Ownership Options for Foreign Buyers of Thai Houses

Thai law states that foreigners cannot own land, they can own buildings only. So, if a foreigner wants to buy a house, (or duplex/townhouse), which includes land, he has two basic ownership options for acquiring the land.

1. Set up a carefully structured Thai limited company to hold the freehold of the land

The freehold of the land is put in the company name. The minimum requirement for the company is for two Thai shareholders. These Thai shareholders will be provided by the lawyer setting up the company. The foreign buyer is made a director, and a shareholder, in the company. You can also have more than one foreign shareholder or director but the total foreign shareholding must not exceed 49%. Crucially, there are a number of protective measures always put in place by the lawyer setting up the company to create a very safe structure for the foreign directors. These give the foreign directors complete control and they typically include, but are not limited to, the following: the foreign director(s) is the only officer who can commit or bind the company in any contractual dealings; the director’s shares are preference shares and hold 10 times the voting rights of the nominal shares, giving the directors 90% of the voting power; when the company is set up, all of the Thai shareholders sign an open dated share transfer form. This means that they can all be signed out and replaced with other shareholders whenever the foreign director(s) wishes.

The company owns the freehold of the land and the investor(s) is free to build on the land, sell or lease property and transfer their rights to next of kin.

Note: The company must comply with the law and money should pass through the company books, shareholder meetings must be held, minutes of meeting prepared, and yearly accounting must be filed. But a good local accountant can take care of all of this for you. It is easy to put some expenses for running the property through the company books. The accountant will also submit annual accounts for a typical fee of around 20,000 THB.

2. Lease the land on a rolling 30 year lease

An alternative to setting up a Thai limited company is for the foreigner to purchase a 30 year lease for the land. Options to renew the lease for 2 further periods of 30 years are built into the contract. The contract can also include a fixed option to purchase the freehold whenever the foreigner wishes.

Note: The house itself (i.e. the building) can be owned directly by the foreign buyer. But, if the freehold of the land is held in a Thai company, then the house will typically be held in the same company. This is for reasons of tax efficiency and ease of resale.