Buying real estate, land and house
Land ownership in Thailand for foreigners
Author: Robert M. Spelde (LL.M)
Under the Thailand Civil and Commercial Code foreigners in principle have the same property rights as are available to Thai nationals, however it is under the Land Code Act B.E. 2497 (1954) prohibited for foreigners to own or possess land in Thailand. As ownership of land is an essential element of any real estate (land and house) ownership it leads to the conclusion that, besides an apartment in a licensed condominium, there is no freehold ownership of real estate (land and house) available for foreigners in Thailand.
Foreign ownership under a treaty
Under the Thailand Land Code Act foreigners may own land under the provisions of a treaty, however the last treaty allowing foreigners to own land in Thailand was terminated in 1970 and there is currently NO treaty with any country allowing foreigners to acquire and own land in Thailand. In fact anyone who contravenes with the above section shall be punished with a fine not exceeding twenty thousand baht or an imprisonment not exceeding two years, or both (section 111 of the Land Code Act).
Section 86 Land Code Act: 'Foreigners may acquire land by virtue of the provisions of a treaty giving the right to own immovable properties and subject to the provisions of this Code' .
Exemptions for foreign land ownership
In theory foreign individuals can own land up to 1 rai (1600 square meters) under section 96 bis of Land Code Amendment Act (1999) for residential purposes through the Board of Investment which requires a 40 million baht investment into Thailand in specified assets or government bonds beneficial to the Thai economy. If granted it is under strict conditions and in specified areas and requires approval of the Minister of Interior. In practice, even if you would be able to make an additional investment in the Thai economy of 40 million baht, this is not a viable option. In addition this ownership is not transferable by inheritance, therefore limited to the life of the foreigner granted the right to own land under this exception.
Ownership of land is also not open to foreign companies, including Amity treaty (US) companies, BVI or Hong-Kong limited companies or any other foreign juristic entity. These companies may, similar to foreign individuals, have a minority shareholding in a Thai company but may not use nominee shareholding structures to create a Thai company for land ownership.
Foreign corporations with substantial investments benefiting the Thai economy may have special privileges and exemptions for land ownership granted for the duration of their business in Thailand under:
- Section 27 of the Investment Promotion Act
- Section 44 of the Industrial Estate Authority of Thailand Act
- Section 65 of the Petroleum Act
Foreigners inheriting land
Again in theory, a foreigner married to a Thai national may as a statutory heir with approval of the Minister of Interior inherit land under section 93 of the Land Code Act, however this section must be read in combination with the above section 86 of the Land Code Act (i.e. in relation to foreign ownership granted under a treaty) therefore it does not apply to foreigners inheriting land from a Thai spouse. They may inherit land but cannot register ownership and must dispose of the land within one year from the date of acquisition (Land Code Act).
Foreign controlled Thai companies
Up till May 2006 it was common practice for foreigners to form a Thai company and to hold land under a Thai company structure. Since the land office guidelines starting in May 2006 followed by the business registration rules and the proposed amendments to the Foreign Business Act this practice is less common. Recent discussions in the Thai government to further clamp down on this structure through new laws and regulations have led to the conclusion that a Thai company structure is not a viable or secure vehicle to create a long term foreign controlling interest in real estate in Thailand.