Foreign Ownership
Foreign Ownership
While direct land ownership by foreigners is generally restricted in Thailand, alternative legal avenues exist for foreign individuals or corporations to acquire property rights without contravening Thai law. Each approach offers distinct opportunities, advantages, and drawbacks. The outcome of each option may vary depending on the specific circumstances surrounding the foreign entity. Certain special laws permit land ownership by foreigners under specific conditions. This overview provides general information for each option. For tailored advice, it is recommended to consult with a qualified Thai legal professional.
Option 1: Establishing a Thai Limited Company for Property Ownership
One viable option for foreigners seeking land and/or house ownership is to establish a Thai Limited Company. A foreigner can purchase a land parcel through a Thai Limited Company, provided the company’s majority shares are held by Thai nationals. To be considered a Thai national company and hold land, the company must maintain at least 51% of its total shares held by Thai nationals and have a greater number of Thai shareholders than foreign shareholders.
Under this arrangement, a foreign owner can simultaneously exercise control over the company and hold freehold ownership of the land. However, this option entails significant costs and administrative burdens, including substantial expenses, paperwork, and annual taxes. Additionally, establishing a company solely for property acquisition without engaging in genuine business activities may be perceived as an attempt to circumvent land ownership restrictions. Therefore, this approach is recommended only when a company with ongoing legitimate business operations will hold the land title.
Option 2: Acquiring Land through Leasehold Agreements
As per the Thailand Civil and Commercial Code, long-term lease agreements provide another legal alternative for foreigners to utilize, occupy, and reside on land for residential purposes within a specified timeframe. Leasehold agreements, however, pose certain challenges. Termination of tenancy can occur due to breach of contract, premature departure by the lessee, or violation of specific agreement terms. In such cases, the lessee may risk forfeiting their deposit or any prepaid rent.
Furthermore, the property lease agreement terminates upon the lessee’s death as it is considered a personal right granted to a specific individual. However, the lessor and lessee can stipulate in the agreement that the lease right can be inherited. Without such a provision, the lease right extinguishes upon the lessee’s passing.
Option 3: Land Ownership under Special Laws
Foreign individuals or entities may be permitted to own land under certain special laws, such as:
Board of Investment (BOI) Promotion: Foreign juristic entities with substantial investments benefiting the Thai economy can acquire land if they obtain investment promotion from the BOI Thailand. This land must be used for the promoted business, and the company must have more than 49% shares held by non-Thai nationals or a greater number of foreign shareholders than Thai nationals. The maximum allowable land area is 5 rai for offices and 10 rai for personal residences.
Act on Industrial Estate Authority of Thailand: Foreign entities can own land if they operate their business within an approved and supervised Industrial Estate under Section 44 of the Industrial Estate Authority of Thailand Act.
Petroleum Act: Foreign entities may receive special privileges and exemptions for land ownership throughout the duration of their operations in Thailand under Section 65 of the Petroleum Act if they obtain concessions for oil and/or gas exploration and production.
Foreign property ownership in Thailand necessitates careful consideration of the available options, their respective advantages and disadvantages, and the specific circumstances surrounding the foreign entity. Consulting with an experienced Thai legal professional is crucial to ensure compliance with Thai laws and regulations and to make informed decisions that align with the entity’s objectives.