Many foreigners who have visited Thailand decides to move there full-time and want to buy land to build a house on. But buying land in a developing country, where the government doesn’t favor foreigners, you need to be careful before signing any purchasing agreements.
In this article, I explain how you can buy land in Thailand and about the most common title deeds used.
Can foreigners buy land in Thailand?
This question is a bit tricky and needs a couple of paragraphs to explain.
Yes, you can buy and control land through different local setups, but you can’t generally own land as a foreigner. Thailand, like many other countries in the region (except for Malaysia), has protective regulations towards foreign ownership.
If you live in Thailand, speak the language and have a Thai spouse, things become a bit easier though. In total, you have four different ways to buy and control land, which I will explain more about now.
1. Buying land with the help of your Thai spouse
It’s common that foreigners who wish to buy land are fairly established in Thailand. Often they have a Thai spouse and have resided in Thailand for a while, or spent a couple of months a year, travelling back and forth from their home countries.
Expats who live in Asia also make up a big chunk of the buyers who decide to acquire a plot of land, to build a house for example.
While it seems like an easy option to buy land with the help of a spouse, there are also many risks involved.
Below I listed some major reasons:
a. You can’t own the property in your own name, it needs to be with your Thai spouse
b. You’ll have no protection in case your spouse wants to file a divorce
c. Your spouse can decide to sell, mortgage or transfer the land without the need of asking you for permission
Be sure to understand the risks involved and contact a lawyer, who can guide you and set up a contract that is as waterproof as possible.
2. Buying land by setting up a Thai limited company
The second option you have is to open a Thai limited company and appoint yourself as a director. Why? Because as a foreigner, you can’t own more than 49% in a Thai company, hence you can’t be a majority shareholder.
Appointing yourself as a director, clearly stating that you have majority voting rights, is a way to make the process more waterproof. Keep in mind that you have the option to open a company with your Thai spouse, which will give the two of you a majority of ownership.
Issues with opening a Thai limited company
The same as it goes with the first option explained, it can seem like an easy option to just open a company, but there are risks and issues involved:
a. While it was fairly easy to open limited companies in the past, it’s becoming increasingly more difficult as the DBD are doing their utmost to prevent foreigners from opening companies that are used for the purpose of bypass local regulations
b. DBD can close down the company in case you don’t file annual company accounts, which is not rarely forgotten by persons who decide to move from Thailand
c. With a number of different shareholders, people might have different interests
3. Get a leasehold contract
Getting a leasehold contract is a preferred choice and recommended from many local agents.
You’ll have full ownership of your house and can lease the land with a maximum time period of up to 30 years, a renewal with 30 years might be accepted at the Land Office. Be sure to seek help from a local reputable solicitor, who can guide you through the process.
If you want to read more about important items you should include in your leasehold contract, I recommend you to read this article.
Title Deeds in Thailand
It can be a jungle to learn about local title system, especially in developing countries like Thailand, Indonesia or the Philippines, just to mention a few.
To make a long history short, titles are included in deeds (title deeds) that prove the ownership of a property, if there are any encumbrances or liens attached to the property, the location of the land and more.
Below I’ve included some of the most common title deeds used in Thailand.
Chanote / Nor Sor 4 (Freehold title)
This land title is the most preferred as you’ll have exclusive rights of the land.
You’ll be assured that the land is measured with GPS coordinates in the best proper way. With a freehold title, you can also sell, transfer, lease or mortgage the land.
Nor Sor 3 Gor
Even if Nor Sor 3 Gor has many similarities with Chanote, there are some minor differences.
Whilst the Chanote proves exact land boundaries with the help of a GPS, the land area in this title is often done through land surveys. With a Nor Sor 3 Gor, you also have the rights to sell, transfer, mortgage or lease the land if you wish to.
The title can be converted into a Chanote if you submit an application to the Land Register, which in turn approves the application.
Nor Sor 3
The main difference between this title and the other two is that the land has not been measured by an official authority (the Land Department). Instead, the boundaries are often measured by the owner, which can result in less accurate measurements.
The problem you don’t know exactly how much land you own and there can be conflicts with neighbors who claims they own part of your land.
As mentioned, I highly recommend you to find a local solicitor, especially when you’re dealing in transactions with land, that can’t even be owned by foreigners.
Local contractual setups opens up to a lot of gray areas, there are solicitors who can help you to draft a leasehold contract which favors you the most.
Common pitfalls when buying land in Thailand
As you probably know by now, there are many issues you can stumble upon if you don’t do your research thoroughly, and seek help where needed. Below I’ve included some other common issues that foreigners can deal with when buying land in Thailand:
a. The seller is not the owner of the property or have mortgaged the property to another party
b. There are liens or encumbrances attached to the property that you weren’t aware of. Be sure to do a title search and check it in detail, together with a solicitor
c. The land you bought can’t be used to build a house (for residential purposes). This is an issue you can encounter when buying farmland, for example
Even if foreigners can’t own land, some still decide to buy and own land indirectly through local contractual setups. It’s a process that requires deep scrutiny and thorough preparations of the documents involved, therefore you should contact a solicitor who has long on-the ground experience in the area.
The same as it goes in other Southeast Asian, there are a number of title deeds you should know more about, before you engage in Thailand’s property market.
You can buy or control land in three different ways, namely:
a. By setting up a local limited company, even if this is less preferred.
b. Buying land with the help of your Thai spouse.
c. Simply lease land.
I hope you found this article interesting and recommend you to read my separate guide that explains how foreigners can buy property in Thailand.