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Further Reading:

Buying Property? Back to Basics - Foreign Ownership Laws

A lot of the questions I have received, as host of this article over the last two years, have been of a more general nature than those that I have tended to answer. I was neglecting many of these questions because I felt that they had been covered in my original series of articles. Not a great deal has changed in these basic principles, but now as we enter the tourist high season it seems like a good time to go back and look at the basics again. The articles which will appear over the next three or four editions of the Gazette are written primarily from the perspective of a foreigner with a first time interest in property in Phuket.

I will start by reviewing what a foreigner can and cannot own in the way of property in Thailand and then move on to the different types of land ownership documents and strata titles that are available.

So lets start with the most basic issue. Foreign nationals may not own freehold land in Thailand. No "if’s", no "but’s", you can’t own it outright, and if you should marry a Thai (male or female) they in turn will loose their rights to acquire (but not to own) land. The only way it can be done is by obtaining Thai nationality, a lengthy process, possible in practice as well as theory, but not far removed in complexity from finding a needle in a haystack.

That sounds pretty restricting, but as I will explain, it’s really not as bad as it might at first appear. Let’s look instead at what a foreigner may acquire. A condominium apartment title (with a proportional or strata interest in common land), long term registered transferable lease rights to land and or buildings, options to purchase land (but not to exercise that option in their own name, unless the law should change), and freehold ownership of all buildings and improvements either existing or to be constructed upon leased land. A foreigner may also own up to 49% of the shares in a Thai company that owns property in Thailand and may be a director of that company.

Through applying one or a combination of several of the above completely legal mechanisms, a foreign national may have effective ownership of property and may sell and transfer those rights to achieve capital gain - in other words just about everything that a freehold owner could do.

I am not going to bore you in this article with the fine details of how all this works. Purchasing a condominium is the easiest, simplest transaction, provided that an allocation remains within the 40% foreign allowance (this allowance is currently under review and might by the time you read this article have been amended to allow 49% foreign ownership) and the funds for the purchase have been remitted from abroad and correctly recorded as such by a Thai bank. In popular buildings, you will often find that more than 40% of the units have been "sold" to foreign buyers, who have taken the unit through either some form of lease or nominee corporate structure. The foreign freehold is definitely the preferred structure for purchase of a Condo; if you do choose another structure of "ownership", have it checked carefully (since most are likely to have tax or other implications that are not immediately apparent) and certainly look for a price that is less than the freehold equivalent.

However if what you want is a house, don’t be deterred by the fact that you can’t acquire freehold land. You may own the building freehold and together with a well constructed leasehold (typically a 30 year lease with two prepaid 30 year renewals) and a purchase option for the land (that could be invoked in the event the laws of foreign ownership changed - or you sold the property on to a Thai) you will have effective ownership, yet still remain within the laws of Thailand.

The structure of such a lease/purchase is complex and needs to be reviewed carefully with respect the properties current ownership and your own personal needs - it is recommended that you always seek the advice of an independent lawyer or property consultant, who speaks your language before making any financial commitment regarding property.

(to be continued next month)