Buying Or Leasing Land In Phuket

Many visitors to Thailand are drawn to the country’s friendly people and amazing culture. Even at first glimpse, they saw it as a fantastic location for purchasing property and constructing their ideal dream home.

However, if you are considering purchasing or leasing land in Thailand, there are a few things you should be aware of.

Is Land In Phuket Good Investment?

Although it may be difficult for us to believe today, land in Phuket was originally quite inexpensive. In 1974, however, when a little island in Phang Nga Bay was prominently featured as a James Bond villain’s refuge, almost no one had ever heard of Phuket.

When he first arrived on the island 40 years ago, a Rai of land cost approximately the same as a baseball cap, according to one old-timer we know.

It’s reasonable to assume that land is a little more expensive now, and land prices have risen significantly over the previous 20 years. However, there is still a lot of value in Phuket.

The most costly land is on the West Coast, which is where you can see the most beautiful sunsets and find some of the nicest beaches. This side of the island, predictably, has a high concentration of services to assist inhabitants and tourists.

In general, the further you get away from the West Coast, the less expensive land becomes.

Buying Land In Phuket Legally

It is feasible for a foreigner to purchase land through a Thai corporation, and this may be done lawfully. The issues come when consumers take shortcuts and accept self-serving counsel from someone who are solely interested in completing a transaction rather than ensuring that the buyer is respecting the law.

The use of a holding company or using a group of nominee shareholders are both clearly unlawful, yet they are far too frequently recommended to naive foreign real estate investors in Thailand.

How Can I Own Land In Phuket Legally?

To begin, the foreigner must recognize two important points:

The land will be registered in the firm’s name rather than their own, and they will not control 100% of the corporation since Thai law restricts foreign share ownership to 49%.

If you form a Thai Company Ltd., it must be operated as a legal entity. Once you’ve found investors, you may start a property rental business, with your house serving as the company’s headquarters. In addition, the business might own and rent the property or villa (or multiple villas).

You may continue to inhabit the property your business owns as long as you follow all applicable Thai corporate regulations, such as submitting accounts, paying taxes, and repaying your directors and shareholders. And if your firm owns numerous properties, you may be making a good profit from your legal business structure.

Leasing Land In Phuket For Foreigners

If the lure of living in a luxury Thai villa is too powerful to resist, but you lack the energy to set up a formal Thai corporation in order to obtain one, you can lease the land for a 30-year term. It is completely lawful to do so.

In Thailand, there have been attempts to portray the 30-year lease as “leasehold ownership,” however this is not entirely accurate. In several European nations, for example, a leasehold may last for 999 years, which could properly provide a sense of ownership. A 30-year deal does not give you that sensation.

A lessee in Thailand effectively rents the land for 30 years. To minimize any misunderstanding, it should simply be called a “lease” rather than leasehold. Anyone interested in a 30-year lease should seek the advice of the best lawyers available. While the lessee’s rights are quite obvious, there are aspects of a well-structured agreement that can help the foreigner’s position.

Unfortunately, leasing agreements that included an automatic renewal, thereby guaranteeing the tenant a 60 or 90-year lease, have been struck down by the courts. As a result, any clause that guarantees an extension is technically prohibited.

Lease extensions that are written on paper are currently being scrutinized. Lease extensions have already been found to be in violation of the “Spirit of Thai Law” by the courts on several instances. Worse even for lessees, if a “30+30” contract is discovered by the authorities, it may invalidate the initial 30-year lease, resulting in the foreign lessee losing everything.

The option to renew, on the other hand, should be included in every lease. After the first lease term expires, the lease agreement should be designed in such a way that a renewal is possible.

This is especially important if a foreigner built their own house on leased land. It is even possible that the value added to the property (i.e. the lovely villa) could be viewed favourably as payment for enforcing a new 30-year lease.

Buying in A Thai Spouse’s Name

If you have a Thai wife, you are permitted to acquire property, a villa, or a home in her name. A Thai lady married to a foreigner could not possess land twenty years ago. Although the legislation has now been altered, the foreign spouse is still required to relinquish any claim to the property. Even if a foreigner marries a Thai woman, he or she is not allowed to co-own a landed property with her.

