Thailand –the ‘Land of 10,000 smiles’ is best known for their soothing and calm beaches spots, wonders of its ancient temples and palaces and the fast-paced yet lively entertainment that the infamous Bangkok has to offer at night –Sud yod! Foreigners who have gone there must have been awestruck and dream of the thought of owning a piece of this land to share the bless of ’10,000 smiles’. Therefore, they must have been pondering with this big question: Are foreigners allowed to own a property in Thailand?
Generally speaking, foreigners are not allowed to directly purchase land in Thailand. Thailand has the same property laws and regulations as western countries. After all, the Thailand Civil Code is based on the European Civil Law system and there are also some of the aspects taken from common law countries. Thai laws may prohibit foreigners from owning land in their own name, however, there are exceptions to these restrictions.
Under section 96 bis of Land Code Amendment Act (1999), foreign individuals can own land up to 1 rai (1600 square meters) for residential purposes through the Board of Investment which required an investment of 40 million baht (about US $1.2million) in specific assets or government bonds beneficial to the Thai economy. However they are required to seek approval from the Minister of Interior which if granted, they will still be under strict conditions and in specified areas. In addition, the ownership of the property is not transferable by inheritance.
Options to Owning Property In Thailand
Nowadays, Thailand has become an international tourist hot spot especially the housing estates in Thailand’s popular seaside resorts such as Pattaya, Phuket, Hua Hin and Samui Island, which have been specifically targeting well-to-do foreigners as vacation gateways. To some, it may be a once in a lifetime or annual holiday spot, however there are some who even manage to own a property there even though it is not easy. Many have been aiming for this east-meets-west balance hot spot but stumbled upon the coherent Thailand property law. Nevertheless, that doesn’t mean the end of the world yet. There are a few loop holes that you can considered as one of your silver linings in this matter.
1) Marry a Thai national
Yes, you heard it right. And no, I’m not kidding. This is also considered as one of the possible route in obtaining property in Thailand. This is because, houses, townhouses, and detached houses are described as ‘landed’ which means they ‘touched’ the land in Thailand under them or around them. Therefore, a foreigner cannot own one or any of these without assistance from a Thai national. In theory, this route would bring a foreigner into marrying a Thai citizen in which the Thai purchases the land and stipulates a lease with a foreigner. The statutory heir will be granted with the approval of Minister of Interior.
2) Buy a condo
Since Thailand has restrictions in buying land for foreigners, most of them looked at the alternative of buying a condo or an apartment instead. Unlike buying land, foreigners can buy and own 100% of them outright. However, some conditions must be met to fulfil this desire. Units in a condominium registered under the 1979 Thailand Condominium Act: it can be foreign owned for up to 49% of the units in floor space of all apartment units added together in a condominium building, but the remaining 51% must be owned by Thai national. That means with any given condo building, 49% of the units are designated for sale to anyone (Thai and non-Thai). There are almost 20% of condos in Bangkok are owned by foreigner residents or investors.
One of the benefits owning a condo in Thailand is that the owner will enjoy zero property taxes since the land and house taxes don’t apply to condo owners. However sweet that may sound, there are other taxes tied to your purchase unfortunately. For example, if you sell your condo, you are expected of transfer fees, document fees, and other taxes that may have been introduced during your ownership period.
3) Buy through a company
Another alternative is to set up a Thai Limited Company. The Thai law has allowed foreigners to own land and their houses through long leases or a “nominee company.” If you opt for this challenge, make sure that you bear in mind that as a foreigner, you cannot hold more 49% of the company’s shares. The company must be 51% Thai owned (with the lone exception being United States citizens, whom have a treaty with Thailand for full ownership).
However, there is a new regulation amended by the Minister of Interior that has been officially declared on 25th May 2016. The new regulation stated that all partly foreign-owned companies are required to prove the source of their funding before purchasing any land and industry sources.
Thailand Property Rental Yield
Reasonably priced properties in Thailand are in demand in all regions, therefore the market is currently fairly stable. Investing in property at this time is considered to be a good move, given the ever-growing popularity of the country as a hot spot for holiday destination. The political unrest in the country during 2010 had little impact on the property market.
Nevertheless, “Larger apartments yield more,” according to the latest Global Property Guide research. The rental yields in the capital, Bangkok, could range from 5.0% to 8.0%. Unlike most countries’ major cities, yields on medium-sized apartments, approximately 120-square metre (sq.m.), in Bangkok are higher than the smaller one. A 60 sq.m. apartments in the central location now are earning gross rental yields of around 5.6%, while a 120 sq.m. apartment on the same location earns gross rental yields of around 8.0%.
In majority of the areas in Thailand, it is expected that prices will continue to rise. However, be alerted that there is a possible little danger that locals might try to charge foreigners more for the purchase procedure as the process is more complicated and they need to be more attentive of the ins and outs of the local property market before they buy.