Land Ownership in Thailand
As a general rule, foreign individuals and entities cannot own land in Thailand. Companies registered in Thailand where foreigners hold more than 49% of capital, or where the majority of shareholders are foreign, are also considered foreign companies and are subject to the same restrictions on land ownership.
Exceptions for Foreign Ownership in Thailand
While foreign ownership of land in Thailand is generally restricted, there are certain legal exceptions and alternative ownership options for foreigners:
Acquisition via International Treaty
Land Code, Section 86
Section 86 of the Thai Land Code permits foreigners to acquire land through provisions of international treaties. However, since the termination of the last such treaty in 1970, no new agreements have been established. Consequently, this provision is currently inactive and does not serve as a basis for foreign land acquisition.
Residential Ownership with Ministerial Approval
Land Code, Section 96 bis, Amendment Act (No. 8) B.E. 2542 (1999)
Section 96 bis allows foreigners investing at least THB 40 million in Thailand to acquire up to one rai (1,600 sqm) of land for residential use if they meet the following conditions:
1. Investment of THB 40 Million: The investment, in approved assets, must be maintained for a minimum of five years.
2. Ministerial Approval: Approval must be obtained from the Minister of Interior.
3. Approved Investment Channels: Investment options include:
• Thai government bonds, Bank of Thailand bonds, state enterprise bonds, or bonds backed by the Ministry of Finance.
• Property mutual funds or financial institution funds regulated by securities laws.
• Shares in a BOI-promoted business or another approved entity.
• Activities declared eligible for BOI investment promotion.
4. Location Restrictions: The land must be located in designated residential zones within Bangkok, Pattaya, or other approved municipalities, excluding military zones.
5. Residential Purpose Only: The land is restricted to residential use for the foreigner and their family, aligned with local customs and values.
6. Compliance and Disposal: Breach of conditions, such as failure to maintain the investment or use the land for residence within two years, may result in a directive from the Department of Lands to dispose of the property within 180 days to one year.
Inheritance as a Statutory Heir
Land Code, Section 93
Foreigners may inherit land as statutory heirs, provided they receive approval from the Ministry of Interior. Size restrictions generally apply, such as up to one rai for residential use or up to 10 rai for industrial/agricultural purposes.
Investment Promotion Privileges
Investment Promotion Act B.E. 2520 (1977), Section 27
Foreign-owned companies with Board of Investment (BOI) privileges may own land necessary for approved BOI projects.
Industrial Estate Projects
Industrial Estate Authority of Thailand Act B.E. 2522 (1979), Section 44
Manufacturing and export companies operating within industrial estates or export zones designated by the Industrial Estate Authority of Thailand (IEAT) may acquire land for business purposes in these areas, subject to BOI and IEAT approval.
Petroleum Concessions
Petroleum Act B.E. 2514 (1971), Section 65
Companies with petroleum concessions are permitted to acquire land required for petroleum activities, exceeding standard foreign ownership limits if necessary.
Financial Institutions
Financial Institution Business Act B.E. 2551 (2008)
With approval from the Bank of Thailand, financial institutions may acquire land for their operational needs or as part of debt settlement processes, with a five-year requirement to resell debt-acquired land unless an extension is granted.
Prohibited Practices
Foreign-controlled companies cannot use Thai nominee structures to bypass land ownership restrictions. Such arrangements are illegal under the Land Code, posing risks of criminal penalties, invalidation of transactions, and forced land disposal. Authorities have the right to refuse registration and report suspected nominee arrangements to the Ministry of Interior.
Legal Property Rights Available to Foreigners in Thailand
Foreign individuals and entities have a range of options for securing rights over property and land use in Thailand, allowing them to legally utilize and benefit from property within the framework of Thai law. These key options include:
- Building Ownership: Foreigners may own buildings and structures on leased land or secure ownership through a right of superficies (as per Section 1410 of the Thai Civil and Commercial Code). This right allows foreigners to construct or own structures on land owned by others.
