Before buying property in Thailand either for investment or residence, you are strongly suggested to have clear understanding to all purchase options in order to choose one that suits you best. Each option including freehold, leasehold, foreign-quota condo, etc. has pros and cons. It can hardly say that one is better than the other.
Generally known as ownership, freehold is the most preferable option when applicable as it provides absolute rights to the property. Under Thai law, foreigners are not allowed to own land. The common ways of getting around this restriction are either owning a land through a Thai partner, family or friend or through a Thai limited company.
- Thai family or partner: Regardless how good your relationship with your Thai sibling or partner is, it is always recommended to put some kind of registration in place to assure you right to the land. Depending on each jurisdiction, lease or usufruct is applicable.
- Company route: To use a limited company to hold property, a foreigner can only hold up to 49% of the shares in the company and therefore additional protection in the company rules should be added. Also to keep your property-holding company out of the radar of the revenue office, the company should earn certain income of allowing director or true owner to live in the property. In addition, the company route comes with the annual cost for filing balance sheet of at least 10,000 Baht. Therefore, the company route is not recommended unless you are buying the high-end property.
Some developers offer leasehold purchase by transferring the construction in to your personal name and granting you a 30-year land lease plus right to 2 times renewal together with the option to convert the leasehold to freehold in the future. The leasehold option is fairly popular as it costs much cheaper than the freehold route and it is far simpler. However, this option is not recommended if your developer holds the land in an individual’s name because the land will be passed to the heir and it can be difficult to locate them to sign for renewal or sign the transfer document when you want to sell your property.
Foreign Quota Condo
This is the most secured option. Under Thai law, foreigners are allowed to own a condo within a foreign quota which is 49% of total living space in one building. Further it is required that the purchase price must be brought from overseas with specific purpose to buy a condo.
You may be offered this purchase option in case the foreign ownership exceeds the quota. However, this option should never be considered unless it is so obvious that the condominium you are buying could procure a high yield because there are so many condominium available in the market that you should not lower your legal position.