A Land and House or a Condominium for Foreign Buyers?
by Sirichot Chaiyachot
Attorney at Law, Siam Legal
Thailand is a beautiful country. The cost of living is not too high, and Thai people are very friendly. For these reasons, you may be one among many who plan to have a second home—perhaps a dream home—in Thailand.
Here’s the problem: non-Thai nationals are, by law, not permitted to hold the ownership of land in Thailand, regardless of their nationality. There are no treaties between Thailand and any other nation that give privileges to any foreign national to purchase land in Thailand as a freehold. Marrying a Thai national does not allow one to hold the ownership of the land as a freehold either, either jointly or solely, in the name of a non-Thai national party.
A long-term lease agreement or mortgage agreement properly drafted and registered is one common way for foreign nationals to protect their investment in a property in Thailand. At present, Thai law only allows the registration of leases of up to 30 years for residential purposes. Any further extension is likely to be difficult to enforce.
A foreign national may take control of the land through a company structure (i.e., a Thai limited company). However, in this case, a non-Thai national can hold only a limited number of shares of the company (i.e., 49 percent or less of the total shares of the company). In addition, there must be at least three shareholders in a Thai limited company, two of which must be Thai nationals, in the event the company holds the title to land.
Please bear in mind that if your intention is not to operate a legitimate business in Thailand, this option is far from ideal. If such a company does not continuously engage in a business, is not active, and does not file its annual balance sheet and corporate income tax for a few consecutive years, it is likely that such a company will be struck off the register. The assets of the company will also have to be sold. In addition to these difficulties, issues with shareholder structures, signatory authority, registered capital, shareholders’ votes, and work permits are all common problems. There will also be a lot of papers for you to sign and a lot of expenses to maintain the business.