FAQ

FAQ FREQUENTLY ASKED QUESTIONS ABOUT THE LEGAL PROPERTY SITUATION

if you really want to purchase property in thailand we recommend you to read all the topics below very carefully. even if not everything may be interesting for you now, at a certain stage it will and you do better to inform yourself ahead. please also note that laws in thailand may change anytime and in case of property this can only be in favor of foreign owners, as it actually can not get worse than it is now. since neighboring countries like malaysia are welcoming foreign investment sooner or later thailand has to catch up, as foreign capital is in the mean time the most important income in the kingdom and in a longterm the government will not go without this.

A - how to buy property

can a foreigner own property in thailand? how to proceed once you found a nice plot and everything else about the HOW TO DO concerning property.

CAN A FOREIGNER BUY AND OWN A PROPERTY IN THAILAND?:

yes, he can buy and own a building without any restrictions, but he can not buy land in his own name. this is the law but there are a few exceptions.

a house is considered a mobile (movable) object (back from the times when traditional thai houses were made from wood only and not even using any nails and therefore could be easily relocated), and a foreigner can buy such an object, whether it be a house, a car ow whatever is considered "mobile" in his name and may own it without restrictions for personal use. the easiest way is to purchase a house or condo (apartment) in a project which is owned by a thai company. it is necessary though to follow strictly the procedure as explained below. due to legal reasons it is recommended to purchase a condominium only for residential purpose. if one intends to purchase several condos and rent them out one has to obtain a license to do so, which is not easily granted to foreigners. for business purpose it is recommended to set up a company. in contrary, when intended to own any kind of property for residential, which means non business purpose, we do not recommend at all to set up a company, as it is illegal to "run" a company without having a business activity. this recommendation is contrary to what several other real estate companies in the market suggest, but we want you to be on the safe side. the government has announced to track down on offenders of this law and in the worst case a company which exists only for the sole purpose of buying property risks to loose the property and has to face legal consequences.

when building a house in a foreigner's name he can, after completion, even obtain a house registration certificate (tabien ban), the so called "yellow book" (thor.ror.13). please note that this tabien baan though is not proof of the ownership of buildings but to have it will make your life easier when dealing with officials.

land though is traditionally reserved for thai nationals and can either be "purchased" as a lease for 30 + 30 + 30 years (not more than 90) only, or, in case of an investment of 40 million baht up (around 1 million USD), he can legally own up to 1 rai of land (1'600 m2) for residential purpose in his own name (not including the amount invested to purchase the land). the investment has to be approved by the BOI (board of investment), which will support the project if it benefits thai economy or promotes social welfare. the money must be invested for a minimum of 3 years. a common example for such an investment are hotels. this explains how it is possible that the majority of phuket's five star hotels are 100% foreign owned - legally.

WHAT IS THE BEST OPTION FOR A FOREIGNER TO PURCHASE A PROPERTY IN THAILAND?:

as mentioned, the laws will change one day, and in a lease contract it can even be implemented that once the law allows a legal purchase the lessee will be able to purchase the land at a specified rate. therefore, for the time being, the best option is to lease a property for 30 years, with the included and legally binding option to extend for another 30+30 years. this way one is totally on the safe side as there is no illegal or "almost legal" action involved. who should one be leasing from? most land owners do not want to let the land on a lease basis - they want the cash NOW and therefore want to sell. ideally a thai person or company of your trust would purchase the property and then let it to you on the mentioned lease basis. your lawyer can help you with this - it is recommended in most cases to have a lawyer to assist in the purchase. he will also be needed to make the proper lease contract. of course you then own everything which is built on this land - the lease contract is actually a lease agreement or "right of superficies". when choosing a lawyer please only choose one who has been personally recommended to you - there are too many lawyers out there who don't really care about their clients but simply try to close as many deals as possible.

option no 2 is a thai person of your trust you are directly related to (your wife/husband, child or a family member) is purchasing the property in her name. you grant her the loan to purchase the property and she rent is out wo you. the rent you pay is equal to the interest she has to pay you for the loan. this is a very clever contract and you can put in any duration you like - even lifetime is possible with the option that this contract is automatically carried over to your legal heir, to make sure your kids do not have to leave the property once you are dead even in case of the legal owner should change her good intention or even her personality. only since 1999 it is possible for a thai wife married to a foreign husband to purchase and own property in her name. a thai child of a foreign national can own land in his/her name. even a minor child can, but in this case some restrictions apply. main restriction is that the court has to grant permission to any kind of activity on or with the land which is generating an income, mainly letting out or selling the property. this means this option is only recommended if you really want your child to be the owner. you can, however, again make a contract which allows you to use the property or part of it for your lifetime.

PLEASE NOTE that we do not recommend in ANY CASE to marry a thai person with the only purpose of being a relative of the owner of "your" house. we know plenty of cases where the foreigner in the end lost everything because he made this mistake. only marry a person you know very well and you trust 100% - and this is not possible after 2 weeks holiday. we are of course ready to help in any related matter. please also note that a thai woman married to a foreigner must prove that the money used to purchase the land is legally and solely hers and sign a declaration stating that these funds belonged to her prior to the marriage and the foreigner (as a result) has no claim to it (even in case of a divorce). however, as mentioned above, the foreign spouse could have other rights such as a registered leashold on the land.

when purchasing a condominium ("a building that can have its separate portions sold to individuals or groups for personal property ownership") you have to be aware that foreigners can own only 49% of the buildings in a condominium project. to explain this simple: if a condominium project involves 100 units for sale, only 49 of those can be owned by foreigners, the rest must be owned by thai nationals. you have to make sure before you buy that this quote is not already used.

you may have noticed that for the time being we don't have any condominiums in our portfolio. the reason is that there is no project in the area of khanom which fulfils our requirements in terms of ecology and integration in landscaping. the ones available are in high rise buildings which we simply do not want to support in any way. other projects which present much better have legal problems or may for other reasons not be recommended. we suggest you ask us for an independent expertise before you purchase any condominium.