- Condominium Units: Foreigners are permitted to own units in condominiums, provided that foreign ownership remains within the “foreign quota” (up to 49% of the total saleable area), in accordance with the Condominium Act B.E. 2522 (1979).
- Usufruct Rights: Foreigners can obtain usufruct rights (under Section 1417 of the Civil and Commercial Code), which grant the right to use and derive benefits from land owned by others for a specific period, typically up to 30 years.
- Land Leases: Foreigners may lease land for up to 30 years for residential purposes and up to 50 years for commercial or industrial purposes, with the possibility of renewal for an additional term.
- Property Utilization Right (Sub-Ing-Sitthi): Under the Property Utilization Right Act, B.E. 2562 (2019), foreigners may secure the Property Utilization Right (ทรัพย์อิงสิทธิ) for up to 30 years. This right provides extensive flexibility, allowing holders to use immovable property, transfer or sublease the right, mortgage it, or pass it on through inheritance, making it a valuable tool for long-term investments.
These rights represent the primary legal avenues available to foreigners for property engagement in Thailand, with potential for additional mechanisms based on specific needs and evolving regulations.
Ownership of Houses in Thailand Separate from the Land
Legal Base for Separate Ownership
In Thailand, it is possible to own a house separately from the land it occupies. This arrangement is particularly relevant for foreigners, who are restricted from directly owning land but can legally own buildings under certain conditions. Generally, the owner of the land is presumed to own any structures affixed to it, as outlined in Section 139 of the Civil and Commercial Code (CCC), which defines immovable property as land and anything permanently attached to it.
However, Section 146 of the CCC provides an exception. It states that buildings or structures constructed on land under the legal right of another person—such as through a lease or superficies—do not automatically become part of the land. Instead, the structure remains independent and may be separately owned by the builder or another party.
This legal framework enables foreigners to lease land or register a superficies while maintaining ownership of houses or buildings they construct on that land. Lease agreements are a common mechanism for foreigners to navigate restrictions on land ownership while securing ownership of structures on leased land.
Building Permit and Ownership
A building permit is essential for constructing a house in Thailand but does not, by itself, confer ownership of the structure. Regulated by the Building Control Act B.E. 2522 (1979), a building permit confirms compliance with construction standards and authorizes the construction process.
In practice, a building permit is often considered prima facie evidence of ownership, particularly for the first owner or builder. This perception arises because the permit often requires written consent from the landowner and is typically issued in the name of the person financing or managing the construction. However, the designation of the applicant as the “owner” on the permit is purely administrative and does not substitute for formal ownership mechanisms.
To establish long-term ownership of a house, individuals must rely on formal legal documentation, such as a registered superficies, lease agreement, or sale agreement. These mechanisms provide the legal foundation for ownership, ensuring security and clarity of rights.
Sale and Transfer of Ownership for an Existing Building
Transferring ownership of a house or structure, independent of the land it occupies, involves the following steps:
1. Signing the Sale Agreement
The current owner and the purchaser must sign a standard Thai-language sale of structure agreement at the Land Department. This agreement must be executed in the presence of a competent land official and serves as the official document initiating the transfer process.
2. Public Announcement Period
A 30-day public announcement of the house sale is required. Notices are posted at designated locations to allow time for any objections to the transaction.
3. Finalizing the Transfer
After the 30-day notice period, both parties return to the Land Department to complete the transfer process. The sale agreement is stamped and officially issued, serving as proof of the new owner’s legal rights to the building.
4. Payment of Taxes and Fees
Transfer taxes and fees must be paid as part of the process. The costs are typically shared between the buyer and seller based on their agreement.
Practical Considerations
Foreigners seeking to own a house distinct from the land must closely follow the legal processes and ensure comprehensive documentation. While having the building permit in the intended owner’s name can simplify administrative matters, it does not constitute legal ownership. The sale agreement and superficies registration (if applicable) provide the required legal foundation for house ownership under Thai law.
