a piece of land. Title deeds are given only for areas of Thailand which are surveyed. For areas which are not surveyed, there are other documents for land possession such as evidence of the possession of the right to utilise the land or other interests in the land. These documents are called "Nor Sor Sam (3) and Nor Sor Sam (3) Kor". Unlike the title deeds, these Nor Sor documents are issued to show the possessors' exploitation of the land. Though these documents do not provide ownership rights, as do title deeds, they can still be registered for transfer of the lands for which they are issued.

What should I look for in a property?

Whether you are considering renting, leasing or purchasing property there are several infrastructure and other considerations which must be taken into account:

• Location - roads, proximity and access to business, shops, hospitals and etc.
• Telephones - access to direct lines, ADSL and IDD facilities
• Water - mains water/wells and supplementary storage facilities
• Electricity - mains connection, and backup generators for condominium blocks
• Security - 24 hour security service, alarms, door and window locks
• Cable or Satellite TV connection - choice of 3
• Pest control - mosquito screens on windows, local area sprayed
• Hot water facilities – usually instant and not storage
• Air conditioning – worth having

Can I own a condominium in Thailand?

Foreigners have a tendency to purchase a condominium as it allows them to put it into their own name. Buying a condominium is perhaps the simplest and easiest option available to foreigners. The only restrictions on purchasing a condominium are that the percentage of units sold to foreigners cannot exceed forty nine percent (49%) of the total number of units in the condominium block; and that the funds used to buy the condominium have been remitted from abroad and correctly recorded as such by a Thai Bank previously called a Tor Tor Sam. This has now been superceded by a letter from your bank manager stipulating the funds have arrived in Thailand in a foreign currency. It is important to note that when you transfer funds, state on the transfer advice that the funds are for the purpose of purchasing a condominium.
Purchases of condominiums by foreign individuals comes under the jurisdiction of the Condominium Act B.E. 2535 (1992).

The owner of each condominium is issued with a certificate of unit ownership. The certificate also has a statement saying exactly what percentage of rights over the common areas of the building each owner has.

What is a Tor Tor Sam?

A Tor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You would request a Tor Tor Sam from your bank when you remit funds to Thailand for the purpose of purchasing a condominium, and the Tor Tor Sam would specify that the remittance is solely for the purpose of purchasing a property - Code 5.22.

Are there property taxes in Thailand?

There are no property taxes as such in Thailand that are exactly equivalent to the property taxes foreigners would know, however, the most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purposes.

Is it possible to get mortgage loan?

Foreigners generally cannot mortgage properties in Thailand themselves, however, most of the financial institutions in Thailand provide loans for real estate purchasing to Thais and Thai companies. It is not uncommon for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in installments from 6 to 12 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan which is financed from a financial institution. The financial institution requires you to mortgage the property with it as collateral against the loan.

Valuations and land appraisals?

Depending on who is selling the land it is possible to have contrasting prices for different plot sizes. Finding the exact appraisal price for land is difficult, since there are generally different appraisal rates; the government rate (which is what the tax fees are based on), the appraisal company's rate and the rate which is considered to be fair market value of the land. Over the last few years all of these rates have come closer together. We have noticed in the past few years that land prices have risen dramatically, some areas more so than others. To ensure the best possible plot of land at the best and fairest price, we will, with our wealth of experience be more than happy to assist you in your purchase.

My wife is a Thai national, can she own land?

Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim. It is important to note that the Thai spouse would be required to sign the declaration at the land office in person on the day of transfer.

What taxes and costs are to be paid?

Since the start of 2004 there have been some changes on the tax payable on purchases of property in Thailand. Depending on the period of time the previous owner has had the property in their name, can determine the tax payable. There is a stamp duty of 0.5%, a transfer fee of 2%, a business tax of 2-3% levied against an owner who has been in registered possession of the property less than 5 years, and Income Tax. There is no Capital Gains Tax in Thailand and Income Tax (usually between 1.0 - 3.0%) on property is the comparable replacement. There are no set rules on who pays the tax and transfer, and it is just another part of the negotiating process, as with all the other costs of the transfer of ownership.

What documentation do I require?

As with any type of purchase of property it is better to come prepared. You will need a current passport with the relevant visa stamp inserted; a bank account in Thailand is a requirement for a condominium purchase and a marriage certificate if married to a Thai national. She will also be required to bring her ID card issued in Thailand and a copy of her Tanon Baan (Blue book). If you are looking to achieve some sort of finance from a developer or bank institution, then proof of income, bank statements, tax returns etc. will be required. If you have any doubts about what is required then please contact the team at North Shore, we will help you in any way we can.