WHERE DOES THE MONEY FOR THE PURCHASE HAVE TO COME FROM?:

if you are able to buy in your name (condo or BOI approved project) you will have to testify how you transferred the money in a (any) foreign currency into a thai bank account. the bank will issue a THOR TOR 3 document upon such transfers which allow you to make the purchase.

as mentioned the money which a thai spouse spends to purchase a property has to be her own money and has to be such before the wedding.

in any case you will need to be able to grant 100% of the necessary funds for your project. foreigners are not allowed to apply for a loan with thai banks, and if you are married to a thai wife she will have problems to get a loan because of the fact that she is married to a foreign husband, unless she is running her own business which is generating enough money to guarantee for the loan.

B - what does it cost

everything about additional costs you have to put in your budget. taxes when purchasing property in thailand are relatively low, and even the price of the land is usually lower than the construction of the house you intend to build. we recommend to revise your budget after reading the facts below.

WHAT IS THE MARKET PRICE FOR MY PROPERTY?:

land prices are usually indicated in million baht per rai. the actual price depends mainly on the location. the closer to the beach the higher the price, and also a property close to the main road has in thailand a higher value than a quiet piece of land in a remote area - which may well be what you are actually looking for, if you look for a property to live in by yourself. for the time being prices in the area are between 1 and 8 million per rai. of course it makes sense to look for a property which has a good value - asking price relation and is in your budget. however, since the location is the most important thing we recommend though to remain flexible when it comes to the land price. in the end you will stay there for a long time, and to choose a property only because it is a bit cheaper than the one you really like may not pay in the end. prices are rising very fast in khanom but are still only a fraction of what asking prices in phuket or koh samui are. the right price in the end is the price which seems right for you. you can always change your house or everything else ON the land, but never the land itself and its surrounding.

WHAT TAXES APPLY AND WHO WILL PAY THEM?:

there is a "special business tax" which is 3.3% (applicable in case of resale during the first 5 years of ownership only).

government fees are 2% of the assessed value on a property transfer and/or 1% of the rental value on 30 years for a lease registration.

the parties have to agree on who will pay the property transaction taxes; a common agreement is 50:50, but in some cases the seller pays all taxes. you will need a "foreign exchange transition form" which you can get from your bank.

taxes which apply after the land is owned: there is a property tax which is currently 12,5% of a property yearly rental value. the tax is NOT due though if the individual owner himself lives in the property.

the income tax rate for juristic companies or partnerships is 30% of the net profit at the company level + 10% withholding tax at the shareholder level. thre are several other rates that apply to resident (locally) incorporated companies, which are, depending on the case, between 15 and 30%. capital gains are taxed at the corporate income tax or personal income tax level and can be quite substantially.

WHAT ABOUT CONSTRUCTION COSTS?:

construction costs depend of course on the size of the project, but also vary substantially from contractor to contractor. it is recommended to use a contractor who has been personally recommended to you but still ask for quotes from 2 additional companies. anyway, even in this case, you have to be prepared that the final costs may easily double as well as the construction time. both will depend whether you are able to be at the construction site at all times or not. if not you need a person of your trust to do this for you. the size of a company is no guarantee for proper work and time frame.

C - additional useful information

two things you have to be familiar with: land titles and thai measurments.

LAND TITLE DEEDS:

the favorite land title deed for a foreigner who wishes to purchase property in thailand is officially called "Nor Sor Sie Jor" or more commonly "Chanote". these titles are issued by the provincial land office located in sichon and are actually surveyd and GPS plotted in relation to a national survey grid and marked by unique numbered marker posts set in the ground. in case they should get lost (what happens mainly at the beach) they can be replaced with 100% accuracy.

the only acceptable option to a chanote is a "Nor Sor Sam" or Nor Sor Sam Gor" which actually are only certificates of land utilization, but commonly accepted as title deeds which can be sold, leased or mortaged the same way as a chanote. the main difference is that nor sor sam titles are not GPS based and therefore boundaries are relative to its neighboring plots which leaves headroom for interpretations which is actually not really what you are looking for. the newer nor sor sam gor is much better as it is more accurately surveyed and is part of an area master survey including an aerial photograph, which makes this title the only real option besides a chanote. all other land titles do not allow construction at all or only very limited and are not reliable as ownership documents.

THAI LAND MEASURMENTS:

1 sq wah = 4 m2
1 ngan = 100 sq wah = 400 m2
1 rai = 4 ngan = 1'600 m2

examples:

1 rai = 1'600 square meters = 0.16 ha = 0.39 acres.

1 ha = 10'000 m2 = 2.47 acres = 6.25 rai

1 acre = 0.4 ha = 4'046 m2 = 2.52 rai

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