LEGAL INFORMATION
Foreign Ownership of Land
Is a foreigner allowed to own land in Thailand?
The answer is generally no, with limited exceptions which are not open to the vast majority of foreign buyers. However, although Thai law prohibits foreigners from owning land in Thailand, structures have developed to enable foreigners to effectively own land interests, and still comply with the existing Thai laws.
Freehold Property – Company Formation and Acquisition
The purchase of freehold land in Thailand can be achieved through a Thai-registered limited company.
In order to do this the company objectives and Articles of Association must allow the company to own land and deal in property transactions. Under Thai law foreigners can hold a maximum of 49% of the shares in the company, while the remainder must be Thai owned. It’s important that the company is structured correctly pursuant to Thai law.
Company accounts must be filed and any applicable taxes paid on time. Accounts are filed once in the year of incorporation and twice annually thereafter.
Leasehold Property
 Foreigners are permitted to lease land and/or structures in Thailand for a maximum of 30 years and, subject to a renewal clause being included in the Lease, for additional 30-year periods. Despite this, it should be noted that Thai law only provides for one such renewal. Even though a renewal clause may be inserted in the lease, it cannot be guaranteed against a purchaser/successor of the freehold interest.
A lease of commercial or industrial premises can be for a term of up to 50 years with, again, an option to renew for further 50-year periods.
Foreigners can lease land and/or structures on a short or long term basis.
Any leases in excess of three years must be registered with the relevant Land Department in order for it to be enforceable.
Leases often include a clause that the Lessee may buy the freehold title to the leased land at any time during the term of the lease should the law change to allow foreigners to do so.
Company Ownership of Freehold Property
A Thai Limited Company can purchase land as a juristic person. The company must be allowed to own land and invest in land in accordance with its objectives and Articles of Association. Foreigners can hold a maximum of 49% of the shares in such a Thai Limited Company, the balance must be owned by actual Thai investors.
It is vitally important that annual accounts are completed and relevant taxes are paid on time.
Land Title Deeds
Acceptable Classes of Land Title for Foreigners
Although many classes of land title are available in Thailand, foreigners are advised to limit their search to just two classes, namely Chanote and Nor Sor Sam.
In the case of Nor Sor Sam, the superior title of Nor Sor Sam Gor is preferable, since the borders have been more accurately measured.
The Chanote and Nor Sor Sam Gor are the only land titles where registered rights of ownership or lease can exist. Therefore any land titles lower than these are not recommended for foreign investment.
1. Chanote (Nor Sor 4 Jor)
This is the only document which can be accurately described as a land title deed, because this alone confirms ownership of the land and is registered with the Land Department. The land is accurately surveyed and plotted in relation to a national survey grid; meaning the ownership, boundaries and area measurements are recorded. Any encumbrances burdening the property, such as mortgages or servitudes are also registered.
It’s possible to sub-divide the land and this class of title is regarded as the best available in Thailand.
2. Nor Sor Sam Gor
The Certificate of Land Utilization, more commonly referred to as a ‘Nor Sor Sam Gor’, signifies the land occupier’s right to utilize the land. The land is generally surveyed and each plot is cross-referenced to a master survey of the area and a corresponding aerial photograph. The boundaries are accurately marked and this is generally regarded as the second best title. Again, under this title the land may be sub-divided and this can also be upgraded to Chanote at the Land Department.
Ownership of Structures
Foreigners may own structures outright in their own name. They must have the right to own structures (known as superficies) over the land, registered in their name on the title deed to the land that the structure is on.
In order to provide satisfactory evidence that they built the structure, the owner of the structure should be in possession of all of the following:
a) The Building Contract/Permit.
b) Records relating to payments to the builder.
c) The owner’s name on the Building Contract/Permit.
Any subsequent transfer of the structure requires a 30-day public notice period before the Land Department will register the transfer of ownership.
Transfer of Ownership (Registration at the Land Department)
All registered dealings in land and structures are recorded at the Land Department and there is a local office located here on Samui.
Transfers of ownership, leases, mortgages, lien, servitudes (easement), sub-division, upgrade, etc. are all applied for and registered at the local Land Department. However, the Land Department does not have in place any procedure for carrying out Due Diligence when transferring land; this is normally carried out by qualified legal professionals.
Leases
For leases that are registered, there is a registration fee and stamp duty of 1.1% of the total rental amount of the term actually being registered (i.e. not including any renewal terms).
