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Further Reading:

Buying Property? Back to Basics - Foreign Ownership Laws

High Season in Phuket is upon us again. The rain and smog (what smog?) are gone, the seas and skies are blue, and if that alone isn't enough reason, the weak Baht is putting a smile on every foreign visitors face. It's the time to renew acquaintances with a lot of old friends and to welcome many first time visitors. And for me, it's once again the time of year to stop responding to some of the more esoteric Ask William!! questions and devote the next three or four articles to answering the more general inquiries of first time buyers as to how land titling works and what a foreign investor can legally acquire in Phuket.

Despite dozens of press reports during the year predicting amendments to allow foreigners ownership of small land plots and increases in the 40% interest allowances for foreigners in condominiums, not a great deal has in fact changed. No, wait, that's not quite correct, for investors with foreign currency, properties here are now considerably cheaper than they have ever been before. If you have ever yearned for a home in Phuket, don't miss this opportunity.

I will begin 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 may sound 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 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 and the funds for the purchase have been remitted from abroad and correctly recorded as such by a Thai bank (this 40% allowance has been under review, indeed was approved at cabinet level by the last two administrations and just as soon as we have a government that manages to stay securely in office for over a year will doubtless be passed). 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)