Phuket Investment Property Business Opportunity in Phuket Thailand

Foreign Ownership of Property in Thailand

Can foreigner own a property in Thailand

Direct foreign ownership of land is not allowed under Thai law. However, a foreigner may own a unit of a registered condominium and a building upon a piece of land, which is considered a separate entity from the land itself.

While foreign individuals, and partnerships and companies with less than a 49% Thai share-holding, are virtually barred from owning land, companies with a majority Thai shareholding of more than 51% are legally allowed to purchase land. Though, in practise, this can still be a difficult purchase to be allowed to make. However, there are exceptions for foreign company ownership of land allowed under Section 27 of the Investment Promotion Act, administrated by the Board of Investment (BoI). This allows for certain companies involved in certain businesses - usually manufacturing - who have invested or will be investing a significant amount of foreign capital into the project to buy land in certain designated areas. Land use is limited to the promoted activity and must be sold within one year of termination of that activity. The BoI regularly reviews the land use to ensure that the promoted activity is being undertaken.

Thai spouses of foreign nationals are also barred from purchasing land, unless their partner signs a declaration indicating that the land is owned independently of the spouse and that they have no interest in the property in any way (including financial).

FREEHOLD OR LEASEHOLD

There are many questions asked as to which method is better and there are relevant arguments made for both cases. Since foreigners cannot own land outright, registered leaseholds with appropriate extensions are equivalent to freehold. Registered Leaseholds are safe, uncomplicated and easy to setup.

LONG TERM LEASEHOLD

Currently the most popular method of securing the land beneath a building that a foreigner wishes to own is to take out a thirty-year lease on the land, with options to renew for two further terms of 30 years, whereby all types of titled land may be leased up to 90 years i.e., 30 years for the right to use of such Property ,typically with 2 x 30 year extensions with a total of 90 years and purchase options can effectively control land for generations to come.

Ownership of the house upon the leased land can be confirmed under civil law as an independent component separate from the land. This means that the lessor of the land has no rights to seize the building should the lease expire or either party default upon the lease agreement. Each renewal of the lease must be registered by both lessor and lessee at the Land Department and payment of government fees and stamp duty must be made upon the renewal.

FREEHOLD PROPERTIES STRUCTURE

If a foreigner is going to operate a business in Thailand then he may purchase the freehold of the land through his Limited Company .The land will be owned by the Company , not the individual.

Even recent amendments that allow a Thai spouse ( male or female ) of a foreigner to buy require proof that the money used in the purchase of freehold land is legally solely theirs with foreigner claim to it.

LIMITED LIABILITY COMPANY

this form of purchasing property is the most popular with foreign investors as the Articles of Association can be varied to allow greater protection for foreign minority shareholders where majority Thai ownership is required under the Alien Business Law. Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under Section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land.

This results in the foreign ownership of the company being limited at 39%, but with changes to the Articles of Association, the use of two tiered stocks (ie. Ordinary Shares and Preferred Shares with different voting rights), plus the foreigner being the only director of the company who can commit or bind the company in any contractual dealings - it is possible to effectively give the minority shareholder control over the company.

Acquisition of Land by Alien

According to Section 86 of the Land Code, an alien may acquire land in Thailand only by virtue of the provision of a treaty providing him with the right to own immovable property. Obtaining such acquisition is subject to the provision of the Land Code and the Ministerial Regulations issued under the Code, and the permission must be obtained from the Ministry of Interior. Before the termination of the treaty which was made on February 27th, 1970, there were 16 countries bided to the treaty ; USA, England, Switzerland, Germany, Denmark, Norway, the Netherlands, France, India, Belgium, Sweden, Italy, Japan, Burma, Portuguese, and Pakistan. Since then, Thailand has no longer made any treaty with any country to allow an alien to acquire land in Thailand by virtue of a treaty.

However, the Land Code has been amended with Section 96 bis providing that since January 19th, 2002, an alien is allowed to purchase land in Thailand for residential purpose and the land to be purchased shall be not more than one rai in area, and the following rules and conditions must be met:

Bringing money not less than Baht forty million into the Kingdom for investment and maintaining the investment not less that five years; )

Permission must be obtained from the Minister of Ministry of Interior;

Money brought into the Kingdom shall be invested in one of the following businesses or activities;

3.1	To purchase bonds of Thai Government, bonds of Thai National Bank, bonds of State Enterprise or bonds which the Ministry of Finance secures the capital or interest,
3.2	An investment in a property mutual fund, a property mutual fund or a mutual fund for resolving financial institution problems established under the law on Securities and Stock Exchange,
3.3	An investment in share capital of a juristic person who is granted permission of investment under the law on promotion of investment,
3.4	An investment in an activity as declared by the Board of Investment to be an activity eligible to be granted promotion of investment under the law on promotion of investment;

