Welcome to the land of smiles, where the vibrant culture, stunning landscapes, and bustling cities draw countless expatriates seeking both adventure and tranquility. Whether you’re here for a short stint or considering making Thailand your long-term home, understanding the intricacies of property ownership is crucial. In this blog, we’ll embark on a comprehensive journey tailored for expats and foreigners, exploring who is eligible to own property in Thailand and how to navigate the process with confidence.
Who has potential to own property?
The essence of the ministerial regulation is to define four categories of high-potential foreigners who can acquire land for residential purposes.
These categories include:
1. High net worth global population
2. Foreign retirees
3. Those wishing to work from Thailand
4. Specialists with special expertise
The land area granted under this right must not exceed 1 rai, according to Section 96 bis of the Land Code, and the land must be used for personal residential purposes within Bangkok, Pattaya, or municipal areas, or within designated residential zones according to town planning laws.
There must be an investment in a business or activity of at least 40 million baht, maintained for no less than 3 years. Examples of such investments include purchasing Thai government bonds, investing in real estate mutual funds, infrastructure funds, or real estate investment trusts established under the Trusts for Transactions in the Capital Market Act (a new addition from the 2002 ministerial regulation).
If the investment is withdrawn before the required holding period, the investor must notify the competent official in writing within 60 days from the date of withdrawal. For the application process, conditions, and methods, the request and supporting documents should be submitted to the Director-General of the Department of Lands for further consideration by the Minister.
The Ministry of Interior explained that the draft ministerial regulation for acquiring land for residential purposes by foreigners, according to economic and investment stimulus measures by attracting high-potential foreigners to Thailand, has added principles regarding the types of investments and the duration of the investment period, differing from the current ministerial regulation of 2002.
The draft regulation remains within the framework of Section 96 bis of the Land Code, which stipulates that foreigners can acquire land for residential purposes not exceeding 1 rai by investing at least 40 million baht in types of businesses beneficial to the economy and society or activities announced by the Board of Investment as eligible for investment promotion under the Investment Promotion Act.
The investment must be maintained for no less than 3 years, and the land acquired must be located within Bangkok, Pattaya, municipal areas, or designated residential zones according to town planning laws.
Source: https://www.thaipbs.or.th/news/content/320831 /
Department of Land https://www.dol.go.th/Pages/home.aspx
How can foreigner own land
Foreigners generally cannot own land in Thailand directly.
However, there are a few exceptions and legal mechanisms that allow foreigners to control or use land in Thailand.
Foreigners can only own 1 Rai 1
(1 ไร่ (Rai) = 4 งาน (์Ngan) = 400 ตารางวา (Square Wa) = 1,600 square meters or 0.3953686 acre) in the case that they own more than that, they will be forced to sell the extended land
of land and only for the purpose of building a home for living.
Here are the primary ways:
1. Through Leasehold Agreements ( For living purpose only)
– Long-term Lease: Foreigners can lease land for up to 30 years, with an option to renew the lease for two additional 30-year terms. This provides a total potential lease period of 90 years.
– Registration: The lease must be registered at the Land Department if it is for a term of more than three years to be legally enforceable.
– Contractual Terms: The lease agreement should clearly outline renewal terms, responsibilities, and other conditions.
2. Through a Thai Company
– Company Ownership: A foreigner can set up a Thai company, where they can own up to 49% of the shares. The remaining 51% must be owned by Thai nationals.
– Control Mechanisms: Although the company must have a majority of Thai shareholders, control can be maintained through various legal mechanisms such as preference shares or structuring the company’s bylaws.
– Legal Compliance: The company must be legally registered and operate as a legitimate business, with Thai shareholders having genuine ownership and not merely acting as nominees.
3. Investment in BOI-approved Projects
– Board of Investment (BOI): The BOI can grant permission for foreigners to own land for business purposes under certain conditions, especially if the investment promotes economic development and falls within certain industries.
– Application Process: Businesses must apply for BOI promotion and meet specific criteria related to investment amount, industry type, and potential economic benefits.
4. Marriage with a Thai National
– Land Ownership: A Thai spouse can own land, but the foreign partner must legally declare that the funds used to purchase the land are the separate property of the Thai spouse.
