Property Law in Phuket: Essential Tips for Foreign Investors

Property Law in Phuket varies from freehold condominiums to lease agreements, joint declarations and exceptions to ownership restrictions, each option is explained in detail. Recent developments and relevant legal considerations are also discussed to help you keep abreast of the dynamic state of property law in Phuket. 

By the time you read this article, you will have the information you will need to purchase property law in Phuket and make informed decisions in line with your goals.

Are Foreigners allowed to own land in Thailand?

Can foreigners own land in Thailand? In general, Thai law prohibits foreigners from buying land outright. There are exceptions, but in practice these are very rare. However, it is possible for foreigners to acquire property law in Phuket. For example, they can set up a Thai limited liability company or enter into a long-term lease agreement with a landlord.

While direct land ownership by foreigners in Thailand is generally restricted, alternative methods are available. One common way is to set up a Thai limited liability company that holds title to the land in the foreigner’s name. Another method is to enter into a long-term lease agreement with the landowner. In addition, a foreigner can legally own a building built on the land by obtaining a building permit in their name.

It is very important to understand the process of acquiring property law in Phuket. It is crucial to understand Thai title deeds to determine the extent of rights over land. It is also advisable to understand the costs and taxes associated with transferring property law in Phuket before purchasing. Legal services are recommended for a smooth transaction. Working with a reputable lawyer familiar with property law in Phuket can help you protect your interests and realise your desire to own property law in Phuket.

Understanding Freehold Ownership of Condominiums

Condominiums are the preferred option for foreign investors considering acquiring property law in Phuket. Under Thai law, foreigners can own up to 49% of the private area of a condominium. This means that as long as the condominium unit complies with the stipulated legal percentage, foreigners have the right to continuously own and hold the purchased condominium until it is sold. In addition, acquiring a condominium gives partial ownership of common areas and entitles the foreigner to partial ownership of facilities such as parking lots, gardens, swimming pools and reception areas. This partial ownership also provides a share in the voting rights of the residents’ association.

Exploring Condo Hotels or Hotel-Licensed Condominiums

Condominiums, also known as hotel-licensed condominiums, are a distinct investment vehicle that combines the advantages of condominium ownership with the convenience of hotel services. While foreigners can legally own condominiums in Thailand, there are some caveats. Property owners are allowed to stay in a condominium hotel for a limited period of time, usually ranging from two weeks to one month per year. 

Branded Residence: Branded residences occupy a unique place in the Thai real estate market. Developed and managed by well-known hotel and hospitality brands, these residences combine luxury living with exceptional service. Often located in prime locations, these residences offer access to exclusive amenities such as swimming pools, fitness centres, spa services and concierge services.

Understanding Leasehold Agreements and Considerations: While foreigners are prohibited from owning land outright in Thailand, leasehold agreements offer an alternative for foreigners wishing to own land such as detached houses, townhouses or private villas. Leasehold agreements allow foreigners to lease the land on which the properties are built to ensure that they can enjoy living in Thailand and comply with legal provisions.

Typically, the leasehold agreement is for a maximum period of 30 years. The tenant is given leasehold ownership and can use the property as a residence or rental property during the lease period. Each lease agreement needs to be officially registered at the local land administration office to provide legal security to the foreign tenant. Many developers include a clause in the purchase agreement promising a 30-year lease renewal, extending the lease term to 90 years.

Exploring Secured Leases or Protected Leases: Under this arrangement, the tenant signs a lease agreement and at the same time signs a purchase agreement with a Thai company affiliated with the developer. In most cases, the developer commits to developing a group of villas to be rented to individual foreigners. The foreign tenants collectively own shares in the offshore company, which in turn owns a minority stake in the lessor company. This ownership gives them special privileges such as voting rights and allows the offshore company to influence the direction and decision-making of the Thai company.

Purchasing Through a Thai Company: When it comes to owning property in Thailand, setting up a Thai company to buy property seems to be a popular option for foreigners. Setting up a Thai company makes it easier to own property registered in the company name. It should be emphasised that it is very important to obtain proper legal advice and guidance to ensure compliance with Thai laws and regulations.

A common choice of foreign buyers is to set up an offshore investment company with the British Virgin Islands favoured for its low operating costs, competitive real estate prices and reliable management. Through shares in an offshore company, ownership can be seamlessly transferred to new buyers as desired, providing flexibility and ease of investment. Working with legal and financial experts familiar with Thai real estate law is essential to effectively set up a Thai company and ensure compliance with all legal prerequisites. 

