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Foreign Ownership of Property in Thailand

 

Foreign nationals may not own land freehold in Krabi or anywhere in the Kingdom of Thailand. They may, however, own land or property in Thailand indirectly through control of a Thai corporate entity e.g. in the form of a limited company or a limited partnership as long as Thai nationals hold 51% or more of the shares.

 

Foreign Ownership of Property in Krabi through Foreign Investment Law

There is an exception whereby a foreigner may own property in Krabi, Thailand on a freehold basis under special legal provisions according to the foreign investment law. Every application for such provision will be considered by the Thai Board of Investment on a case by case basis. Please contact us for further advice if you think you might be eligible.

 

 

Condominium Ownership in Krabi, Thailand

Legal ownership of a condominium property in Krabi is possible depending on specific special legal provisions. Foreigners owning such property in Thailand must not amount to a majority though, so availability of such properties in Krabi and in Thailand will vary depending on other units sold and the specific legal status of each Condominium.

 

 

 

Thai Limited Company as a way to own property in Krabi.

This form of purchasing property is the most popular with foreign investors because the Articles of Association and the shareholders agreement can specify conditions to provide greater protection for foreign minority shareholders where majority Thai ownership is required under the Foreign Business Act.


Thai law requires that 51% of the shares be held by Thai nationals, however, any company with more than 40% foreign interest that purchases land will be investigated by the Land Office to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land. This effectively results in the foreign ownership of any limited company that purchases land being limited to a maximum of 39%. However, with the recommended changes to the Articles of Association, the foreigner can be the only director who can commit or bind the company in any contractual dealings. This way of setting up a limited company in Thailand effectively gives the minority shareholder control over the company and therefore control over any Thai property owned by the company.

 

The requirements of setting up a Limited Company for ownership of property in Krabi and Thailand do vary depending on very specific criteria. To ensure a trouble free future in Thailand, foreign investors who want to set up a company to hold property in Krabi or anywhere in Thailand should consult a qualified and experienced lawyer.

 

There are also many legal and tax implications in setting up any sort of land or property ownership in Thailand, it is very important to get the right advice.

 

 

 

Long term Leasehold as a way to own property in Krabi, Thailand

Foreigners may register a long term leasehold contract over the land consisting of an initial 30 - year term plus contracts for two further prepaid 30 year leases- for a total of 90 years. This method of owning a property in Krabi, Thailand is the simplest and least controversial. Many Thailand development companies offer this means of Thailand property ownership to foreigners along with further guarantees that enable the foreigner to sell the property as freehold to an eligible Thai National.


What is Leasehold.? Leasehold is the form of holding properties by lease right according to legal timeframe registration with the Land Office. The lease holder is entitled to exercise their rights the same as holding by freehold e.g. sale, sub-lease or transfer rights and benefits to the other.

 

Leasehold Registration.

Leasehold related laws at the moment in Thailand allows leases with a maximum term of 30 years to be registered with the Land Office. To enable longer periods of lease the standard procedure is to make contracts between the buying and selling parties for an additional 2 terms of 30 years effectively making a total of 90 years. The contract specifies that the purchase price of the original lease also includes the purchase price of the two additional leases.


Before the end of the first lease period, the second 30 year lease is registered with the Land Office at no additional cost and before the end of the second period, the third period is registered also with no additional expenses. However, contracting parties should negotiate these conditions at the first registration.


The lease and the contracts give the purchaser complete control of the property for the entire 90 years exactly the same as a single lease of 90 years would do. You will be able to transfer or effectively sell or give the remains of the 90 years to a third party at any time during the 90 years. However, please note that at the first registration period both parties need to consult with the land official on the lease fee throughout the 90 years lease term. This is a standard well accepted practice in Thailand. We recommend you talk to a lawyer experienced and qualified in Thai Land Law for further clarification.

 

Fee and Expense

According to the Land Office regulation, the leasehold registration fee is 1%  from the rental of the maximum lease period. Also, the landlord has to pay a personal income tax based on a progressive rate deducted at the time of the registration. However, the parties may  share these expenses equally by negotiation.

 

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