The land to be acquired shall be located in Bangkok Metropolis, Pattaya City, or Tessaban (Municipality), or in the area specified as residential zone according to the law on Town and Country Planning and shall not be located in a military safety zone according to the law on Military Safety Zone;

An alien, who is granted permission, shall utilize the land only for residence for his/herself and the family in a way that is not contrary to the local custom or good living of the local community;

If an alien, who is granted permission to acquire such land, does not comply with the rules and conditions specified, he/she shall disposes of such land in the portion of his/her possession within the period of time specified by the Director General of the Department of Lands which shall be not less than one hundred eighty days and not more than one year. If the time limit elapses, the Director General shall have the power to dispose of such land;

If an alien, who is granted permission to acquire such land, does not utilize the land for residence within two years as from the day the registration for land acquisition is made, the Director General shall have the power to dispose of such land.

Besides the aforementioned rules and conditions, an alien may acquire land by inheritance as statutory heir, in this instance, the land devolved when combined with the land already acquired shall not exceed that specified by law, for examples, land for residential purpose not exceeding 1 rai per household, land for commercial purpose not exceeding 1 rai, land for industrial purpose not exceeding 10 rais, and land for agricultural purpose not exceeding 10 rai per household.

An alien whose spouse is a Thai national either legitimate or illegitimate, that Thai national can purchase land but the alien spouse of that Thai national must give a joint written confirmation that the money which that Thai national will expend on purchasing the land is wholly the separate property or personal effects of that Thai national and not the Sin Somros or jointly acquired property.

Fees

(a) 0.01% of the valuation price, in the case of purchasing the land located in the land development project (this rate is due in December 2002)

(b) In the case other than (a) the fee is 2% of the valuation price

Taxes and duties

To be paid according to the Code of Revenue

Acquisition of Condominium Unit by Alien

Previously, an alien could have ownership in a condominium unit or bought a condominium unit in each condominium in a proportion not higher than forty percent of the total space of all units in that condominium at the time the application for condominium registration had been lodging. Later, on April 28th, 1999, the Condominium Act was amended to facilitate an alien in the purchase of condominium unit. As such, an alien may have ownership in a condominium unit in a proportion not higher than forty nine percent of the total space of all units in that condominium at the time the application for condominium registration is being lodged. The amended Act also provides that an alien may have ownership in a condominium unit exceeding forty nine percent if the following rules are satisfied:

1.	Such condominium shall be situated in Bangkok Metropolis, municipality area or other local administrative area i.e. the Pattaya Ciity;

2.	The total area of the land on which a condominium is situated, when combined with the land provided for common use or benefit of all co-owners, shall not exceed five rai;

3.	Such condominium shall accommodate not less than forty condominium units;

4.	Such condominium shall be registered not less than one year prior to the date an alien applies for ownership in the condominium unit;

5.	Such condominium shall not be situated in the area of military safety zone under the law on Military Safety Zone;

6.	An alien shall utilize a condominium unit in a way that is not contrary to the local custom or good living of the local community;

However, in a five year term as from April 28th,1999, the rules concerning the acquisition of ownership by an alien in a condominium unit in a higher proportion than forty nine percent shall take effect. After that it shall be repealed, and the alien obtaining an ownership in this regard and the alien receiving an ownership in a condominium unit transferred by the former are allowed to continue holding the ownership in that condominium unit even in a higher proportion than forty nine percent.

Application for Acquisition of Land or Condominium Units by Aliens and Persons Connected with Aliens

Application by Aliens for Acquisition of Land

Nowadays, an alien may apply for acquisition of land in Thailand in three cases as follows:

1.1	Receiving inheritance as a statutory heir under section 93 of the Land Code, in this instance, the total area including the land which has already been acquired (or has not yet been acquired) shall not exceed that specified in section 87 of the Land Code, i.e. not more than 1 rai for a residential purpose;
1.2	Bringing the money into the Kingdom for investment to the amount as prescribed in the Ministerial Regulation, which shall be not less than Baht forty million. In this instance, the land to be acquired must be for a residential purpose and must be of not more than 1 rai in area, provided also that permission must be obtained from the Minister. Under section 96 bis of the Land Code, the application for such acquisition of land shall be in accordance with rules, procedures and conditions prescribed in the Ministerial Regulation.
1.3	Applying for acquisition of land under other laws such as the Promotion of Investment Act, B.E. 2520 (1977), the Industrial Estate Authority of Thailand Act, B.E. 2522 (1979), the Petroleum Act, B.E. 2514 (1971). Detailed Information regarding the Promotion of Investment Act and the Industrial Estate Authority of Thailand Act can be obtained from the Board of Investment (BOI) at tel. + 66-2537-8111 and from the Industrial Estate Authority of Thailand at tel. +66-2253-0561 respectively.