When land or a villa is acquired in the name of a Thai spouse today, a joint declaration must be made saying that the money used to purchase the property were solely owned by the Thai spouse and that the foreigner waives any and all future rights to those funds. This means that the Thai spouse can sell or mortgage the property without the foreign spouse’s approval or agreement.

Land Titles in Thailand

Private land ownership was first recognized in Thailand in 1872, during King Chulalongkorn’s reign. However, it took another 30 years, in 1901, to establish a system of property titles and a Department of Land Registry to regulate and administer private land ownership.

The department’s name and subordination have changed a few times during the previous 100 years. Originally part of the Department of Agriculture, it was transferred to the Department of Interior in 1932 and given the name Department of Lands, which it still bears today (a few changes between 1932 and 1941 notwithstanding).

The Civil and Commercial Code (originally passed in 1923), as well as the more recent Property Code, provide the foundation for most contemporary legislation governing land ownership (1954). Even those who understand the law are sometimes perplexed by the vast variety of land title classifications prevalent across the Kingdom.

If you’re new to Thailand, the several forms of land titles, as well as the various land measuring units, might be perplexing. If you or your Thai spouse are unfamiliar with the many titles that exist, it is not a good idea to try to acquire a piece of property.

If you’re serious about buying land in Thailand, you need at the very least be aware of the options available. A lot of property in Thailand may never have been adequately surveyed since it was owned by private land owners for years (perhaps generations) before a family member opted to sell.

Landowners-to-be should avoid becoming engrossed in the complexity of the numerous titles. Because the only focus should be on locating land with a full Chanote title, it is not required to have a deep grasp of the land market.

When acquiring any property in Thailand, it is critical to seek the best legal counsel and do thorough due diligence. This is especially true when acquiring land, as a thorough title check is required to confirm the land’s real history of ownership and the absence of any liens or mortgages.

Chanote Titles

As a foreigner, you should only consider a Chanote title, also known as a real title document, because it is the safest type of land ownership. A Nor Sor 4 Jor is the official term for a certificate issued by the Land Office to certify freehold title of the property in question.

The fact that the land has been fully and formally surveyed and mapped on a national survey grid utilizing GPS coordinates distinguishes a Chanote from other title documents. Using numbered concrete marker posts, land specified under a Chanote is also “staked.”

The red Garuda emblem, which appears on practically all official Thai government papers, is printed on the top of the Chanote titles, which are printed on yellow paper. This document will also include a map of the land and a confirmation of whether or not it has ever been subdivided. It will also include any liens, mortgages, or other encumbrances on the property.

A foreigner will not be authorized to register a Chanote title in their own name, or jointly with a Thai citizen, save in exceedingly unusual circumstances (e.g. a spouse).

Other Titles

Some foreigners may be interested in the reasonably priced Nor Sor 3 or Nor Sor 3 Gor games, albeit neither is as reliable as a Chanote game. The Land Office also issues these titles, and while they are legal papers, the land borders have not been surveyed as precisely as with a Chanote title. There are other titles that just demonstrate a claim to utilize the land but do not indicate real ownership. We do not recommend them to any foreign investor though.

Transferring Building Ownership

Property ownership, unlike land ownership, does not require or involve the use of a title. Any sale or long-term lease, however, must be recorded with the Land Office. Foreigners may (and should) register their ownership of a structure that is separate from the land.

If they were engaged in the construction of the building, proof of construction is sufficient for registration; otherwise, the Land Office will want to see sale agreements and documentation from the building’s acquisition.

Do You Have The Best Lawyer?

We’ll wrap off with the most obvious, yet sometimes overlooked, reason why individuals make major mistakes: they choose the incorrect counsel.

As always, we advise you to get the finest counsel possible. If your lawyer tells you to form a Thai corporation and that they would take care of the shareholders and that nothing will ever go wrong, they are probably not the appropriate lawyer for you.

The authorities are well-versed in every tactic that has been employed in the past to conceal foreign ownership. Find a lawyer that will clearly and succinctly explain all of the problems so that you are aware of the risks you are taking. That will be handled by a reputable attorney.