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Foreign developers and overseas corporations typically look for land and/or hotels in Thailand. Industrial real estate is also targeted by investors who set up manufacturing or assembly operations locally.
It’s not strange, as Thailand has one of the biggest economies in Southeast Asia and attracts tens of millions of travelers and workers each year.
In the past years, land prices have increased much in the greater Bangkok area. This is contrary to Japan, where land prices have fallen since the early 1990s.
With that said, acquiring land in Thailand can be a time-consuming process with many potential pitfalls. It’s crucial that you work with a reputable partner that has experience in catering to foreigners.
In this article, I explain how foreigners can buy land in Thailand and what you should pay attention to.
- Can foreigners buy land in Thailand?
- Title Deeds Available in Thailand
- Common pitfalls when buying land in Thailand
- Thailand Land Prices
Can foreigners buy land in Thailand?
Foreigners are not allowed to own land in Thailand, this is a common practice in other Southeast Asian countries, including Indonesia, Vietnam, and the Philippines.
With that said, there are ways to at least control land. Let’s review the different options you have.
1. Buying Land With a Nominee
The first option is to buy land with the help of a local nominee. In short, this means that a local citizen keeps the land under his or her name.
To give yourself maximum control of the land, a lawyer can help to set up contracts that give you majority voting rights.
There are a lot of risks of going for this option though. At the end of the day, you might have little to say if you end up in disputes. This kind of ownership is not legal nor recognized in Thailand.
Both the nominee and the land buyer might end up going to jail or receive hefty fines. Recently, a big Thai law firm had their offices raided by police for helping foreigners purchase land using Thai nominees.
2. Buying Land Through a Thai Limited Company
Another option is to open a Thai limited company and appoint yourself as a director. Just keep in mind that you cannot own more than 49% of a Thai company as a foreigner.
The only exception is if you’re an American citizen, but there are still restrictions to ownership of land if that’s the case.
Appointing yourself as a director, clearly stating that you have majority voting rights, is a way to make the process more waterproof.
Even if the BOI has issued certain incentives for foreigners to own land, the incentives are not available for foreign landholding or development companies.
The incentives are only available for some property intensive businesses such as resorts and hotels.
Issues of 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:
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.
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.
With a number of different shareholders, people might have different interests as well.
3. Lease Land
Getting a leasehold contract is easier and recommended by many local agents, at least if you’re an individual foreign buyer.
If you’re a property developer or an investment firm, setting up a joint-venture with a local Thai developer or real estate company might be a solution.
You can lease property up to 30 years and renewals of 30 years might be accepted at the Land Office. Assure to work with a credible local partner when dealing with local contracts.
Title Deeds in Thailand
Thailand’s title system is different from that used in other countries and there are specific terms you should study beforehand.
Below I’ve listed the different title deeds available and how they differ from each other.
1. Chanote / Nor Sor 4 (Freehold title)
This land title is the most preferred as you’ll have exclusive rights to the land.
If the land holds this title, it’s been measured with GPS coordinates in the best proper way. With a freehold title, you can sell, transfer, lease, or mortgage the land.
2. 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 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.
3. 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.
Future potential issues might arise with neighbors if they claim that they own parts of your land.
As mentioned, I highly recommend you to find a local solicitor, especially when you’re dealing in transactions with land.
Local contractual setups not rarely involve many gray areas. There are solicitors who can help you to draft a leasehold contract that 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:
- The seller doesn’t own the property or have mortgaged the property to another party
- There are liens or encumbrances attached to the property that you weren’t aware of. Be sure to do a title search and check the title in detail, together with a solicitor
- The land can’t be used to build a house for residential purposes. This is an issue you can encounter when buying farmland
Thailand Land Prices
Land prices in suburban areas and in the greater Bangkok Metro have increased much in the past years. One of the main drivers is the opening of various new MTR stations.
Besides, local developers have shunned away from condo developments and focused more on building landed units, such as townhouses.
There’s been an oversupply of condominium units at the same time as the demand for landed properties goes up.
Looking at vacant land prices in greater Bangkok, the Real Estate Information Center (REIC) has tracked the following changes from the year before:
- Q1: +21.5%
- Q2: +8.8%
- Q3: +17.1%
- Q4: +27.6%
- Q1: +16%
- Q2: +32.3%
- Q3: +31.6%
- Q4: +32.6%
- Q1: +14.3%
- Q2: +13.3%
- Q3: +12.6%
- Q4: +12.5%
According to CBRE, land inquiries increased as much as 50% during the first 9 months of 2020 in Phuket compared to 2019.
A majority of the inquiries came from private buyers and local developers that planned to build new homes on the island.
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:
- By setting up a local limited company
- Buying land with the help of a local nominee
- 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.
2 Responses to “How to Buy Land in Thailand: A Complete Guide”
#1 options is the easiest yet risky. You’ll be needing someone who’s trustworthy
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