Exceptions to Foreign Ownership

While there are restrictions on foreigners owning land in Thailand, in exceptional circumstances foreigners are allowed to own property.

Prescribed Investment: The Thai Land Act provides a way for foreigners to become private landowners through prescribed investments. This means investing in bonds issued by state-owned enterprises, the Bank of Thailand, the Government of Thailand or guaranteed by the Ministry of Finance. By making prescribed investments, foreigners can allocate part of their funds to eligible bonds and use the remaining balance to acquire vacation homes or real estate.

The Board of Investment (BOI): Foreigners wishing to develop their business or invest in Thailand can benefit from certain privileges granted by the Board of Investment (BOI). These privileges include permission to own land: Under the BOI’s program, foreigners can inspect Thai businesses and have legal control over the land owned by the company.

Purchasing Villas Through a Thai Company: While land ownership by foreigners is often restricted, a common strategy is to set up a Thai limited liability company. This company must operate as a legitimate business, generate income and have eligible Thai shareholders. Foreigners can own up to 49% of the company shares, while Thais can own the remaining 51%. Extensive legal advice is required to ensure compliance with Thai laws and regulations.

Property Law in Phuket: Purchasing Luxury Properties in Thailand

For those in search of elegance and sophistication, Thailand offers a wide range of luxury properties tailored to the discerning buyer. From luxury condominiums to private villas, the Thai real estate market offers options to satisfy the desire for a luxurious lifestyle.

High-End Condos: Bangkok, Phuket, and other major cities in Thailand are home to a number of luxury condominium developments that offer luxurious living. These condominiums feature luxurious amenities, awe-inspiring views, and impeccable design. With world-class amenities such as infinity pools, private gyms, spa services, and concierge services, luxury condominiums offer unparalleled comfort and convenience. They are also often equipped with modern construction techniques and state-of-the-art technology, ensuring a luxurious and sophisticated living experience.

Upscale Villas and Exclusive Properties: Thailand is renowned for its exclusive and picturesque villas offering unparalleled privacy and luxury. From beachfront mansions to hillside retreats and lush tropical grounds, these private villas in prime locations feature spacious living areas, private pools, lush gardens and panoramic views. Designed with the utmost attention to detail, these properties offer a tranquil sanctuary to relax and unwind. With luxurious features such as a private spa room, home theater, wine cellar and large outdoor entertainment area, these private villas represent a true haven of luxury.

Joint Ownership of Landed Properties: For foreigners wishing to own land in Thailand, a joint declaration provides a legal framework for co-ownership. Joint ownership allows several people to jointly own property and share the associated rights and responsibilities. If you are married to a Thai national, joint land ownership in Thailand is restricted. However, your Thai spouse can purchase property in your Thai name by submitting a legally binding joint declaration confirming that the purchase was financed by your Thai spouse’s own contribution.

In this case, it should be noted that your Thai spouse reserves the right to legally lease, sublet or sell the property without your consent. To continue living on the land forever, you can enter into a lease agreement with your spouse and lease the land for a period of 30 years. This agreement gives you the right to reside on the land for the duration of the lease without any legal problems. 

Legal Considerations for Purchasing Through Thai Friends or Nominees

One way to buy property in Thailand is to use a trusted Thai friend. However, it is vital to keep in mind some important legal issues when choosing this option. If you ask a Thai friend to buy property on your behalf, you need to understand the legal issues involved. It is very important to realize that while the source of funds for the property investment must be a Thai citizen, you as a foreigner are legally prohibited from owning the title deed. As a result, the property will be registered in the name of your Thai friend.

It is important to understand that under this arrangement, your Thai friend has the legal authority to sell, rent or dispose of the property without your consent. This is very important as you have no direct control over the fate of the property. Another viable option to protect the continued use and enjoyment of the property is to enter into a rental agreement with a Thai friend. By renting a property from a friend, you can legally secure the right to use the property for a certain period of time (usually up to 30 years) depending on the length of the lease.

However, you should be aware that buying through a Thai friend or agent has its own risks. The authorities may discover this arrangement and consider your friend to be an illegal agent acting on your behalf, which could lead to legal consequences. When considering this option, it is advisable to seek legal counsel to ensure compliance with Thai laws and regulations. By consulting with an experienced professional, you can understand the legal complexities, protect your interests and make an informed decision about acquiring property through your Thai friends.

Frequently Asked Questions