Ownership Advice

In Thailand, there are restrictions on foreigners directly owning land.

This emanates from a quite old law, designed to protect against over-acquisition and control of the territories of Thailand.

Notwithstanding that restriction, which exists in quite a number of jurisdictions other than Thailand, the real estate market has year on year developed, including in Phuket, to a sophisticated level, facilitating a safe and secure investment.

However, correct advice should be sought to protect the investor in relation to the land on which property is built, the contractual rights, and any corporate structures involved in an acquisition.

Real estate development on land is permitted, and then leasing or sale of interests are also permitted in Thailand. Provided that the developer or the individual concerned has a secure set up, this can easily be transferred to a prospective purchaser.

As laws have changed in Thailand, if a particular legal framework was set up several years ago, it may be that prospective purchaser's lawyers may seek to make changes, to effect an acquisition securely. All such acts are standard practice, and experienced realtors such as The Phillips Group and legal service providers should be familiar with the same.

The typical methods of acquisition/investment can be:

  • Condominium direct freehold ownership
  • Condominium Thai quota ownership with a Thai company, which is subject to several criteria for being involved in a Thai company including having genuine Thai shareholders in such company
  • "Protected" Leasehold, which is a lease of 30 years registered interest, where the power to renew the lease for consecutive terms of 30 years is vested in the lessee through a corporate structure
  • 'Direct' Leasehold, which is a lease of 30 years registered interest, where the power to renew the lease for consecutive terms of 30 years is vested in a responsible and credible developer, such as a public company, or a private company backed by appropriate individuals whom can be relied upon to maintain their interest beyond a 30 year term so that the lease will be renewed
  • 'Freehold' through Thai company acquisition. Less common, but can be effected provided that the 'joint venture' nature of the investment with Thai shareholders is regulated with a balance of avoiding 'nominee' activities, but still maintaining control over the assets of the company.

This is achieved through special articles of association; golden shares; and a shareholders agreement, together with a review of the actual Thai shareholders themselves.

It is worth noting that foreigners can own buildings in Thailand, so whilst still dealing with the structure for 'protecting' the land, the building can be secured safely too.

Each method above has pros and cons, but each is achievable. At above the US$5MM level, tax structuring is also recommended.