Thai law is clear and imposes rules concerning the right to ownership a property belonging to foreigners.
A law of 1975 does not allow foreigners to own land in their own name (the land still belongs to Thai). But Foreigners can beings owners of structures on land.The law authorizes the purchase in freehold and proper name of villas or apartments in "condominium developments".
There are several options depending on the property you wish to buy.
Thai law does not authorize a foreigner to own land in its own name. However, a foreigner can buy full freehold property (house, villa ...) built on a land.
There are 3 possibilities to purchase a land for a foreigner
1) Invest 40 million THB (€ 1 million / $ 1.1 million) in Thai economic sectors and ask to buy a land in freehold to the Thai authorities(Maximum 1 Rai).
Investors wanting to possess land may subscribe on a lease of 30 years with a renewal maximum 2 times, a total of 90 years. Registered leases are safety and must be verified by a lawyer to avoid any problems.This lease contract must be registered at the Land Department to remain valid for the duration of the contract.This leasing contract is safe and your rights are protected.The lease is transferable if you want to resale but it must specified: the duration of the lease, the right for the buyer to resale his lease, the registration fees, the heirs of the lease in case of death.
3) Creating a Thai company
Thai persons or Thai companies may be owners of land and buildings constructed on this land.
If the lease option does not please you, you can create a Thai company that you control, and which could legally buy land. The land will belong to the Company and as a director of the company, you will have control of the ownership of the land.
But this company will be controlled by the Land Department, it shall have a real activity!
You have to go through a lawyer, so that you legally guide to the legal structure of the company.
Many foreign buyers choose this solution because it simplifies things at the time of resale of the property.
Foreigners can purchase in freehold (Freehold title) a condominium (apartment) as classified in accordance with 3 rules:
- That the residence (condominium) is a Freehold purchase.
- That 51% of the floor area of the development owned by Thais .
- That the transfer of funds for the purchase comes from abroad and the initial reason for this transfer
In practice, it is simple because the developers take care to fulfill the conditions of a legal purchase .
You will have to open an account in your own name in a Thai bank and when the funds will be on your Thai account, the bank will issue you a certificate "Foreign Exchange Transaction Form" that you will need:
- To repatriate money, in the case of resale of this apartment.
Do not forget to check the title and the identity of the seller, check the quota of foreign-owned units in the building. A foreigner can sell to a foreigner, to check the rules of the condominium. and request the amount of condo fees and taxes payable in the transaction.
If you want, a lawyer can check that all the conditions are required to complete the purchase of the property safety.
Contact a real estate agent who will prepares a list of properties matching your wishes.
You can also ask a real diagnosis by a specialist.
Title Deeds may be mainly divided in 4 categories in Thailand as follows:
If you want to buy a plot of land or a property in Thailand, you will consider land with a title Chanote, Nor Sor 3, Nor Sor 3 Gor, Condominium Title ,because only these four titles be purchased, rented and used as mortgage collateral.
You can register a property or a lease with these 4 titles and they allow the application for a building permit.
- Chanote (Freehold title deed): This is a certificate of ownership that can be used as evidence confirming the ownership of land. This certificate is issued by the Cadastre (Land Department), defines the area of land very precisely thanks to a GPS reading. The Chanote is the safest and most accurate title.
This property titles is called Nor Sor 4 Jor or Chanote.
- Nor Sor 3 Title: The "Nor Sor 3" is a document certifying the property rights of a terrain.Ce certificate is issued by the Cadastre (Land Department). Title Nor Sor 3 concerns plots and whose limits are set by the neighboring plots. It is less accurate than the chanote but its value is the same.
- Nor Sor 3 Gor title: The "Nor Sor Gor "title has the same legal value as the Nor Sor 3, except that the Nor Sor 3 Gor, borders the Area of land by air parcel tracking and reproduced at scale 1/5000. Nais Sor 3 Gor the Nor is less accurate than Chanote.
- Condominium Title: This title is a relative Condominium ownership title only use properties in collective living (called condominium in Thailand). This title indicates the area of a private apartment, the total area of the ground and the percentage of this apartment to collective ownership. This percentage also represents the vote share in the condominium.
Fees for the transfer of ownership for properties in Thailand
- Transfer fee: 2% of the land office appraised on the value of the property.
- Withholding Tax: 1% on the transaction value of the property, whichever is higher, if the seller is a corporation - Sliding scale based on the land office appraised value of the property, if the seller is an individual.
- Stamp duty or business tax: Stamp Duty is 0.5% of the value of the property. Specific Business Tax: 3.3% of the transaction value of the property.
- Other tax: For leasehold, there is a registration fee of 1% and a stamp duty of 0.1% of the total lease amount .
- Property Taxation: Building and Land Tax is imposed on the owners of a house, building, structure and/or land except for the first residential place. The tax rate is 12.5% of actual or assessed annual rental value of the property.
If you still hesitate, a good idea would be to start renting a property and this allows you to plan your future purchases involved the time to discover the island of Phuket and the housing market. There are a lot of things to be considered when buying a property abroad.