Application by Aliens for Ownership in a Condominium Unit

An alien or a juristic person deemed by law as an alien may have ownership in a condominium unit in Thailand when 2 following conditions are satisfied. In the absence of either condition, the alien is not permitted to have ownership in a condominium unit.

2.1

Being an alien or juristic person deemed by law to be an alien under section 19 of the Condominium Act in any of the following prescribed categories viz:

(1)	Being an alien permitted to have a residence in the Kingdom under the law on immigration, in this instance, the evidence required to be produced shall be a passport indicating the nationality of the alien, and the certificate of residence (either TM. 11, TM. 15 or TM. 17 Form, as the case may be) issued by the Immigration Division, National Bureau of the Royal Thai Police Force. In the case of an alien who possesses an alien identification card issued by the Police Station in whose jurisdiction the alien is domiciled, such card can be used as evidence for the purpose of applying for acquisition of ownership in a condominium unit in this case without production of a passport;
(2)	Being an alien granted permission to enter into the Kingdom under the law on promotion of investment, in this instance, the evidence required to be produced shall be a passport indicating the nationality of the alien, and a letter of the Office of the Board of Investment certifying that the person is an alien granted permission to stay in Thailand under the law on promotion of investment;
(3)	Being a juristic person deemed by law to be an alien under section 97 and 98 of the Land Code and has been registered as a juristic person under the laws of Thailand, in this instance, the evidence required to be produced shall be the evidence indicating the registration as a juristic person under the laws of Thailand, i.e. a certificate issued by the corporate Registrar of Department of Commercial Registration, Ministry of Commerce must be produced in the case of a limited company, a public limited company, a limited partnership or a registered ordinary partnership;
(4)	Being a juristic person that is an alien under the Alien Business Operation Act B.E. 2542 (1999) and that is granted a certificate of promotion of investment under the law on promotion of investment, in this instance, the evidence required to be produced shall be a letter of the Office of the Board of Investment certifying that the person is granted promotion of investment under the law on promotion of investment;
(5)	Being an alien or a juristic person deemed by law to be an alien, who brings a foreign currency into the Kingdom or withdraws the money from a non-resident Baht account or from a foreign currency account, the following evidence must be produced;

2.2

The ownership in condominium units by the alien and juristic person in 2.1 shall not be in a higher proportion than forty nine percent of the total space of all units in that condominium at the time of the application for condominium registration under section 6 with the exceptions that:

(1)

A condominium in which the condominium units are to be owned by the alien and/or the juristic person specified in 2.1 in a higher proportion than forty nine percent must be located in the area of Bangkok Metropolis, municipality or the City of Pattaya and the land on which the condominium is situated shall not, when combined with the land provided for common use or benefit of all co-owners, be more than five rai in area. Also, the condominium units in such condominium shall not be less than forty units and the condominium shall already be registered not less than one year prior to the date of application for the alien to own the condominium units in the proportion higher than forty nine percent, and such condominium shall not be situated in the area of military safety zone under the law on military safety zone.

(2)

It is provided in section 9 of the Condominium Act (No. 3), B.E.2542 that at the expiration of five years as from the date of the entry into force of the Condominium Act (No. 3), B.E. 2542 (28th April 1999) the provisions as set forth in a. shall be repealed and the alien or juristic person having obtained the condominium units under a. or the alien or juristic person specified in 2.1 to whom the condominium units are transferred from the aforesaid alien or juristic person may continue to have ownership in such condominium units although in the higher proportion than forty nine percent of the total space of all units in that condominium.

