Ownership of Land and Condominium Units by Foreigners
If you are a tourist or an expat who plans to reside in Thailand for good, you may be interested to know about the process and the surrounding intricacies on how to own a property in the country. Since there are many regulations that govern the possession of land and condominium units by foreign nationals, it will help a lot if you know these guidelines.
Individual Land Ownership
Foreign nationals are not permitted to own properties in Thailand. In theory though, individual foreigners can possess land of 1,600 square meters or 1 rai in certain districts for solely residential purposes. This is made possible through a regulation done by the Board of Investment: section 96 of the Land Code Act. In this legislation, a foreigner should acquire investments (worth at least 40 million baht) that are conducive to economic growth – either in government bonds or specified assets, apart from purchasing the land. Once this is achieved, although highly unlikely, a foreigner has to adhere to strict conditions. In addition, the land should be located in a certain area, and the purchase should be approved by the Minister of Interior. Moreover, this land ownership cannot be transferred by inheritance, which means the land can only be used by the foreigner for residential purposes during his lifetime. In actuality, even if a foreign national is very rich, this is not an advisable measure. Apart from this only exception, land ownership in the country remains restricted for foreigners.
Land Ownership for Foreign Companies
Foreign companies who have considerable investments that boost the country’s economy can enjoy several privileges and exceptions for land ownership. This is made possible by section 27 of the Investment Promotion Act, which is under the Industrial Estate Authority of Thailand Act – section 44 and the Petroleum Act – section 65. The privileges and exceptions, however, are only valid during the duration of the investment. A Thai company controlled by foreign nationals with majority Thai shareholding (measured by share percentage and the count of shareholders) is the only way that foreigners can control their real estate investments in the country. Although partial land ownership (up to 49%) of a Thai company owned by a foreign national is not deemed illegal, it is considered controversial by many. Since 2006, Thai government officials have been strict about the misuse of Thai corporations in order to evade the property ownership restrictions for foreigners.
Land Ownership through Inheritance
As per the 93rd section of the Land Code Act, a foreign national who inherits Thai property as a statutory heir can own land, as long as he is given permission by the Minister of Interior. However, this section is only applicable for foreigners governed by the section 86 treaty. This is not valid for foreign nationals who are named statutory heirs by spouses who are Thai nationals. So far, there has been no treaty in effect permitting foreign nationals to acquire land in the country, therefore, the Minister of Interior will not give this type of permission to any foreigner. As such, a foreign national can play his role as statutory heir and inherit a parcel of land; however, he cannot register himself as an owner. Consequently, he needs to sell the land he has inherited within a year after his bequest.
Since a foreigner cannot own land in Thailand, condominium ownership is the next best thing. After all, natural and juristic individuals who are non-Thai citizens can own a condominium unit in the country, as specified by the quota for foreign ownership of the condominium. However, these foreign nationals should follow the specifications of the Thailand Condominium Act, Section 19.
Thailand Condominium Act Stipulations
In Thailand, foreign freehold ownership of a condominium is governed by the following statutes:
- Only 49% or less of the total area of all the condominium rooms (when joined together) can be owned by foreign nationals. The rest – 51% or more – should be owned by naturalized or juristic Thai citizens. For example, in a complex with 100 condominium units, only 49 can be acquired by foreigners.
- Foreign nationals who wish to purchase a condominium unit should qualify for ownership, as stated by the Condominium Act, Section 19. Usually, this requires a foreigner to bring foreign currency equal to the cost of the condominium unit (in baht)– and have it exchanged in Thailand.
NB. Outright foreign ownership of a condominium denotes a unit licensed and registered under the Condominium Act of Thailand.
Should the foreign ownership quota of a certain condominium project run out, the remaining units can be transferred to foreign nationals under a certain contract: the condominium lease agreement. There are no regulations concerned the condominium leases to foreigners, in comparison to buying a freehold condominium in the country. The lease agreement allows the foreigner to use and possess the unit for a certain length of time. In legal terms, leasing a Thai condo unit is as good as normal tenancy. The user has no right to sell the unit or obtain a title deed. Under this agreement, a foreign national cannot claim co-ownership of common areas in the building. He also cannot vote during the meeting of joint owners. Once the agreement expires, the lease can be renewed, if the owner is willing to renew the document. Otherwise, the unit should be returned to the owner. The condominium lease agreement is covered in the Civil and Commercial Code, ‘hire of property’ section. As a property hire, the foreign national needs to shoulder rental tax, as specified in the lease agreement.