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Ownership by foreigners

Ownership by foreigners


Property purchases by foreigners in Thailand are simple but there are some restrictions. These restrictions, however, don’t apply to condominium units which can be bought freehold in one’s own name. In fact foreigners can buy as many of them as they like. The only rule is that in an apartment building Thais must own at least 51 percent of the units, while the other 49 percent can be owned by foreigners.

Assuming you arrive before the quota that is allocated to foreigners is sold out, you will have no problem to buy a unit outright. Resale and transfer is no problem, as you own the property on a freehold basis. A unit owned by a foreigner can be sold to either another foreigner or a Thai national. Should the latter be the case, it will mean that the percentage of ownership will change, freeing up the availability of another local owned unit in the building to be sold to a foreigner.
Remember, you must show that the money for the purchase has come from overseas by way of a foreign currency receipt and/or a letter from your bank. (This is a relatively new regulation, intended to prevent money laundering). Ownership papers will be issued in your own name.
When it comes to buying a house, or just a plot of land, a foreigner cannot become the owner of that land, so you can do one of three things:
a) You can find a Thai national and use their name (e.g. get married to a Thai citizen). In this way you are entitled to use the property as long as you don´t have a disagreement with your Thai partner. Doing it this way, you will never really own the property. The Thai partner will be the owner.
b) You can lease some land or a house. Leases usually run for 30 years, but can be renewed. A 30 year lease means that although you won’t really own the property, you will gain control of it for at least 30 years. Similarly you could arrange a 30-year lease with two 30-year extensions. However, extensions of 30 year leases much depend on the willingness of the lessor, and you will have little chance of success when trying to legally enforce an automatic renewal of such a lease.
The best way to achieve this is to adopt step (a), and buy the property in your Thai friend’s or partner´s name. Then a legal document must be drawn up whereby this person leases the property to you for both the first 30-year period plus any additional renewal periods. The contract must show that all rental moneys for the lease(s) have already been paid in advance. Make sure that the current lease is registered at the land office.
This method of securing ownership appears to be perfect. However, in order to resell the property one must ensure that the current owner can transfer the title deeds to the new owner and return the cash from the sale to you. This is by no means guaranteed. And there could be another problem: if the owner passes away and the property is transferred to his next of kin, then the renewal may be contested.
c) You may form a company, which means using Thai shareholders, and then transfer the house into the company’s name. The company can then grant you the right to reside at the property, and as director you can arrange to obtain majority voting rights in that company even though you are a minority shareholder. However, you will not own the property (the company will) and your share holding in the company must remain at 49 percent or less in order to maintain the company’s status as a Thai limited company. If the company owns property your holding should remain at 39 percent or less.
The company can be set up by a lawyer or even by the developer’s legal experts prior to a property sale. Often the Thai shareholders will be nominees used by the lawyer who sets up the company. Since it is rather unlikely that you will choose the nominees yourself, it is advisable to at least keep track of the nominees in order to assure that they are independent from any other party involved in the property deal. While this is technically illegal, it has become a common practice among ten- if not hundred thousands of foreigners.
Even some condo developers have tried to sell condominium units by way of company ownership, trying to circumvent the 49 percent foreign ownership rule, but the resale of such a condo would be just as difficult as selling a Thai owned unit. It is therefore not advisable to buy a condo in a company’s name unless you get a significant discount compared to a similar unit under foreign quota.