Application for ownership in land by a Thai national who has an alien spouse or ex- spouse or by a Thai national who is a minor child of an alien

3.1	In the case where a Thai national who has an alien legitimate spouse applies for permission to purchase land or accept a transfer of land in a similar case during marriage or cohabitation as husband and wife with an alien, as the case may be, if after the inquiry the applicant and the alien spouse have given a joint written confirmation that the money which that Thai national will expend on the purchase of the land is wholly the separate property of that Thai national and not the community property or the jointly acquired property, the competent official will proceed with the registration of rights and juristic act. In the case where a Thai national whose spouse is an alien intends to purchase land or condominium unit but fail to give a joint written confirmation to the competent official as the alien spouse is being abroad, in this instance, an alien spouse shall make the statement declaring in written at the Royal Thai Embassy, Royal Thai Consulate or Notary Public that the money which that Thai national will expend on the purchase of the land or condominium unit is wholly the separate property of that Thai national and not the community property or property which an alien spouse has co-ownership in it. The competent official shall declare that the alien is an actual spouse of the Thai national and then submit to the competent land official who will proceed with the registration of rights and juristic act. In the case where a Thai national whose spouse is an alien, after marriage, has already purchased or possessed the land and informed or submitted a false document declaring the married status of a Thai national as single or had not been married to an alien to the official prior to the date the letter of Ministry of Interior, most urgent no. MOI 0710/wor 792 dated 23 March 1999 was issued, or has already purchased or possessed the condominium unit after marriage and informed or submitted a false document declaring the married status of a Thai national as single or had not been married to an alien prior to the date the letter of the Department of Lands no. MOI 0710/wor 34167 dated 6 October 2000 was issued, such alien spouse, whether legitimate or illegitimate, and a Thai national shall together give a joint written confirmation, which later to be filed in the case-list (or dealing package), to the competent official that the money which that Thai national will expend on the purchase of the land or the condominium unit is wholly the separate property of that Thai national and not the community property or jointly acquired property. If an alien spouse is being abroad and not be able to come to give a joint written confirmation to the competent official, in this instance, the application shall be considered in accordance with the case that a spouse of a Thai national who intends to purchase land or a condominium unit is being aboard, then an applicant shall consign the statement, after completion, to the competent land official for filing in the case-list.
3.2	In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, applies for permission to accept a gift of land during marriage or cohabitation as husband and wife. If the inquiry reveals that the acceptance of the gift is made with the intention that the land will become the separate property or personal property of the donee without resulting in the alien having co-ownership in the land, the competent official will proceed with the registration of rights and juristic act.
3.3	In the case where a Thai national with an alien ex-spouse who is divorced or has ceased to cohabit or a Thai national who is a minor child of an alien applies for entering into a juristic act for the purpose of acquiring land, if an inquiry reveals no circumvention of law, the competent official will proceed with the registration of rights and juristic act.

Application for ownership in a condominium unit by a Thai national whose spouse or ex-spouse is an alien or by a Thai national who is a minor child of an alien

4.1	In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, applies for permission to purchase or accept a transfer of ownership in a condominium unit with the intention that the property will become the separate property or personal property of the former, (for this purpose, it is deemed that a condominium unit is owned by a Thai national) or in the case where a Thai national with an alien ex-spouse who is divorced or has ceased to cohabit or where a Thai national who is a minor child of an alien applies for the acquisition of ownership in a condominium unit, the application shall be considered in accordance with 3.1 to 3.3 mutatis mutandis.
4.2	In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, expends money which forms the community property or the jointly acquired property, as the case may be, for the purpose of purchasing a condominium unit, whether the purchase is made in the name of that Thai national alone or jointly in the name of the alien spouse as well, consideration shall principally be made of the alien. In this instance, the alien must be an alien within the meaning of section 19 (1), (2) or ( 5), as the case may be. The Thai national spouse is therefore entitled to purchase a condominium unit in accordance with the entitlement of the alien spouse and it shall be deemed that such condominium unit is wholly owned by that alien because the ownership in a condominium unit is indivisible and governed by section 19 bis.
4.3	In the case where a Thai national who has an alien spouse, whether legitimate or illegitimate, applies for permission to accept a gift of a condominium unit, such gift being made with the intention that the property will become the community property or such gift resulting in the alien having co-ownership therein, the alien spouse of that Thai national must be an alien within the meaning of section 19 (1) or (2) and it shall be deemed that the condominium unit is wholly owned by the alien and governed by section 19 bis. In contrast, a Thai national who has an alien spouse under section 19 (5) is not allowed to accept a transfer of a gift which is made with the intention that the property will become the community property because the case under section 19 (5) is one involving the application by an alien for permission to acquire ownership in a condominium unit in a manner of sale, in respect of which payment therefor must be made.

