Property Ownership and Ownership in Thailand
The first thing I discuss with my clients as part of an investment consultation on the acquisition of real estate in Thailand is ownership. Often, my clients or do not have any idea about the methods of owning real estate, or this knowledge is fragmentary, obtained from incompetent sources, were incorrectly interpreted, or were intentionally distorted by unscrupulous market participants. To fill the knowledge gap, as well as try to systematize all the information necessary for the investor on the methods of owning real estate in Thailand, I wrote this article.
For an investor in foreign real estate, in addition to profitability, the issue of ownership rights is always an acute issue. The national legislation of different countries is radically different, and Thailand has very specific differences from what a citizen of Russia, Belarus or Ukraine is used to seeing in their homeland.
Legislatively there is a big difference in the form of owning a house and an apartment, let’s understand.
Land and house
It is necessary to start with the main and, perhaps, the most annoying statement:
A foreign citizen does not have the right to own land in Thailand.
But it’s too early to close the country of smiles for yourself as an object of investment, show patience and read to the end, good news awaits you.
The first thing that foreign buyers of houses, villas, townhouses and other detached buildings are faced with is the inability to register the land as a property. The classic way to circumvent this restriction is to acquire land in the name of a Thai company (company limited), in which a foreign citizen can own a 49% stake and be the CEO, at least 51% of the company must belong to at least two citizens of Thailand or a Thai company. The step-by-step process and the cost of opening a company in Thailand, I described in an article at this link. There are working mechanisms to protect against illegal actions by Thai shareholders in order to avoid unauthorized seizure of the company or sale of your land, but as part of this article I will not dwell on this in detail, I will make only a few important points:
The practice of acquiring the land on which a house, villa, townhouse, etc. is located by foreign citizens through Thai companies has been widespread for decades.
The Thai government has repeatedly expressed categorically against the use of Thai companies solely for the acquisition of real estate, as this does not meet the purpose of creating the company, and, in theory, such transactions can be declared null and void with the subsequent alienation of the land to the state. Conclusion: your company should show real business activity, and not give zero reports for years.
The building itself is acquired by a foreign citizen without restrictions and is more preferable from the point of view of security of ownership than registration for the company.
There is a practice of acquiring land in the name of a spouse – a Thai citizen, this is the most risky option, since upon termination of the relationship your real estate, drawn up in such a way in 99.9% will go to your former second half.
My personal opinion: if you do not live in Thailand, and you do not have a company doing business here, I do not recommend acquiring land in this way. A 100% legitimate alternative to this method is the long-term lease of land from its owner, the lease is registered with the land department and an encumbrance is made in the certificate of ownership of the land for the corresponding lease period. The maximum lease term can be 30 years and contain conditions on the possibility of extension.
The unprecedented interest of foreign investors in Thai real estate is largely due to the Law “On Condominiums” adopted in 1979 (Condominium Act B.E. 2522, as amended in 1991, 1999, 2008), which legitimized and greatly simplified the acquisition of ownership of apartments in apartment buildings by foreign investors.
A condominium is an apartment building that has an appropriate license.
Up to 49% of the living space in a condominium may be owned by foreign citizens on a private ownership right (freehold), also sometimes referred to as “Foreign Quota”
Thai citizens and Thai companies must own at least 51% of the condominium’s living space (“Thai Quota”)
And here we inevitably come to two main ways of owning an apartment in Thailand – Freehold and Leehold.
Freehold (literally) – literally translated from English. “Fluency”. You become a full-fledged owner of the real estate, receive the appropriate certificate – Chanot.
You can dispose of it as you like – to sell, give, transfer by inheritance.
Voting right. Legitimate owners have the right to vote at meetings of condominium owners in proportion to their living space.