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Buying property - the essentials
• About foreign ownership - land & houses • About foreign ownership - condominiums
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About foreign ownership - land & houses in Phuket
The following information is offered as a guide to foreign nationals considering buying property in Phuket. This information in no way replaces the need for professional legal advice. Potential buyers are strongly advised not to base investment decisions solely on the basis of the information provided here.
Foreign nationals may not own land in their own name, but they may own buildings on the land. However, there are a number of ways that a foreign national may acquire effective, secure ownership:
(a) Leasehold land/building ownership
The maximum allowed registered lease for residential land is 30 years. Leaseholds for foreign purchase are usually structured to include the initial 30-year period plus two pre-paid renewals of 30 years each. This, combined with outright ownership of the building(s) on the land, secures possession. As the buildings (owned outright by the foreign national) are separated in law from the land (leased to the foreign national), the lessor cannot take possession.
(b) Limited liability company
A Thai company with foreign shareholding (maximum 49 percent) can own land freehold. If this option suits your purpose better than the leasehold option, consult your legal advisor to work out the best way to secure your position. In the past, Thai ‘shell’ (non-trading) companies were formed by foreigners, with nominee Thai shareholders, to buy property. This practice, prohibited under the Foreign Business Act (1999). has become the subject of close scrutiny by the authorities.
Simply put, if the company does not ‘trade’, and if the shareholders are transparently not real shareholders, registration of your purchase may be impeded. If your lawyer brushes aside your concerns on this issue, and suggests setting up a company with transparently ‘nominee’ Thai shareholders, you would be wise to seek a second opinion.
Nevertheless, there are structures that overcome these obstacles and allow you set up a Thai company and to exercise control over the company and therefore the property. Expert legal advice is essential to get this right.
(c) Thai spouse
If you are married to a Thai national, he or she may own land outright. (A law which meant a Thai woman had to give up land ownership rights on marriage to a foreign national was amended in 1999.) However, the Thai national must be able to prove that the funds used in the purchase are solely and legally his or hers and that the foreign national has no claim on those funds. This requirement is usually satisfied by a notarised declaration signed by the foreign national.
While this, of itself, may be insufficient to guarantee your possession of the property, combined with the same building ownership and leasehold arrangements outlined in (a) above, this may provide additional ‘comfort’ to foreign buyers, particularly when buying individual properties (as opposed to a house within a development), where the lessor is an ‘unknown quantity’.