The Acquisition of Land for Residential Purpose by Aliens

An alien bringing money not less than Baht forty million as specified in the Ministerial Regulation into the Kingdom for investment may apply for acquisition of land for residential purpose not more than one rai in area, provided also that permission must be obtained from the Minister. Under section 96 bis of the Land Code, the application for such acquisition of land shall be in accordance with rules, procedures and conditions prescribed in the Ministerial Regulation as follows:

In the case of an alien, who brings money for investment and wishes to apply for permission to acquire land for residential purpose, shall lodge an application (Alien 4 Form) to the competent official under section 71 of the Land Code together with the following documents:

1.1

An alien identification card issued by the Police Station in whose jurisdiction the alien is domiciled or a certificate of residence issued by the Immigration Division, National Bureau of the Royal Thai Police Force or a passport indicating the nationality of the alien;

1.2

Evidences of an investment in the business or activity that falls under Ministerial Regulation prescribing rules, procedures and conditions concerning the acquisition of Land for residential purpose by aliens B.E. 2545:

(1)	Letter of investment confirmation from bond seller and bonds of Thai Government, bonds of Bangkok of Thailand, bonds of State Enterprise or bonds which the Ministry of Finance secures the capital or interest;
(2)	Letter from the Asset Management Company confirming that an alien has invested in property mutual fund, property mutual fund or mutual fund for resolving financial institution problems established under the law on Securities and Stock Exchange, and an evidence of investment in such fund;
(3)	Evidences concerning investment in share capital of a juristic person who is granted promotion of investment under the law on promotion of investment, certificate of registration as a juristic person, name list of the juristic person's share holders, and a certificate indicating that such juristic person is granted promotion of investment from the Board of Investment;
(4)	Evidences of engagement in an activity that entitles for being granted promotion of investment under the law on promotion of investment according to the announcement made by the Board of Investment, certificate of registration as a juristic person, name list of the juristic person's share holders, and the Board of Investment's letter indicating that an activity being operated entitles for being granted promotion of investment. The evidences mentioned in para. 1.2.1 to 1.2.4 either the evidence in one para. or one combines with the other(s) can be used but the total amount shall be not less than Baht forty million.

1.3

Evidences of bringing a foreign currency into the Kingdom or the withdrawal of themoney from a foreign currency account or from a non-resident Baht account for investment.
Either one or more of the above mentioned evidences can be used but the total amount shall be not less than Baht forty million.

1.4

In the case of the land to be acquired is not located in Bangkok Metropolis, Pattaya City or Tessaban (Municipality); the letter of confirmation from the Provincial Office of Town and Country Planning is required certifying that the land to be acquired is located within a residential zone under the law on Town Planning.

1.5

Letter of Ministry of Defense or of the agency concerned confirming that such land is not located in a military safety zone under the law on Military Safety Zone.

1.6

The sketchy map showing the location of land seeking for permission.

1.7

In the case where an applicant has already had right on land by the time the application is being lodged, an applicant shall produce such land right document;

A person who is granted permission shall maintain the investment period not less than five years. He/she is required to produce the evidence of possession in the investment in 1.2 as the case may be as current, which shall be not less than Baht forty million, to the competent official according to section 71 once a year, on five consecutive years and each year shall be no later than the date making the acquisition registration of the aforementioned land.

A person who is granted permission shall utilized such land for a residential purpose of his/herself and the family in a way that is not contrary to the local custom or good living of the local community.

A person who is granted permission shall inform such land utilization for a residential purpose to the competent official of land office according to section 71 within sixty days as from the date of utilization.

A person who is granted permission shall facilitate the competent official supervising the use of such land to ensure that the utilization is in accordance with rules and conditions prescribed in the law once he/she receives a written notifications from the competent official under section 71.

If a person granted permission withdraws an investment in the business or activity before the due date of investment in 2, he/she shall inform in writing to the competent official according to section 71 within sixty days as from the date of making the withdrawal.

A person granted permission shall utilize such land for residential purpose within two years as from the date of the land acquisition registration.

If a person granted permission does not comply with the rules and conditions in 2-6, the Director General shall have the power to order such person to dispose of the land in a portion of his possession within the period of not less than one hundred eighty days and not more than one year. If the time limit elapses the Director General shall have the power to dispose of such land. Also, if the person does not comply with the condition in 7, the Director General shall have the power to dispose of such land.

Any foreign language document shall be translated into Thai language. The translation shall be certified according to the Ministerial Regulations (B.E. 2540) issued under the Purview of Administrative Procedure Act B.E. 2539. (Phraratchabunyat Vithipratibut Ratchakarn Thangpokkhrong B.E. 2539)

10.

In the case of a person bringing money into the Kingdom to the amount of Baht forty million for investment and has bought the land less than 1 rai, if later and within the period of investment, that person wishes to buy additional land, in this instance, the documents attached to the current investment can be used along with the application for acquisition of the additional land.