(Source: http://www.thailand-lawyer.com/condo.html)
Buying
a condo in Thailand is an attractive option for many foreign nationals. There are less nationality restrictions on condo
ownership than land ownership and it is possible for a foreigner to own a condo outright. As one of the few property
rights allowed to non-Thai nationals, condo-ownership is popular for investment as well as residence and retirement purposes.
What condo units are foreign nationals legally permitted to purchase?
In general, non-Thai nationals may purchase condo units in condo
buildings throughout Thailand, as long as their purchase would not cause the foreign ownership ratio of combined units in
the building to exceed 49% of the total floor area. Certain condo buildings in the Greater Bangkok Metropolitan Area
may not be subject to the 49% foreign ownership ratio restriction.
What are the requirements for a foreign individual to purchase a condo unit in a building
in which foreign purchases are permitted?
Foreigners who do not have a Thailand residence permit must show proof that the funds for purchase of the condominium
were brought from outside of Thailand. Non-Thais who have legal residence permits are not required to show evidence
of funds coming from abroad.
What is the most typical way for a foreigner to purchase a condominium in Thailand?
Most foreigners purchase a condominium by showing evidence of
an incoming remittance of foreign currency into their bank account from abroad. This is typically demonstrated by requesting
the issuance of a certifying document from a bank in Thailand.
Can foreigners inherit ownership of a condo?
Property ownership of a condo may be inherited by either Thai or non-Thai descendents under
normal circumstances.
Are condominium long-term leases available?
Yes. Condominiums may be leased to foreigners for periods of up to 30 years and may have options
to renew. Leases of greater than 3 years are required to be registered with the Land Department. This option may be
useful to acquire condominiums in buildings that have exceeded their foreign ownership ratio quota.
Why is important to have a qualified lawyer supervise your condo purchase transaction?
Thailand laws regulating real estate transactions do not provide as many inherent consumer
protections as those in most western jurisdictions. For example, in Thailand, real estate agents are not licensed and
title insurance is not commonly used. Thailand is very much a "Buyer Beware" jurisdiction.
The most common methods of properly securing property are:
- Be the largest shareholder of a domestic company, and have the company own the property
(see details below, as you will own less than 50%, usually 39%); or
- Sign a 30-year (or less) lease with a domestic company or
Thai individual, with an automatic option to renew for another 30 years. This is called the 2x30 ("two times 30") way.
Many people follow these proper procedures and don't have problems.
In short, here is a summary of the current status of foreign real estate property ownership in Thailand, as
I've perceived from my research:
- A foreigner can own a condominum as long as less than
40% of the condos or apartments in the building are owned by foreigners. (This is an old law.)
- A company can own property such as land and a house (and hence
the foreigner can buy land and a house via their company) as long as no one foreigner owns more that 39% of the company (recently
amended from 33%) and total foreign ownership of the company does not exceed 49%.
- The
Thai wife of a foreigner can own property (a recently changed legal status due to gender equality in the new 1997 constitution
revision), in her name only. This is fine as long as you don't have marital problems. (The same, of course, goes for a Thai
husband, but the law was changed recently for Thai wives due to the new constitution guaranteeing equal rights.)
- A
foreigner can lease land for 30 years, with an option for another 30 years, according to articles in the press and as confirmed
by every lawyer I've asked. (If you live longer than 2x30 years, consider yourself lucky in another regard.) This is referred
to as the 2x30 ("two times 30") option.
- The
2x30 option has been mentioned in "this is how I did it" circles, but you are advised to check with a lawyer, and ask about
what proposed laws were actually passed in Parliament over the past few years. After the 1997 economic crisis and IMF intervention,
plans were written up to amend the property laws so that a foreigner could lease in their individual name up to 1 rai of land
for up to 30 years (1 rai = 1600 square meters or about a 40 meter x 40 meter plot, or 1 acre = 2.5 rai), on which the foreigner
could build a residential property. Before the foreigner could do this, the foreigner must deposit 10 million baht of hard
currency from overseas into a bank in Thailand. This amendment to the property law had been pending in parliament for a long
time, but I didn't keep up with it. Lawyers say it was passed, but I didn't read that myself in the newspapers, not that I
never miss a day.
- However,
I did catch something in apparent reference to that "10 million baht of hard currency", as stated by The Nation in March,
2001:
The way this is often pitched is as follows:
"Put a few hundred dollars worth of baht in your pocket. Get all the forms for shareholders in your company.
Go onto the street and find some strangers. Pay them some tens of dollars to sign a shareholder document, sign another document
selling their shares (leaving the date blank), and go photocopy their ID card. These are your six Thai shareholders. They
don't even know what company they are shareholders in. Even if you get a big problem and someone traces down these shareholders
based on their ID card, you already have their signed document selling their shares so that you can immediately backdate and
transfer these shares to a trusted person."
Another way this is pitched is by lawyers who say "Leave it up to us, we will handle all of the above".
The option, of course, is to find trusted shareholders who know exactly what they own (say, 61% of your company
split among 6 shareholders). These shareholders may be a combination of employees, relatives, friends, other associates, shareholders
of other companies you are involved in, whatever. This is not a sham company, but it's a company you must set up carefully
and manage.
A hybrid option is that the latter company owns the property and issues a 2x30 lease to you.
To many, the main benefit of company ownership of property is that a company can own or lease a lot more property
than can an individual.
If you are leasing
land, then you must pay taxes on the lease amount. One source states that, for example, if you lease land for 30 years and
pay for the entire period in advance in order to get a receipt, then you must also pay 1.5% of the total value of that lease
for the entire 30 years ... in advance. If this is true, then buying the land in your wife's name and then leasing it from
her means you pay more in taxes.
In my home country of the USA, it was common for investors to buy a property and then
rent it out, whereby the rent covered much of the mortgage, and often exceeded it. In Thailand, this is not true, i.e., rental
prices usually do not come close to mortgage prices. This is the nature of the Thai property market and the values in the
local economy.
Notably, right now, the ratio of sale to rental value in Thailand is around 200, i.e., if you collect rent for
about 16 years then you'll break even. In the west it's around 100.
However, many properties have been appreciating in value at a high rate in Thailand, whereby many investors
have bought a property and simply sat on it for awhile before reselling it to turn a profit, the property having never been
occupied. This is particularly true in Bangkok, Pattaya, and Phuket. Under those circumstances, the rent could be seen as
pure profit, in view of the eventual resale of the property for profit.
The Finance Ministry, National Housing Authority and Government Housing Bank
