A
Professional Agent in Luxury Beach Front Villa and Sea View Apartment
in Phuket
Can Foreigners Own Property in Thailand?
Many foreigners want to buy property in Thailand, whether they live in the
country or not. Some wish to purchase for investment purposes, some wish
to purchase a home for themselves. What are the options available to foreigners?
Condominiums
Condominiums are gaining in popularity amongst foreigners. The reason for
this is that by Thai law, foreigners are permitted to own a condominium
providing they satisfy certain criteria.
There are only five classes of foreigner considered to qualify as owners
of condominiums:
1. Foreigners holding a residency permit under Immigration law;
2. Foreigners permitted to stay in Thailand under the Investment Promotion
law, such as the Board of Investment;
3. A Thai registered entity with at least 51 percent of shares held by Thai
nationals;
4. Foreign juristic entity in receipt of a promotion certificate under the
Investment Promotion law;
5. Foreigner or a foreign juristic entity remitting a foreign currency into
Thailand or withdrawing money from Thai Baht account of the persons who have
residence outside Thailand or withdrawing money from foreign currency account
.
If you do not fall in to any of the above classes, then you are not allowed
to own a condominium.
Further, according to the Condominium Act, not more than forty-nine percent
of a condominium block can be foreign owned . In light of this, a purchaser
must request a letter of guarantee from the condominium juristic person setting
out the proportion of foreign ownership. Such letter needs to be submitted
at the Land Office together with other documents when a foreign purchaser
is registering a purchase.
If the condominium block is already held by 49% foreigners, does that mean
a foreigner cannot proceed with the purchase? Not necessarily. A Thai juristic
person can purchase a condominium, with no restrictions, therefore if the
foreigner is a director/shareholder of a Thai Limited Company, the condominium
can be bought by the company.
A further restriction exists with respect to the Condominium Act. A foreigner
must remit foreign currency in to Thailand to finance the purchase. (There
are a few exceptions to the rule, one being if you work in Thailand, you
can use funds earned in Thailand so long as they were paid into a non-resident
bank account.) Further, the foreigner must obtain a Foreign Exchange Transaction
form (FET) from the bank as proof of such remittance. The FET form must
be filed at the Land Department when the foreigner registers the purchase.
The FET form will be issued by the receiving bank. If the foreigner remits
Thai Baht from abroad, the bank will refuse to issue an FET Form.
The amount of money specified in the FET Form must cover the whole of the
condominium unit price.
Where the remittance
is less than $20,000 USD, the bank will issue a ‘credit
advice’. The credit advice is issued in English and is not acceptable
by the Land Office as evidence of remittance for a condo purchase therefore
you need to ask the bank to issue a letter of guarantee in respect of the
remittance, which normally costs 200 THB per letter.
Land
Generally, foreigners are unable to purchase land in their own name. One
option available is leasing. The law permits a foreigner to enter in to
a lease agreement. Leases aimed at foreigners often have a term of 30 years.
This is the maximum term for a lease which can be registered by law at
the Land Office. However, often a seller will agree to include a clause
in the Lease Agreement permitting the foreigner to renew the lease, sometimes
for a total of 90 years.
However, foreigners do
not always like the idea of leasing and would prefer to own the freehold.
Unfortunately, Thai law does not allow foreigners to
own freehold land in their own name. If a foreigner has a Thai spouse then
the foreigner could give the purchase funds to the spouse and the spouse
could buy the property on behalf of the foreigner. This obviously carries
some risk because the property will be registered in the spouse’s name
and the foreigner may be requested to sign a form stating that they have
no right or interest in the property. Therefore, if the spouse decides to
sell the property at a later date, the foreigner would have no right to claim
the sale proceeds because they have signed away their rights. In essence,
the money the foreigner gave to their spouse is treated as a gift.
Foreigners do try to protect themselves by asking their spouse to enter
in to a contract with them, confirming that the funds belong to the foreigner,
that the property cannot be sold without the permission of the foreigner
and that on the sale of the property, the proceeds are returned to the foreigner.
However, this sort of agreement would be unenforceable because it is contrary
to the law, thereby offering no protection to the foreigner.
There is however, one lawful option available, which does offer protection
for the foreigner. A Thai Limited company can purchase land, as a juristic
person. Therefore, if a foreigner is a director and shareholder of a Thai
Limited Company, they can, in essence, purchase land through the company.
The only restriction is that the company must be allowed to own and invest
in land in accordance with its objectives and Articles of Association.
The only problem presented is that a foreigner can hold only 49% of the
shares in a Thai Limited Company, the balance must be held by Thai shareholders.
Therefore, on the face of it, the foreigner can never have control of the
company. This is a common misconception.
It is possible for a foreign shareholder to be issued with Preference Shares
which give them increased voting power and allows them to control the Thai
Company thereby controlling the assets of the company i.e. the land.
A House/Villa
A foreigner can purchase a house or villa in their name however, they cannot
purchase the land upon which the house is situated. This is quite a strange
concept for most foreigners. There is an answer though. Foreigners can
enter into a sale and purchase agreement for the house and a separate lease
for the land. Alternatively, a Thai Limited Company can buy both the land
and house.
Repatriating funds
There is no Thai law preventing a foreigner from selling their property and
remitting the sale proceeds back to their home country. The usual Transfer
fees, Stamp Duties etc will apply however there is no capital gains tax
in Thailand.
Similarly, if the foreigner sells his/her shares in a Thai Limited Company,
the sale proceeds can be remitted abroad.
There are no fines or taxes applied to such remittances although you may
be asked to produce paperwork, such as a sale contract, to show where the
money came from. This may be requested by the Bank of Thailand to check that
you are complying with money laundering laws.
Summarized by Knight Frank Thailand
Trading
as
Knight Frank Chartered (Thailand) Co., Ltd
Knight Frank Phuket Co.,Ltd
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