Proposed Changes to Foreign Ownership Limits and Lease Terms
On June 21, 2024, it was reported that the Thai government is considering amendments to property laws to enhance foreign investment:
• Increased Condominium Ownership: Proposals include increasing the foreign ownership quota in condominiums from 49% to 75%.
• Extended Lease Terms: Discussions are underway to extend the maximum lease period for foreigners from 30/50 years to 99 years.
These proposals are aimed at boosting foreign investment in Thailand’s real estate sector. However, they are still under consideration and have not yet been enacted.
Registration of Real Estate Transactions in Thailand
As a general rule, real estate transactions in Thailand, such as buying, selling, long-term leasing, and mortgaging, must be registered with the Land Department to be valid and legally enforceable. Other rights, like usufructs, superficies, and servitudes, also require registration to ensure legal recognition.
Examples
1. Sale of Immovable Property
• Section 456, CCC: A sale of immovable property is void unless made in writing and registered with the competent official.
2. Long-Term Lease
• Section 538, CCC: Leases exceeding three years must be registered to be enforceable.
3. Mortgages
• Section 714, CCC: Mortgages must be in writing and registered to secure the lender’s rights.
Documents Confirming Land Rights in Thailand
Due to the peculiarities of land legislation in Thailand, there are many documents confirming land rights. Foreign investors typically encounter only a few of them.
Any transactions or operations with land, whether it is purchase, lease, usufruct, superficies, or obtaining a construction permit, are possible with the following documents:
- Chanote (Nor Sor 4 Jor – น.ส.4 จ): Certificate of Land Ownership. It is the only document that confirms land ownership rights in Thailand. Issued by the local Land Department office, a Chanote marks the land’s exact boundaries established through precise surveys and marked with unique numbered signs as per the national grid of geodetic measurements. It confirms the exact location and area of the plot. Chanote also validates condominium unit ownership (Or Chor 2).
- Nor Sor 3 Gor (น.ส.3ก): Certificate of Confirmed Land Possession. This document confirms land possession rights and allows for land lease registration. Unlike Nor Sor 3 (see below), it is based on more precise measurements: each plot is reconciled with the district master plan and verified against corresponding aerial photos. Nor Sor 3 Gor is often issued pending a Chanote, indicating a strong basis for eventually obtaining full ownership certification. When dealing with such plots, it’s recommended to additionally confirm the plot boundaries to avoid potential disputes with neighbors.
- Nor Sor 3 (น.ส.3): Land Possession Certificate. Unlike Nor Sor 3 Gor, the surveying is less precise (no aerial photos of the land, boundaries marked only in relation to neighboring plots). Such plots can be sold, leased, or mortgaged. However, transactions require prior public notification, submitted no later than 30 days before registration. This document can be “upgraded” to Nor Sor 3 Gor.
- Sor Kor 1 (ส.ค.1): This document certifies actual land possession, most common in rural areas. As surveying isn’t conducted, boundary data may be approximate. Transfer of rights under this certificate is possible only through inheritance. However, it’s possible to exchange Sor Kor 1 for Nor Sor 3 or Nor Sor 3 Gor, allowing for land disposal.
Purchasing an Condo Unit in Thailand
Condominiums in Thailand
Foreigners can own condominium units in multi-apartment buildings (condominiums) recognized as registered, licensed by the Land Department, and governed by the Condominium Act B.E. 2522 (1979). There are also other types of multi-apartment buildings in Thailand that do not confer individual apartment ownership.
The Condominium Act defines a “condominium” as a building where individuals can own separate units (apartments), each comprising personal property of part of the real estate and joint ownership of common property (parts of the condominium not included in the apartment, the land on which the condominium is located, and land plots or other objects intended for joint use).
Apartment owners in a condominium have rights and responsibilities for joint management and use of the building’s common property. The ownership certificate for a condominium unit validates ownership of the specific apartment.
