Over the last ten years, there has been a significant increase in the popularity of Thailand’s real estate among foreigners who want to make the country their second home. Koh Phangan, which is one of the most desirable locations, has attracted a large number of Thai nationals and foreigners after the pandemic. While many people are interested in owning property on the island, it is crucial to understand the regulations to avoid making common mistakes. Additionally, it is recommended to seek guidance from legal teams, as there are several reputable firms available on the island.
I’m not Thai, can I buy land?
In Thailand, it is generally not permitted for foreigners to purchase land directly as per Thai laws, which prohibit foreigners from owning land in their own name. However, there are alternative options available to foreigners for successful land acquisition.
The most popular solution is to establish a Thai Limited Company that can own the land on behalf of the foreigner. Another option is to enter into a long-term leasehold agreement with the landowner. Surprisingly, it is not widely known that although a foreigner cannot own land in Thailand, they can own any structure or house built on the land. To do so, one simply needs to apply for a construction permit to build the house in their own name.
Option 1: Setting up a Thai Company
Although foreigners are not permitted to hold land under their name, they can use their Thai registered company to own the land. In Thailand, there are various types of business entities available.
- The most commonly used is a Thai Limited Company. There are certain business registration criteria which must be met when incorporating a limited company.
- The Thailand Amity Treaty is also permits Americans to do business in Thailand, however this type of structure cannot own land.
There are also tax considerations if you are going to do more than own a house or need a Thai Work Permit (see Corporate Tax in Thailand).
The next step is to get well acquainted with the process of buying real estate in Thailand. It is also important to understand the different types of title deeds in order to determine the extent of the owner’s rights over the land you are interested in. Also, it is advisable to know the cost of transfer and Thailand property taxes in advance.
Option 2: Leasehold Agreements
Buying Thai real estate under a leasehold interest is a very popular and preferred way for foreigners to acquire property in Thailand.
Why is it the favoured alternative?
- It is simple and straightforward.
- Foreigners can obtain full interest on a lease in Thailand throughout the specified lease term.
- This is preferred over purchasing through a limited company where you have several shareholders who may have interests that are different from yours.
- You can transfer the leasehold interest or even sell it the same as you would for any other freehold title conveyance in Thailand.
- The maximum lease term is 30 years.
An option to renew will not be automatic and an additional 30 year periods will depend on careful drafting and discretion of the Registrar at the Land Office.
Option 3: Marrying a Thai
If a foreigner is married to a Thai, they may be able to purchase land in Thailand, but there are certain restrictions to consider:
- As the non-Thai spouse, you must declare that you have no rights to the land, effectively relinquishing any claim to the property.
- Even if you purchased the property, it cannot be registered under your name, but instead must be under the Thai spouse’s name.
- The couple may need to sign declarations at the Land Department, stating that the funds used for the purchase are the separate property of the Thai spouse.
- In case of divorce, it may be challenging to prove that the land is marital property.
There are basic guidelines that the law provides in the management of matrimonial assets and in this case, a skilfully drafted prenuptial agreement may help to minimize your risks as the non-Thai spouse.
Once you have decided which land you are going to purchase, always consult a lawyer before signing any documents. Phangan Land is teamed with a trusted legal team who have worked with hundreds of foreigners in securing land plots on the island, who are willing to assist you. You can reach out to using the contact form on our page.