Mortgages
It’s possible for a mortgage to be registered over a land or structures. A mortgage granted by a foreign finance company can be registered on the title deed.
Costs
1. Mortgages
The fee and stamp duty payable for the registration of a mortgage is 0.06% of the declared mortgage amount, with a maximum fee of Bt200,000, if the property is:
a) Part of a licensed development, condominium, house or commercial building, or;
b) With land, if there is a registered structure upon it, and the land area is less than one rai.
If not within the above, then the fee will be 1.05% of the declared mortgage amount, with the maximum total fee again set at Bt200,000, for land in excess of one rai that is not situated on a licensed development.
2. Leasehold
Leaseholds for terms longer than three years must be registered at the land office. The registration fee payable upon registration of a lease at the Land Office is currently 1.1% of the total lease value.
3. Land and Property Taxation
Building and Land Tax is imposed against the owner of a house, building, structure and/or land, subject to the first residential property exemption rule.
A local development tax is levied against any person owning or in possession of land, the applicable rates vary and are valued by local authorities. There is an allowance for land used for personal dwellings and this also varies upon the location of the land.
The tax rate is 12.5% of the assessed annual rental value of the property for both residential and commercial premises.
4. Transfer Costs
Sale & Purchase
There are three government fees to pay at the land office:
A. Transfer Fee - Land only
2% of the Land Office appraised value
Or
Land & House
0.01% of the Land Office appraised value
B. Income Tax
When the seller is a company, the fee is 1% of the Land Office appraised value of the property or the actual transaction value (whichever is the higher). Where the seller is a person, the fee is calculated on the Land Office appraised price based on a sliding scale of personal income tax; such tax is deducted from the income tax bill for that year
+ Either
C. Stamp duty (Applicable when the seller is a person – not a Thai Co., Ltd.) This is 0.5% of the Land Office appraised value of the property, or the actual transaction value (whichever is the higher). This applies only if the land has not been transferred within the previous five years.
(Not applicable between March 2007 and March 2009 where only a reduced SBT applies – see below.)
Or
D. Special Business Tax (SBT)
Currently reduced to 0.11% of the Land Office appraised value, or actual transaction value (whichever is the higher).
(Reduced rate applicable between March 2007 and March 2009.)
5. Purchasing a condominium unit or a property from a Licensed Development
There are three government fees to pay at the land office:
A. Transfer Fee
0.01% of Land Office appraised value (reduced rate applicable between March 2007 and March 2009).
B. Withholding Tax
1% of the declared purchase price.
C. Special Business Tax (SBT)
0.11% of the Land Office appraised value
(Reduced rate applicable between March 2007 and March 2009)
These fees are correct at the time of going to press on 24.3.2009. Fees may be adjusted at the end of March 2009.
Work Permit / Visa
It is illegal for a foreigner to engage in any kind of work, whether paid or unpaid, without a valid work permit. Any violation is treated very seriously by the authorities and penalties are severe.
In order to apply for a work permit a foreigner must first obtain the appropriate Non-Immigrant visa from a Thai Consulate outside of Thailand. The requirements and supporting documentation for obtaining a Non-Immigrant visa are subject to frequent change therefore it is important to obtain up- to-date information before application.
A work permit is issued for a specific occupation, for a specific company, in a specific location. It is illegal to work outside these parameters without first applying to change the work permit to the new job, employer and/or location.
There are several restricted occupations and professions which are prohibited to foreigners under Royal Decree B.E. 2522 (1979) and a work permit for these occupations cannot be obtained.
For foreigners not planning to take up employment in Thailand there are other visa options available subject to meeting the qualifying requirements.
DFDL Crawshaws has affiliated offices in Bangkok, Vietnam, Cambodia, Laos and Myanmar and employs lawyers and consultants qualified in England, Wales, America, Hong Kong, Thailand, Australia, Canada, Philippines, Laos, Vietnam and Cambodia.
This information is for reference purposes only.
DFDL Crawshaws strongly advises that professional legal advice is sought before conducting any business in Thailand and disclaims any liability whatsoever for any damage caused by the information provided therein.
 
Samui Office:
157/21 Moo 1, Bophut, Koh Samui, Suratthani, 84320
Tel: 0 7724 6081
Fax: 0 7724 6082
Email: enquiries@crawshaws.com
Websites: www.crawshaws.com
www.dfdlmekong.com
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