In Thailand for foreigners to own properties can be quite difficult, here are some tips on how Expats can purchase properties in Thailand.
Foreigners can own property in Thailand through several legal avenues. Here are three common methods:
1. Condominium Ownership
Foreigners can directly own up to 49% of the total area of all units in a condominium project. This is the most straightforward way for non-Thai nationals to own property. The purchase must be made in foreign currency, and proof of the fund transfer must be provided to the Thai Land Department.
To own a condominium in Thailand as a foreigner, you need to follow these steps:
1. Ensure Legal Compliance
– Foreign Quota: Confirm that the condominium you are interested in is within the 49% foreign ownership quota. Thai law allows foreigners to own up to 49% of the total area of all units in a condominium building.
– Foreign Currency Requirement: The funds used to purchase the condominium must be transferred from abroad in foreign currency and converted to Thai Baht by a Thai bank. This is crucial for obtaining the Foreign Exchange Transaction Form (FETF), also known as the Thor Tor 3 form.
2. Transfer of Funds
– Transfer the purchase funds from your home country to a Thai bank. Ensure the transfer is in foreign currency and the purpose of the transfer is clearly stated as “for the purchase of a condominium.”
– Obtain the Foreign Exchange Transaction Form from the bank, which serves as proof of the foreign currency transaction.
3. Agreement and Deposit
– Sign a sales and purchase agreement with the seller, detailing the terms of the sale, including the price, payment schedule, and responsibilities of both parties.
– Pay a deposit to secure the unit. The deposit amount varies but is typically around 10% of the purchase price.
4. Due Diligence
– Conduct due diligence on the property, including verifying the ownership, ensuring there are no encumbrances, and checking that the developer has the necessary permits and approvals.
– Engage a lawyer to assist with the due diligence process.
5. Final Payment and Transfer
– Make the final payment as per the sales and purchase agreement.
– Prepare the necessary documents for the transfer of ownership at the Land Department.
These documents typically include:
– The Foreign Exchange Transaction Form.
– The signed sales and purchase agreement.
– A copy of your passport.
– The condominium’s title deed (Chanote).
– Proof of payment of applicable taxes and fees.
6. Registration at the Land Department
– Visit the Land Department with the seller to register the transfer of ownership. The Land Department will verify all documents and process the transfer.
– Pay the applicable transfer fees and taxes. These typically include a transfer fee (2% of the appraised value), a specific business tax (3.3% of the appraised value), and stamp duty (0.5% of the appraised value, applicable if the specific business tax is not applicable).
7. Obtain Ownership Certificate
– Once the transfer is completed, you will receive the updated title deed (Chanote) with your name registered as the owner. This document serves as proof of your ownership of the condominium.
Additional Tips:
– Legal Assistance: It is highly recommended to hire a reputable lawyer to assist with the process, especially if you are not familiar with Thai laws and regulations.
– Developer Reputation: If buying off-plan, ensure the developer has a good track record and is financially stable to complete the project.
By following these steps and ensuring compliance with Thai laws, foreigners can successfully own a condominium in Thailand.
For more information please read our blog :
Renting : Legal Blog : Renting Propert in Bangkok
Buying: Legal Blog : Buying property in Bangkok
2. Leasehold Agreements
Foreigners can lease land or property for a period of up to 30 years, with the possibility of renewing the lease for two additional 30-year terms, effectively granting a 90-year leasehold. Lease agreements must be registered with the Land Department to be legally enforceable.
Foreigners can enter into leasehold agreements in Thailand to effectively gain long-term use of land or property. Here’s a detailed guide on how to do it:
1. Understand Leasehold Limitations
– Foreigners can lease land or property for a maximum initial period of 30 years.
– Lease agreements can be renewed for two additional 30-year terms, subject to negotiation with the landowner, making it possible to have a total lease period of 90 years.
– Leasehold rights can be registered with the Land Department to ensure legal enforceability.
2. Find the Property
– Identify the property you wish to lease. This could be through real estate agents, property websites, or direct negotiation with property owners.
3. Negotiate Lease Terms
– Negotiate the terms of the lease agreement with the property owner. Important terms include:
– Duration of the lease.
– Lease renewal terms.
– Lease payments and schedule.
– Responsibilities for maintenance and repairs.
– Conditions for terminating the lease.
– Terms for transferring or subleasing the property.
4. Draft the Lease Agreement
– Draft a comprehensive lease agreement outlining all agreed-upon terms. It’s advisable to involve a lawyer to ensure that the contract complies with Thai law and protects your interests.
(Should Consult professionals and lawyers)
5. Legal Due Diligence
– Conduct due diligence on the property to verify the ownership and ensure there are no existing encumbrances or legal issues.
– Check that the property owner has the legal right to lease the property.
