Land & Property Law in Thailand

Thailand is an incredible country much famed for its serenity and rich culture. In fact, the country is much popular among the tourists, and is now the number one tourist spot in South-East Asia. With its mind blowing scenery, stupendous beaches, idyllic tropical islands, and a myriad of attractions covering palaces, ancient shrines, interesting museums, historic monuments, and places of cultural significance, Thailand has been drawing holidaymakers from across the world per year.

Factors such as exceptional low prices and excellent investment potential have also lured large number of people to invest in the country's property market. All these have led to increased demand for property in Thailand. Property market in Thailand is highly active, with a number of options, ranging from land and houses to condominiums, villas, and serviced apartments. Discussed further in this article are laws as well as procedures involved in connection with owning a property in Thailand.

The laws regarding ownership of property in the country are quite confusing, in fact they can be
quite restrictive. However, there are certain loopholes in the law regarding this issue with a number of ways a foreigner can own a land or property in the country. Through a means of land leases, company ownership, investments, and above all, through a Thai spouse.

Land Leases - Although Thai law prohibits land ownership rights to people, foreigners are allowed to hold 100% interest in a land lease in the country. In other words, land lease is one of the simplest as well as straightforward options for a foreigner to acquire a property in Thailand. According to the Thai lease law, a maximum of 30-year lease year is provided, and that too with the option to renew the lease for an additional period of 30 years.

Company Ownership - Registered companies in Thailand with majority Thai ownership could buy land in Thailand. In general, only Thai majority companies are allowed to own land in the country. However, in certain instances, the Board of Investment (BOI) allows a foreign registered company registered in the country to own a land for a short period of time.

Thai Spouse - A Thai wife of a foreigner is allowed to own a land or property in the country in her own name. This option is a very good way to own to a property in Thailand if there is not any marital problem between the couples.

However, it has been made mandatory for the couples to sign declarations with the Land Department. This in turn is to specify that the funds used are the property of the Thai spouse. But, it may sometimes become a problem in case of divorce. In such a situation, an expertly prepared prenuptial agreement may prove helpful for the non-Thai spouse.

Investment - As per the Thai property law, a foreigner is allowed to purchase a limited amount of land, on the basis of investment of about 40 million baht for five consecutive years, provided if the land is for residential purpose.

Condominiums - Apart from the above, by far the easiest way to own property in Thailand is by the purchase of a condominium. Deeds to condominium ownership are a title to: part of the building or a building with multiple owners with these holding a part interest in the land and other common assets such as swimming pool, car parks etc. There are three legal acts relevant to the purchase of a condominium unit by an alien, being the Condominium Act B.E. 2522 (or 1979, the Condominium Act (No. 2), B.E. 2534 (or 1991) and the Condominium Act (N. 3) B.E. 2542 (or 1999) issued on 28th April, 1999. Until recently, foreigners could only own forty percent (40%) of the aggregate unit space but this now has been amended to 49%.

Land in Thailand is measured in rai, ngan and wah. Land prices are expressed in baht per rai or baht per wah for smaller plots.

1 Rai = 4 Ngan or 1600 sq. m.
1 Ngan = 100 Wah or 400 sq. m.
1 sq. Wah = 4 sq. m.
1 Acre = 2.471 Rai or 43,560 sq. ft.
1 Hectare = 6.25 Rai or 10,000 sq. m.

Quick Purchase Guide

The Initial Purchase Agreement - The initial purchase agreement will detail price, terms and conditions, settlement date etc. and in most cases a 5-10% deposit will be required to secure the property. This deposit is refundable should the sale not go through, as long as it is not your fault.

Reservation Fee -When buying a new condominium, an initial reservation deposit of is required and this amount is deducted at a later stage from the total price. Once an agreement is signed, usually 10 to 15 days after the reservation, the buyer is required to pay 5% - 10% of the total price. Depending on the terms of the contract, the balance then could be due in installments or as a lump sum at the time the title is transferred

Fees - As a general rule, for residential sales you can expect the total fees and taxes to work out to be approximately 2% to 3% of the property market value.
There is usually a stamp fee of around 0.5%, a transfer fee of around 2%, a business tax of 3.3 % (levied against a vendor who has been in registered possession of the property less than 5 years), and income tax (similar to capital gains tax) at a variable rate.

Property Taxes - There are 2 different types of tax levied on property in Thailand:

1. Land Tax - This is an annual tax levied on land ownership. The amount is often so small that in practice the body charged to collect it rarely bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.

2. Structures Usage Tax - This only applies to commercially used properties. The rate is 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.

If the property is purchased through a company, you need to consider that corporate tax is higher than personal tax, and the cost of setting up the company must be considered as part of the initial investment.

Capital Gains Tax - There is no capital gains tax in Thailand and income tax (usually between 1.0 - 3.0%) on property is the comparable replacement.

Visa Requirements

We advise you to contact your local Thai Consulate or Embassy before travelling to Thailand for advice and to arrange your visa. There a various kinds of visa that permits you to stay in the country ranging from 15 days up to a year including:

Visa on arrival - You will be granted 15 days entry as a tourist when you arrive at an airport while in possession of a return ticket.

Tourist Visa – This can be obtained prior to your entry into Thailand from a Thai consulate or embassy. If your purpose of stay is tourism you will be granted 60 days entry with the possibility to extend by a further 30 days at an immigration office in Thailand.

Non- immigrant Visa - This visa entitles the holder to stay up to 1 year. There are various categories of non-immigrant visa including:-

Category "B" (business – paid employment) – this category entitles a person:
          a) who is employed by a non Thai company to conduct business in Thailand
          b) who is employed by a Thai company to work in Thailand

Category "ED" (education – unpaid work) – this category entitles a person to:
          a) to study in Thailand
          b) to take part in work study or observation tour in Thailand
          c) to participate in projects or seminars in Thailand
          d) to attend a Business Conference or Trade Fair in Thailand
          e) to attend as an official at a recognised event in Thailand
          f) to attend a training course (teaching, diving, boxing, etc) in Thailand
          g) to study as a Buddhist monk in Thailand

Category "O" (other) – this category entitles a person:
          a) to vi1sit Thai spouse/family
          b) to visit non Thai family/friends living in Thailand
          c) to participate in unpaid volunteer work in Thailand
          d) to visit as a UK pensioner