Foreign Buyers
The law identifies the following categories of foreign buyers:
- Foreign citizens with permanent residence status in Thailand.
- Individuals residing in Thailand under the Investment Promotion legislation.
- Legal entities receiving investment incentives under the law.
- Companies registered under Thai law where more than 49% of the capital is owned by foreigners or more than half of the shareholders are foreigners.
- Individuals transferring currency to Thailand or withdrawing money from a non-resident account or a foreign currency account.
Foreign Quota
Foreigners can purchase condominium units within the so-called foreign quota: the area of apartments owned by foreigners must not exceed 49% of the total area of all apartments in the building.
To register the transfer of apartment ownership to a foreigner at the Land Department, a letter from the condominium’s management company confirming compliance with the foreign quota is required.
Payment Specifics
Foreigners who are not permanent residents of Thailand or individuals entering Thailand under the Investment Promotion legislation must prove that the money for the apartment purchase came from abroad. Supporting documents will be required when registering ownership rights at the Land Department.
The most common method is a bank transfer from abroad, with the Thai bank issuing a corresponding certificate. For transfers exceeding $50,000, the bank issues a Foreign Exchange Transaction (FET) form.
When transferring foreign currency to Thailand, it’s necessary for the beneficiary’s name in the FET to match the buyer’s name as stated in the sales contract. The total amount transferred must not be less than the apartment’s price specified in the sales contract.
Investment Visa
In some cases, purchasing an apartment may allow for obtaining an investment visa.
Lease
In Thailand, the maximum lease term for property is 30 years, with the possibility of renewal for no more than another 30 years, according to Section 540 of the Civil and Commercial Code of Thailand.
Any property lease agreement must be in written form.
If the lease is for more than three years, it must be registered with the Land Department. Otherwise, the contract will only be valid for three years.
For commercial and industrial purposes, there are additional leasing options under the Lease of Immovable Property for Commercial and Industrial Purposes Act B.E. 2542 (1999) and the Eastern Economic Corridor Act, allowing lease terms from 30 to 50 years with the possibility of an additional 50-year renewal.
Also Read:
Leasehold in Thailand
Due Diligence
Before engaging in real estate transactions in Thailand, it is crucial to conduct due diligence – a thorough legal examination. This process includes investigating the property’s title history, searching for possible restrictions and burdens, identifying other potential problems, inspecting the property, and ensuring compliance with land use, construction, and zoning regulations.
The examination should be conducted by experienced professionals to identify potential issues early and make informed decisions before finalizing the transaction. This helps save time, effort, and money, ensuring a safe and successful real estate deal.
Taxes and Fees for Buying or Selling Property in Thailand
When buying or selling property in Thailand, various taxes and fees are applied. Here’s an overview of these costs:
- Registration Fee: This fee is generally 2% of the property’s appraised value. Typically, the buyer and seller share this cost equally, unless agreed otherwise in the contract.
- Specific Business Tax (SBT): This is a tax of 3.3% on the sale price or appraised value of the property (whichever is higher), including a municipal tax. This tax is applicable mainly to the seller, and is only applied if the property is sold within the first five years of ownership.
- Stamp Duty: In cases where SBT does not apply, a stamp duty of 0.5% of the sale price or appraised value (whichever is higher) is levied. This is usually paid by the seller.
- Withholding Tax (WHT): The withholding tax rate varies depending on whether the seller is an individual or a corporate entity. For a corporate entity, the tax is 1% of the sale price or appraised value, whichever is higher. If the seller is an individual, the tax is calculated on a progressive scale based on the appraised value and the period of ownership.