6. Register the Lease
– To make the lease legally enforceable, it must be registered with the Land Department if the lease term is longer than three years.
– Prepare the necessary documents for registration, which typically include:
– The original lease agreement.
– Copies of the property owner’s title deed (Chanote).
– Copies of identification documents (passports) of both parties.
– Proof of payment of lease registration fees.
7. Visit the Land Department
– Both the lessee (you) and the lessor (property owner) need to visit the Land Department to register the lease.
– Pay the registration fee, which is usually 1% of the total lease amount.
8. Obtain the Lease Certificate
– Once the registration is completed, you will receive a lease certificate from the Land Department. This certificate serves as proof of your leasehold rights.
Additional Tips:
– Legal Assistance: Hiring a reputable lawyer can help ensure that the lease agreement is fair and legally sound.
– Renewal and Transfer Clauses: Clearly outline the renewal process and any conditions for transferring or subleasing the leasehold to another party.
– Dispute Resolution: Include provisions for dispute resolution to handle any potential conflicts during the lease period.
By following these steps and ensuring compliance with Thai legal requirements, foreigners can secure long-term leasehold rights to land or property in Thailand.
For more information please read our blog : Legal Blog : Leasehold agreement in Bangkok
3. Through a Thai Company
Foreigners can set up a Thai company, where they can hold up to 49% of the shares, while the remaining 51% must be held by Thai nationals. This company can then purchase land or property. It’s crucial to ensure that the Thai shareholders are genuine investors and not just nominees, as nominee structures are illegal.
Foreigners can own property in Thailand through a Thai company, provided that the company is structured and operates within the legal framework. Here’s a detailed guide on how foreigners can use this method:
1. Understand the Legal Framework
– A Thai company must have at least 51% of its shares owned by Thai nationals. Foreigners can own up to 49% of the shares.
– The company must be legally incorporated and registered with the Department of Business Development (DBD) under the Ministry of Commerce.
2. Set Up the Thai Company
– Consult with a Lawyer or Business Consultant: Engage a reputable lawyer or business consultant experienced in Thai company law to assist with the incorporation process.
– Prepare Necessary Documents: Gather and prepare the necessary documents for company registration, including:
– Articles of Association.
– Memorandum of Association.
– List of shareholders.
– Details of the company directors.
– Company objectives.
– Office lease agreement (if applicable).
3. Register the Company
– Reserve a Company Name: Choose and reserve a company name that is not already in use.
– File Incorporation Documents: Submit the required documents to the DBD to incorporate the company.
– Obtain a Company Registration Certificate: Once the company is incorporated, you will receive a Company Registration Certificate from the DBD.
– Register for Tax and VAT: Register the company for corporate income tax and VAT (if applicable) with the Revenue Department.
4. Capital Requirements
– Ensure the company has sufficient registered capital. The minimum capital requirement for a Thai company with foreign shareholders is typically 2 million THB, but this may vary depending on the business activities and the number of foreign employees.
5. Acquire Property
– Identify the Property: Find a property that you wish to purchase through the company.
– Conduct Due Diligence: Perform due diligence on the property to verify ownership, check for encumbrances, and ensure all permits and approvals are in order.
6. Purchase Agreement
– Negotiate and sign a sales and purchase agreement for the property. This agreement should outline the purchase price, payment terms, and other conditions of the sale.
7. Transfer Ownership
– Prepare Necessary Documents: Prepare the required documents for the transfer of ownership, including:
– The company’s corporate documents (registration certificate, list of shareholders, etc.).
– Sales and purchase agreement.
– Copies of identification documents of the company directors.
– Proof of payment of the purchase price.
8. Register the Transfer at the Land Department
– Both the buyer (company representative) and the seller must visit the Land Department to register the transfer of property ownership.
– Pay the applicable transfer fees and taxes, which typically include a transfer fee (2% of the appraised value), specific business tax (3.3% of the appraised value), and stamp duty (0.5% of the appraised value, applicable if the specific business tax is not applicable).
9. Obtain the Title Deed
– Once the transfer is completed, the company will receive the updated title deed (Chanote) with the company’s name registered as the owner.
Additional Tips:
– Genuine Thai Shareholders: Ensure that the Thai shareholders are genuine investors and not just nominees, as using nominee structures is illegal and can result in severe penalties.
– Legal Compliance: Regularly comply with all corporate regulations, including annual financial statements, tax filings, and maintaining proper records.
– Legal and Financial Advice: Continually seek legal and financial advice to ensure that the company operates within the law and maintains good corporate governance.
By following these steps and ensuring compliance with Thai laws, foreigners can successfully use a Thai company to own property in Thailand.
Each method has its own advantages and legal requirements, so it’s important for potential buyers to seek professional legal advice to navigate the complexities of property ownership in Thailand.
