Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.
Although you are able to own a house or structure in your own name, Thai law currently prohibits foreigners from owning the land the building is erected on.
However there are a number of ways in which you can structure the purchase to own and invest in land:
Buying a condominium is perhaps the simplest and easiest option that is available to foreigners here in Thailand Under the condominium act B.E 2535 (1992). Foreigners can own condominiums in their own name provided that the total of foreign owned units does not exceed 49% of the total living area of the condominium.
The funds to purchase a foreign owned condomium should be remitted from outside Thailand in a currency other than Thai Baht (GBP, Dollar, Euro etc) in to a bank in Thailand (from a bank account in the name that is to be registered on the title deed). There needs to be a remark written on the transfer stating 'to purchase a condominium'. This enables the relevant form (Thor Thor Sam) to be obtained from the receiving bank.
A Thor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand.
You must request a Thor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Thor Tor Sam must specify that the remittance is solely for the purpose of purchasing a property.
Whenever a property in Thailand is bought and sold, there are four taxes that need to be taken into account.
Prior to 1998,any Thai national who married a foreigner would lose their right to purchase land in Thailand. They could, however,still retain land that they owned prior to marrying the foreigner.
However, the Ministerial regulation (1999) now allows any Thai nationals married to foreigners the right to purchase land.
In order to do this the Thai spouse must prove that the money used to purchase the said land is legally and solely theirs with no foreign claim to it. This is usually acheived by the foreign spouse signing a declaration stating that funds used for this purchase belonged to the spouse prior to the marriage and is beyond claim.
This is a brief synopsis on what methods of finance are available to expatriates and foreigners who wish to purchase property in Thailand.
This is the most simplest of transactions where you pay cash to the owner of the Thai property. It is worth noting that when sending cash from overseas to Thailand where the intention is to use the property as an investment, (so potentially removing cash/asset from Thailand in the future) paperwork will need to be completed in order to allow freedom of capital back out of Thailand at a later date without, issue and tax complications.
What you would not want to happen is to move a large amount of cash into Thailand and be restricted upon what you can take out at a later date.
Whilst this should be the most convenient and obvious choice of finance options, unfortunately various different Thai banks over the past have implemented lending to foreigners overnight and then restricted again within similar timescales. The criteria for lending, is not always straight forwards and in some cases, clients have found out numerous months down the line and after providing various documentations, that the lending is no longer available.
Should you have a Thai wife, lending maybe more feasible and could open a few more doors although again, procedures and terms/conditions are not as one would expect from a western developed country.
It is not uncommon for high end properties to be provided an Owner finance option. Let's say a client has a property for THB 30,000,000
The owner and in present market conditions will still most likely not be keen to reduce the balance by much however, could be happy to consider circa 50% today and the remaining 50% over a mutually agreeable timescale at circa 5-10% interest per annum.
Likewise, a developer could also be keen to offload properties and offer some form of finance in order to receive revenue which the developer can be plough back into another development. Developer finance is often similar and would expect circa 50% deposit and the remaining balance over a mutually agreeable period with some form of interest charge.
During the past 10 years, International Property Ownership has been influential with regards to a clients portfolio. It has been standard for an affluent property investor to diversify property across countries and therefore is now easily available to offer finance on overseas property. This effectively means that should you own property in any country other than Thailand, International Banks would happily set up a mortgage on your existing property and release the equity to fund your purchase in Thailand.
This effectively gives you cash to use as you please in Thailand (within reason) at a charge (interest rate) to the bank. It is highly recommended to use an experienced broker who has dealings with several multi-national banks in order to find the most efficient and cheapest International Bank. (Please contact our office for an established company introduction)
For the more professional investor, placing cash into property is simply not an option. For the pure investment minded i.e. Clients who want to purchase a property as an investment for both capital gain and annual rental income, Asset Finance is the most suitable option.
Again working with International Banks, clients are able to use existing investments (or set up new) to then be lent money back again on the back of the investment. This allows a client to invest money into a well-established portfolio earning a return of 7%, be lent the money back at 2% and then purchase property with the loan. The client then makes a profit of 5% before even investing into property.
Should you then purchase a decent property with a decent rental return of circa 6%, the money is than working efficiently. Capital Gain on the property is also an expectation which enhances the overall position.
Still in its infancy although gradually becoming more established, this method allows clients of all categories to purchase property in Thailand.
It is a well-established and common fact that a foreigner (expatriate) unless owning existing assets such as property/cash/investments will struggle to find a form of finance. The client will usually have attempted a Thai bank and found after several months, the bank will not lend.
The Hedge fund or 'Co-Investment' facility allows a client who has 50% deposit to borrow the remaining funds and purchase the property with a loan over 20-30 years. In much the same way as a normal bank, the fund acts in a similar way and would expect all similar documentation to be provided with similar terms. I.e. loan over 20 -30 years and an interest charged above Thai Minimum Lending rate.
In fact, the fund works most efficiently off all the options since allows a client to easily purchase property and easily take money out of Thailand without any complications due to the structure (consultation required upon suitability).
For all queries regarding any of the above, please email email@example.com or provide a contact number and we shall arrange contact to advise on your options
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