Thailand is and remains beloved by many tourists, thanks to its rich culture, amazing scenery, delicious food, and super-friendly people. It’s so popular that some foreigners wish to live in the country. While there are benefits of purchasing property in Thailand, ownership is a different matter altogether for many interested foreign buyers.
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Can You Own Land In Thailand?
Under local laws, foreigners are prohibited from owning land under their name, and this remains largely true to this day. A theoretical exception exists under Section 96 of the Land Code, and there’s an ongoing discussion about making regulatory changes, but the former is rare and impractical, while the latter has yet to be implemented due to significant public backlash. This doesn’t mean that alternatives are not available. Foreigners can acquire land but not own it directly. They have to establish a Thai limited company to make this happen. Another option is to enter into a leasehold agreement.
What Is The Difference Between A Freehold & A Leasehold Property Ownership?
A Thai freehold ownership allows you to own a property indefinitely if you meet certain economic requirements and follow either of the two acquisition options.
Pros
- Potential appreciation of a property
- Long-term return on investment
- Potential rental income
- Equity growth through mortgage payments
- Security and permanence
Cons
- Higher down payment and closing costs
- Tied to a specific location for a long time
- Possible difficulty when selling, along with higher fees
- Maintenance and repair requirements
- Property value is vulnerable to market fluctuation
Leasehold ownership is governed by the leasehold system in Thailand. It specifies that a leaseholder can rightfully occupy a property for a pre-determined time, which can range from 5 to 30 years. This type of ownership is protected under the local laws and can’t be disrupted.
Pros
- Lower upfront costs, usually requiring only a security deposit and advance payment for the first month’s rent
- Flexibility to move, if and when desired
- Maintenance and repair are the landlord’s responsibility
Cons
- Potential increase in rental fees due to market fluctuations
- No equity growth
- Limited to no control over renovations and modifications
What’s The Rule On Foreign Ownership For Specific Types Of Properties?
Condominiums
Unlike land, a foreigner like you can buy and own a condominium and put it directly under your name. But you may want to beat other foreigners to it, as there are limits as to how many foreigners can own units in a given condominium building. Thai law limits ownership of the total usable floor area to less than 49%.
Houses, Villas, & Other Landed Properties
The law that keeps foreigners from owning land in Thailand extends to landed properties, such as houses and villas. This is one thing you should consider when navigating luxury real estate investments in the country. Since outright ownership isn’t possible, you can take one of the two legal arrangements available to you. Either option allows you some degree of control over a property acquired.
Leasehold Agreement
Since a foreign individual can’t buy a landed property, you can enter into a leasehold agreement with a tenancy period of up to 30 years. If you love living in the same property for longer, and if the landlord allows it, you can renew the lease agreement.
Thai Limited Company
This company structure allows foreigners to hold less than 49% of the shares, while the rest are owned by the locals. Through the foreign-owned company, you have the option to buy land and landed properties. Before you buy villas in Phuket, you should familiarise yourself with the real estate laws that apply to you as a foreign investor.
While you’ll find it difficult to navigate the Thai real estate market, there are still investment opportunities you can explore. If you’re eyeing Phuket for your next home, consult Sunway Estates for property options.
