Owning Land in Thailand?
The first thing any prospective home buyer or home builder builder should know is:Foreigners Cannot Own Land in Thailand
So why do so many property web sites tell you how you can own land in Thailand? Some write lies .. others .. just fail to tell the truth. So now is a good time to stop using the term "owning land".
Before going further, this article is about home ownership issues, not condominium ownership.
You can, however, own a house. But it shouldn't be difficult for you to see problems associated with owning a house and not the land on which it is built.
So what is the secret to owning your dream home? There are no secrets. If someone want's to tell you their secret way of owning land, run away very quickly.
Alternatives to Owning Land
Leasehold - Land can be leased from a Thai owner. Thirty years is currently considered to be the legal maximum time duration of a lease. Options for an additional 30 years are spoken of, but may or may not be contractual. Since the land office will not record a 30 year option, it may be wise to assume it won't happen.Exercise due diligence just as you would a land purchase in the west. Engage the services of a trustworthy attorney. Embassy web sites usually have a list.
Note: A lease of any duration will not be legal after 3 years unless it has been recorded at the land office and taxes paid on the transaction. Taxes are currently in the 1% range.
Spouse/Partner - Foreigners with Thai partners often choose to buy property in the name of the partner. The foreigner will be required to sign a statement that they claim no financial interest in the land. This practice is quite simple and straightforward, but it does have drawbacks. Your partner will own the land. So unless you take some proactive steps to protect yourself, you may be walking a dangerous path.
The most common way for a foreigner to protect themselves is by a leasehold. You would create a lease, register it with the land department, and pay taxes on the transaction.
Thai Company - Various schemes have been used over the years to buy land in the name of a Thai Company. Foreigners cannot own majority stock in a Thai Company. There appears to be a movement afoot to enforce laws that make "organizing a company for the purposes of owning land" illegal. It always has been illegal, just seldom enforced.
Note: Amity Treaty Companies (100% ownership for Americans) cannot buy and own land.
REIT - Real estate Investment Trusts are said to be legal in Thailand and have no ownership restrictions. We don't know of anyone who has registered a REIT, but the minimum capital is Bt 250 million. A good attorney may be able to shed more light on this possibility.
Getting Creative in Thailand
I lived in one of those "off the beaten path" beach locations for a number of years. Getting land and building a house seemed like a good idea since I wanted to get away from the noisy weekend tourist parties that can be quite annoying.One day a guest house owner asked me if I was interested in a house adjacent to his property. It was a nice location and the price wasn't bad, but I wasn't all that keen on it. In retrospect, that worked to my advantage. I even sent a couple of other people around to look at it for themselves. No takers.
After a particularly noisy weekend near my rental, I dropped by again. The guy quoted me a new price that was 15% lower. That got me to thinking.
I called a good Thai friend in Bangkok. He has a 30 something son who is a professional. We worked out a situation as follows:
- I would make a deposit of roughly 20% and put the house in his son's name
- His son would get a long-term mortgage from the Government Savings Bank .. younger people can get longer term loans.
- The friend offered to make payments until he had matched my initial deposit in exchange for a 50% interest. Maybe he knew I wouldn't live there forever.
- If I lived on the property through my lifetime, the property was already in their name
- If we decided to sell, we would split all profits
For me it worked out fine. I would rather trust a friend of 15 years than a "fiancee" or spouse I had recently met.
Financing / Owning a House in Thailand Through Friends
If you have good Thai friends and want to consider doing something similar, be aware of a few issues.- You should probably still get a 30 year lease from your friends
- Unless a family member has the credit rating to get a mortgage loan, it won't work.
- Someone is less likely to cheat you when they would be looking at mortgage payments.
- Your Thai friend will be taking a risk as well. If you walk away, he still has to make mortgage payments.
- Have an agreement up front in case the two of you decide to sell