For individual sellers, calculating withholding tax involves considering the sales price, deductible expenses, net income, and the duration of ownership. This tax is calculated on the annual tax income, multiplied by the number of years the property has been owned to determine the withholding tax amount.
| Tax | Rate | Payer |
|---|---|---|
| Registration Fee | 2% of the appraised value | Usually, the buyer and seller pay this fee equally, unless the contract states otherwise. |
| Specific Business Tax (SBT) | 3.3% of the higher of the sale price or the appraised value (including municipal tax) | Seller |
| Stamp Duty (if SBT is not applicable) | 0.5% of the higher of the sale price or the appraised value | Seller |
| Withholding Tax (WHT) | – For corporate sellers: 1% of the higher of the sale price or the appraised value. – For individual sellers: Calculated on a progressive scale based on the appraised value and the duration of ownership. | Seller |
Land and Building Tax in Thailand
The new Land and Building Tax Act has been in effect since January 1, 2020. This tax replaces the previous taxes that were essentially income taxes on rent, rather than a property tax.
Taxpayers
The taxpayers of the land and building tax are the owners, holders, and users of land and buildings, including apartments in condominiums.
Tax Base
The tax base for the land and building tax is the appraised value of the land, buildings, or condominium apartments, determined according to the Land Code.
For land and buildings without an appraised value, the value is determined in accordance with the rules, procedures, and conditions set by the ministry’s acts.
Maximum Tax Rates
The tax rates for land and buildings will be set by Royal Decrees but shall not exceed the following maximum rates:
| Purpose of Land and Buildings | Maximum Tax Rate |
|---|---|
| Agricultural use | 0.15% |
| Residential use | 0.3% |
| Other uses | 1.2% |
| Unused/unoccupied properties | 1.2% (*) |
Note:
(*) For land or buildings that are idle (not used) for three consecutive years, the rate will increase by 0.3% every three years, up to a maximum rate of 3%.
Land and Building Tax Rates
Agricultural Land and Buildings
| Value | Tax Rate |
|---|---|
| 1 million – 75 million baht | 0.01% |
| 76 million – 100 million baht | 0.03% |
| 101 million – 500 million baht | 0.05% |
| 501 million – 1 billion baht | 0.07% |
| > 1 billion baht | 0.1% |
Individual owners of agricultural land or buildings are exempt from tax for 2020-2023.
Residential Land and Buildings Owned by Individuals Registered in the House Book
| Value | Tax Rate |
|---|---|
| 1 million – 25 million baht | 0.03% |
| 26 million – 50 million baht | 0.05% |
| > 50 million baht | 0.1% |
Residential Buildings Owned by Individuals Registered in the House Book
| Value | Tax Rate |
|---|---|
| 1 million – 40 million baht | 0.02% |
| 41 million – 65 million baht | 0.03% |
| 66 million – 90 million baht | 0.05% |
| > 90 million baht | 0.1% |
Residential Land or Buildings Not Specified Above
| Value | Tax Rate |
|---|---|
| 1 million – 50 million baht | 0.02% |
| 51 million – 75 million baht | 0.03% |
| 76 million – 100 million baht | 0.05% |
| > 100 million baht | 0.1% |
Land or Buildings for Other Uses
| Value | Tax Rate |
|---|---|
| 1 million – 50 million baht | 0.3% |
| 51 million – 200 million baht | 0.4% |
| 201 million – 1,000 million baht | 0.5% |
| 1,001 million – 5,000 million baht | 0.6% |
| > 5,000 million baht |
Unused Land or Buildings
| Value | Tax Rate |
|---|---|
| 1 million – 50 million baht | 0.3% |
| 51 million – 200 million baht | 0.4% |
| 201 million – 1,000 million baht | 0.5% |
| 1,001 million – 5,000 million baht | 0.6% |
| > 5,000 million baht |
Tax Deductions
| Type of Property | Non-Taxable Value |
|---|---|
| Agricultural land and buildings owned by individuals | Up to 50 million baht |
| Residential land and buildings owned by individuals registered in the house book on January 1 of the reporting year | Up to 50 million baht |
| Residential buildings owned by individuals registered in the house book on January 1 of the reporting year, but the land is owned by another person | Up to 10 million baht |
Photo by big.tiny.belly on Unsplash
For assistance with real estate transactions in Thailand, please email us or use the form below.