Foreign ownership options when buying a house
According to Thai law, foreigners can not own land in Thailand but they can own buildings. A foreigner that wishes to purchase a house, duplex or a townhouse that comes with a land plot has two options to choose from in order to acquire the land.
Setup a Thai limited company to hold the freehold of the land. The freehold of the land is put in the company name. One will need a minimum of two Thai shareholders in order to setup a Thai limited company. In some cases, the lawyer will provide you with the two shareholders when you setup the company. The foreign buyer is made a director and shareholder in the company. It is also possible to have more than one foreign shareholder or director but the foreign shareholding must not exceed 49%.
There are a number of protective measures that are put in place by the lawyer setting up the Thai limited company in order to create a very safe ownership structure for the foreign directors. These measures give the foreign directors complete control of the Thai limited company and they include but are not limited to, the following: the foreign director(s) is the only person within the Thai limited company that can bind the company in any contractual dealings; the director’s shares are preference shares and hold 10 times the voting rights of the nominal shares, which give the directors 90% of the voting power; when the company is set up, all the Thai shareholders sign an open-dated share transfer form. This implies that they can all be signed out and replaced with other shareholders whenever the foreign director(s) wishes.
The Thai limited company owns the freehold of the land and the investor is free to build on the land, sell or lease property and transfer their rights to next of kin.
Note: The Thai limited company must comply with the law and all money should pass through the books, share holders meetings should be held, minutes of the meetings should be kept and yearly accounting must be filed. A good local accountant and in many cases the lawyer that you use to setup the company will be able to take care of this on your behalf. Some expenses for running the property can also be put through the books hassle free. The accountant will also submit annual accounts for a typical fee of approximately 20 000 THB.
The second option is to lease the land on a rolling 30-year lease. This alternative option allows the foreigner to purchase a 30-year lease for the land. An option to renew the lease for 2 more periods of 30 years are built into the lease contract to make a total lease period of 90 years. The lease contract can also include a clause that allows the foreigner to purchase the freehold whenever he wishes.
The house (Building) can be owned directly in the foreign investor’s name.