Thai law, in general, prohibits non-Thai citizens from buying land or purchasing land in Thailand. However, there are various exceptions to the law, as well as methods for foreigners who want to buy land or purchase land to acquire rights to land in Thailand legally.
What are the options available for buying land in Thailand?
For a foreigner wishing to buy land or purchase land in Thailand, there are mainly four options worth exploring. These include using investment, leasing, owning a company and marrying a Thai spouse.
Investing/BOI: With significant investment of funds, foreigners may be allowed to own a limited amount of land under Thai property law. Some foreign companies seek and obtain the approval of the Board of Investment (BOI) to purchase land for a limited period. This option, however, is not available to the vast majority of non-Thai nationals seeking to obtain a second home, retirement home or investment in Thailand because of the legal restrictions involved. As a result, other options must be examined.
Leasing: Thai property law allows a foreigner to lease land for a maximum of 30 years, with lease renewal options of 30 years. Many foreigners choose this method to secure land or property ownership. In comparison to setting up a company, land leasing is easier and requires less maintenance.
Owning a company: A foreigner may use a Thailand-Registered Company to obtain property rights or land interest in Thailand. This “Thai” company must be at least 51% owned by Thai shareholders, while the remaining 49% or less may be held by foreigners.
By company formation, foreigners are able to acquire ownership interest in land in Thailand. This ownership is deemed permanent if the company stays in operation and does not sell or transfer the land or the shares. Company formation for the purpose of owning land would be suitable for people considering setting up businesses in Thailand; people with intentions of holding land for investment or for long duration; and as inheritance for future heirs. One other advantage of this type of ownership is the possibility of mortgaging and/or subdividing the land for resale purposes. This is a right normally conferred by land leases.
The use of Thai nominees to hold shares in a company owning land in order to circumvent the law is an offense under Thai law. It is therefore recommended to have genuine Thai partners in any company owning land in Thailand.
Another issue to be aware of is the need to maintain regulatory compliance of the company. The law requires a Thailand-registered company to file annual balance sheets and to maintain a company address. Moreover, companies that are not operating may be de-listed. It would, therefore, be wise to use an active company to purchase land or buy property in Thailand.
Marrying a Thai spouse: A recent revision of Thai law has provided the opportunity for a Thai with a foreign spouse to buy land or property in Thailand. Prior to registering the land parcel at the Land Department, the couple may be asked to sign declarations, declaring that the funds for the property came solely from the Thai spouse. This may, in effect, result in the non-Thai spouse waiving his/her rights on the land or property. Such declarations may become problematic in a divorce case as the non-Thai spouse may have difficulties proving that the land was marital property. To prepare for such an event, a skillfully-drafted Agreement Before Marriage may be useful.