– Usufruct Rights: The foreign partner can obtain usufruct rights, granting them the right to use the land during their lifetime without ownership rights.
5. Inheritance
– Usufruct or Lease: Foreigners can inherit land but can only retain it for use or lease purposes. They must dispose of the land within a year if they inherit ownership rights. Must be the “legal heir” and get verification from the Ministry of land first only. Inheritance from a Will testament will not be approved.
6. Condominium Ownership
– Direct Ownership: While not land, foreigners can directly own up to 49% of the units in a condominium building. The purchase must be made with foreign currency transferred into Thailand.
Key Considerations:
– Legal Advice: It is crucial to seek legal advice to navigate the complexities of Thai property law and ensure compliance with all regulations.
– Due Diligence: Conduct thorough due diligence on any property and understand the legal implications and obligations associated with each method of control or ownership.
– Use a registered Agency who has experience and is qualified.
By utilizing these methods, foreigners can effectively control or use land in Thailand within the bounds of the law.
What you should be aware of :
Using Thai nominees to circumvent restrictions on foreign land ownership is illegal in Thailand. Here’s an explanation of why this practice is against the law and the potential consequences:
1. Legal Framework
Thailand’s land laws, particularly the Land Code Act, impose strict regulations on foreign ownership of land. According to these laws, foreigners are generally prohibited from owning land directly. To enforce these regulations, the Thai government has established clear rules to prevent foreigners from using nominees to bypass these restrictions.
2. Definition of Nominee Structure
A nominee structure involves a foreigner using Thai nationals or Thai entities (such as a company) to hold land or property on their behalf. The Thai nationals or entities appear as the legal owners, but in reality, they are acting as proxies for the foreigner, who provides the funds and exercises control over the property.
3. Reasons Why It Is Illegal
– Circumvention of Laws: Using nominees directly violates the intent of Thai land ownership laws, which aim to keep land ownership within the control of Thai nationals.
– False Representation: Nominee structures involve false representation of ownership. Thai law requires the true nature of ownership and financial interest to be accurately reported and transparent.
– Economic and Security Concerns: Allowing foreigners to own land through nominees can lead to undue foreign influence over Thailand’s real estate market and strategic areas, potentially affecting national security and economic stability.
4. Legal Provisions
– Land Code Act: The Land Code Act explicitly prohibits the use of nominees to hold land on behalf of foreigners. Sections 86 and 87 of the Land Code Act detail these prohibitions and the penalties for violating them.
– Civil and Commercial Code: The Civil and Commercial Code also supports the prohibition by requiring that legal transactions be genuine and not a facade for bypassing the law.
5. Penalties for Violating Nominee Rules
– Criminal Charges: Both the foreigner and the Thai nominee can face criminal charges, including fines and imprisonment.
– Confiscation of Property:The Thai government has the authority to confiscate property that is found to be held illegally through nominee arrangements.
– Nullification of Contracts: Any contracts or agreements made under a nominee structure can be declared null and void, leaving the foreigner without legal recourse to claim the property.
6. Alternatives to Nominee Structures
Instead of using illegal nominee structures, foreigners should consider legal methods for holding or using property in Thailand and consults with professional fully registered agency :
– Condominium Ownership: Foreigners can own up to 49% of the units in a condominium building.
– Leasehold Agreements:Foreigners can lease land or property for up to 30 years, with the possibility of renewal.
– Investment in BOI-approved Projects: Foreigners can obtain land for business purposes through the Board of Investment (BOI) if the project meets specific criteria.
– Thai Company: Foreigners can hold up to 49% of a Thai company that owns land, provided the company operates as a legitimate business with genuine Thai shareholders.
Conclusion
Using Thai nominees to circumvent land ownership laws is illegal because it undermines the legal framework designed to protect national interests and ensure transparency in property transactions.
Engaging in such practices exposes both the foreigner and the Thai nominee to significant legal risks, including criminal charges and property confiscation.
It is essential to adhere to legal methods for property acquisition and use in Thailand to avoid these risks.
So please do your research well and consult with Professionals.
