Anyone considering moving to Thailand, or even just buying a home there, should be aware of the issues surrounding property rights. Indeed, according to the current land code, foreigners cannot own land in the country . This significantly complicates matters.
However , there are two possibilities allowing foreign nationals to acquire property, under certain conditions: leasehold , or long-term lease , and freehold ownership.
What are the specific characteristics of these two concepts? That's what we're going to find out.
Foreign freehold ownership : the strengths of freehold ownership
Becoming a property owner in Thailand offers several advantages, including absolute ownership. The property you acquire belongs to you indefinitely, whether it's part of a condominium or a detached house.
Foreign freehold ownership : some major advantages
As you might expect, freehold ownership is extremely strategic for several reasons:
- You are fully holding of the property you acquire, without restrictions;
- In a condominium, the purchase is made in one's own name ;
- Your investment is safe from a legal point of view ;
- You can to bequeathto rent it out or resell it.
That said, if you choose this type of property, you should also be aware that purchase costs are often higher for foreigners. The same applies to transfer fees, which can exceed 5% of the purchase price . And don't forget the costs incurred by your business, as you will need to hire an accountant annually to prepare your financial statements.
Take all these implications into account so you can embark on this adventure with full knowledge of the facts!
Freehold ownership through a public limited company?
So how can you achieve this highly advantageous freehold ownership if foreigners cannot own land in Thailand? The idea is based on a thorough understanding of Thai law. Indeed, anonymous companies can own land there… Therefore, all you need to do is own a company to have indirect ownership rights over the properties it manages. This will give you the same rights as any other property owner in the country.
However, be aware that you must be the majority shareholder of your company , but as a foreigner, you cannot own more than 49% of its shares. You will need to partner with two additional shareholders, who must also be Thai, to share the remaining shares.
Choosing a condominium
It's understandable that owning a business isn't your goal: that leaves you with the option of condominium ownership . Since 1992, foreigners have been allowed to buy apartments there, under certain conditions.
Here too, the Foreign Quota applies, meaning that 49% of the apartments in a condominium cannot be sold to foreigners . If you are considering purchasing an entire condominium, you can, however, consider a long-term lease on the Thai Quota , which corresponds to the 51% that you can never officially own. In this case, the property titles related to this portion of the condominium will remain in the hands of Thai citizens.
Leasehold ownership long-term lease
While a long-term lease may seem more restrictive than outright ownership, you should be aware that this option is actually quite advantageous. It involves renting a property for 30 years, renewable a maximum of two times.
Throughout its duration, you are the legitimate occupant of the land on which this property is located and possess the usufruct.
Here are the major advantages of leasehold ownership :
- The costs associated with a 30-year lease do not constitute more than 1,1% of the value of the property, unlike transfer fees exceeding 5%;
- The Acquisition costs are also lower than in the case of full ownership.
On the other hand, there is a major drawback to these long-term leases: once the 30-year term has expired, you have no guarantee that the owner (or his descendants, in the event of his death) will accept the renewal you hope for.
Thai land law can be complex for a foreigner wishing to buy property in Thailand. That said, there are options, some more advantageous than others, to choose from.
Buying in a condominium, freehold ownership through a limited company or long-term lease: it's up to you to weigh the pros and cons, in order to realize your projects!
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