A guide to Land Law in Thailand This is mostly covered by the Land Code Act BE 2497 (1954). This amended act has an important part in governing property ownership and real estate transactions. Thailand’s Land Laws protect national interests while offering a pathway for Thai nationals and foreigners to invest in the country’s real estate market. In this guide, we will explore the complexities of Land law in Thailand, highlighting the restrictions and the ownership options available for foreign investors.
Overview of Land Ownership in Thailand
Under Section 86 of the Land Code Act B.E. 2497 (1954), foreigners are prohibited from owning land in Thailand, except under very limited circumstances such as inheritance. This law forms the foundation of land ownership regulations in Thailand, endorsing a national policy prioritizing local land ownership. However, while direct ownership is restricted, several legal mechanisms allow foreigners to hold property interests, including condominium ownership, long-term leases, usufructs, superficies agreements and by registering a mortgage on the land title.
Foreign Ownership of Land: Legal Restrictions
Foreigners are not permitted to own land directly in Thailand, although a Sap Ing Sith can be registered to a foreigner for a total of 30 years this is not true ownership and has restrictions.
Foreigners can inherit up to one rai of land (1,600 square meters) only for residential purposes.
Commercial or agricultural land cannot be inherited.
Ministerial approval is required for foreign inheritance of land. Failure to obtain this approval means the land must be sold within a year.
Although this is law in reality foreigners are not usually permitted to inherit land.
Foreigners, however, have several legal alternatives to secure property interests in Thailand, including:
Condominium Ownership: Under the Condominium Act B.E. 2522 (1979), foreigners can own up to 49% of a building’s total condominium space. This remains one of the most straightforward ways foreign investors hold property in Thailand.
Foreigners can buy and own a condo freehold and own it 100 percent if it falls within the 49 percent total condominium space.
Industrial Estates: Foreign companies may own land in industrial estates controlled by the Industrial Estate Authority of Thailand.
BOI Privileges: Some BOI companies offer promotions that include the option to acquire a specific amount of land (for the use of their headquarters for example).
Leaseholds: Foreigners can lease land for up to 30 years, with an option to renew for an additional 30 years. These leases must be registered to be legally enforceable.
There is no right of perpetual renewal ship to the beneficiaries of the Lessor.
What does this mean?
It means if you have a registered lease of 30 years but have been promised 30 plus 30 plus 30 and the lessor dies before the expiry of a 30-year period there is no guarantee that the beneficiary of the lessor has to oblige you this right.
Contact our General Manager of Foreign Affairs Brian Ramsden on 0956583038 to arrange a free consultation to discuss how we can assist you and secure your property investment.
Usufructs and Superficies: These legal agreements allow foreigners to use land without owning it. Superficies permit foreigners to own buildings on land they don’t own, while usufructs provide the right to use land for a specified period.
Condominium Ownership: An Attractive Option for Foreigners
One of the easiest ways foreigners invest in Thailand’s real estate market is through condominium ownership. The Condominium Act allows foreigners to own up to 49% of the units in any condominium building. However, foreign buyers must comply with strict regulations, including transferring funds from abroad and obtaining a Foreign Exchange Transaction Form from a local bank.
Condominium ownership offers several advantages:
Freehold Title: Foreigners gain full ownership of the unit, including the ability to sell or transfer the property.
No Land Ownership Concerns: Since the condominium owns the land, the foreign buyer avoids the land ownership restrictions imposed on foreigners.
Leasehold Agreements: Securing Long-Term Use.
For foreigners unable to own land directly, leasehold agreements offer a viable alternative. Leaseholds provide the right to use the land for up to 30 years, possibly renewing for an additional 30 years. Although leaseholds do not grant ownership, they provide a secure, long-term residential and commercial use options. However, at the end of the lease period, the property reverts to the landowner.
Ownership of the Landed Property House or Villa
It is possible if the land is split from the structure on the land to own the House or Villa and register it to a foreigner.
Remember the Land has to be leased and all leases over 3 years in length must be registered by law.
Superficies and Usufructs: Additional Legal Options
Superficies allow foreigners to own buildings on land they do not own. This agreement is typically used for long-term projects and can last up to 30 years or for the landowner’s lifetime.
Usufructs provide the right to use someone else’s land for a specific period, often lasting the lifetime of the usufructuary. This option enables foreigners to lease or sublease property and benefit from its use without owning the land.
Investment Incentives and Corporate Structures
Foreign investors interested in land ownership can also explore opportunities through investment incentive programs such as those offered by the Board of Investment (BOI), the Industrial Estate Authority of Thailand (IEAT), and the Eastern Economic Corridor (EEC). These programs may grant foreign ownership rights in exchange for substantial investments, usually tied to economic benefits like job creation or technology transfer.
Another legal avenue for land ownership is through corporate structures. Foreigners can own up to 49% of a Thai company, with the remaining shares owned by Thai nationals. This company can then legally purchase land, provided it adheres to strict guidelines set by authorities.
PLEASE NOTE
It is illegal for a foreigner to set up a Thai company for the sole purpose to own land.
Nominees are also illegal.
Unless you are operating a real company following the law the use of a company to buy property is illegal.
There are ongoing costs in buying property in a company name and remember you do not own it the company does.
Due Diligence and Compliance with Land Law in Thailand
Conducting thorough due diligence before purchasing property in Thailand is crucial to avoid legal issues. This includes:
Verifying the legal status of the property.
Confirming that the seller has legitimate ownership rights.
Ensuring compliance with zoning laws and building regulations.
Foreign buyers should also adhere to foreign ownership quotas, particularly in condominiums, as exceeding these quotas can result in legal complications.
Servitude this is very important.
Lawyers For Expats Thailand
Lawyers for Expats Thailand will do more than handle the sale/purchase agreement and accompany the buyer and seller to the land department. We conduct proper due diligence for clients and provide a full solution to ensure the client follows the law and that their investment is protected.
Lawyers for Expats Thailand also work with the estate agents to ensure everything runs smooth.
In addition to this if your property investment is over 250,000 USD, we will assist you in applying for a LTR Visa 10 years 5 plus 5 which will provide a number of benefits for you and your family including Tax free foreign transfers into Thailand
Proposed Changes to Land Law in Thailand
These are currently just proposals
The Thai government has recently proposed amendments to foreign ownership regulations, including:
Increasing the foreign ownership quota in condominiums from 49% to 75%.
Extending leasehold terms from 30 years to 99 years.
These changes aim to stimulate foreign investment by providing greater security and longer investment opportunities. While these proposals are not yet enacted, foreign investors should stay informed about any updates to Thailand’s land law.
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