Foreign Land Ownership In Thailand – The Problem
When it comes to being a foreigner abroad, Villa, House and Foreign Land ownership in Thailand are some of the most hotly debated topics for those looking to invest in the real estate sector here. It’s not uncommon to hear complaints from foreigners regarding the inability to legally purchase and own a Freehold Villa or House in Thailand, but this is not just a problem here.
It’s very easy to become immediately smitten with Thailand’s people and culture when you first arrive in the Kingdom, and many of the newcomers that fall in love with this amazing country, quickly decide that this tropical paradise is somewhere that they would like to set up home.
Shortly after that, they learn that as a foreigner, they are not allowed to legally own land in Thailand. The research will show that there is a way to circumnavigate those laws, but each of them is unappealing.
Going down the route of owning land illegal in Thailand is certainly not something we recommend and while things can still be done “properly” by setting up a Thai Company, there are still many risks for each party involved in that process.
Foreigners can still own the buildings of course, but that means very little when the property that is located on the land is tied to a Lease contract. When put further under scrutiny, the idea of being confined to a Leasehold does not inspire many potential buyers to part with their hard-earned cash.
What Exactly is a Leasehold in Thailand?
This article is intended for those that feel hard done by this ruling, and so that they can gain a better understanding and appreciation that there are similar restrictions across the globe, and some of these countries may surprise you.
Thailand is Far From Alone
Most people don’t care to look much further after they discover Thailand’s policy on foreign land ownership but they are far from alone. There are in fact nearly as many countries which have foreign land ownership restrictions as there are that allow foreign land ownership.
Thailand is the Same as The Rest of South East Asia
For those of you that know the local areas around Thailand, you will know that most of the surrounding countries in Southeast Asia, excluding Malaysia, also forbid foreign land ownership.
For the powers that be in these countries, opening the doors to foreign land ownership would for the most part, irreparably change the property market dynamics and harm the native citizens.
Foreign land ownership restrictions will help to keep the domestic property market at a much more affordable rate to the citizens of said country. Something that, so far, Thailand has managed to avoid.
It will come as no surprise that if Thailand were to allow foreign freehold ownership of villas, houses and land, the average price will skyrocket and potentially put it out of reach to Thailand’s lower-income houses.
Western Countries Also Restrict Land Ownership
Many of the more prevalent western countries are thinking of, if not already, adopting new measures that will curb foreigners ability to be able to buy land.
Let’s look at the UK for example. With the ever-increasing real estate prices in the UK, lawmakers and high profile figures have been prompted into taking a harder stance on foreign land and house ownership. The house prices in the UK have gotten well out of hand already, just take a look at the average house price in London.
We may end up seeing a new higher capital gains tax in the not so distant future, levied on the profits that are made from selling a home in the UK by foreign owners. If the problem persists beyond that, even more, drastic measures could end up being taken.
Home prices in Australia have also now become quite unrealistic and in the Land Down Under, restrictions on foreign buyers are already put in place. This means a limit to the kinds of properties that foreigners can buy, which is new construction projects only. Those that break this law can see themselves ending up with huge fines or, in worse case scenarios, prison sentences!
The Swiss seem to be intent on restricting foreigners from buying property. Most cantons (Counties in Swiss) already have limits in place for the number of foreigners who are eligible to purchase property per year.
Switzerland has long been suffering from extortionate property prices that seem to have risen substantially year by year. The cantons in the Apline state that have been more lenient with foreign property owners have seen a ridiculous price raise for even small apartments.
The areas that the local authorities have put their foot down on foreign property owners have seen a more realistic price range for the available properties. Restrictions do work if they are implemented correctly..
The Rest Of The World
If we listed every country that is now restricting foreign property ownership it will be an exhausting read but you’ll see why foreign land ownership in Thailand is not such a foreign concept elsewhere. You’ll also be amazing at just how many other countries are starting to go down this route.
Many of the Western countries that are only just now thinking about changing the goalposts for a foreign-owned property are even a bit late to the party.
Out of approximately 195 countries in the world, roughly 40% already have restrictions in place regarding property ownership for foreigners.
We appreciate that some of these countries are not necessarily countries that are desirable areas to make a property investment. Out of the 54 countries that are currently not attracting investors in droves, some of the countries that fall under that number, such as Africa, is still a desirable place to relocate to.
The same could of course be said for many other countries such as The Middle East, Asia or South America.
Some countries are simply too far away to attract a large number of foreign buyers, for example, countries that are in the Oceania region. Some of the countries are just too small also or don’t technically have an open property market, to begin with – think the Holy See / Vatican.
These countries must be counted among the 195 but for the sake of argument, even if you exclude these from the list, there are still roughly 78 countries that all restrict foreigners from buying Freehold land in their respective countries.
Some of them may still allow foreigners to have partial ownership of properties, normally in the form of a Leasehold agreement or a Condominium purchase, but for some, a Freehold purchase is not on the cards.
There are nearly 100 countries across the globe that do allow the ownership of land for foreign investors, but many of these countries still have restrictions in place. For example – Turkey, South Korea and Croatia only allow certain nationalities to purchase land because of a reciprocity agreement put in place by their government. Dominica also has a limit of only 1 acre for land ownership. Some countries will be more inclined to guard their residential land while others prefer to keep their agricultural land out of bounds.
Certain countries will allow you to buy land but you must first become a resident. Eygpt will only allow leaseholds of up to 99 years, with places like the UAE also offering leasehold options.
With that in mind, it should be time to consider that maybe Thailand is not so much different from other countries in regards to foreign nationals buying and owning property and land. In Thailand, you do still have some good property ownership options. Quality condominiums are available to foreigners and many are in great locations and offer stunning views.
The condos in Phuket have been designed and legally structured ingeniously. While owning land with a Villa and large garden is not a legal option for most, you can still get a dream home in the shape of a condo where you can own it both legally and in perpetuity.
You can view some of these properties here: Luxury Condominiums in Phuket
Is There Any Way To Own Villas Legally in Thailand?
If you’re an investor or an entrepreneur and you’re in the business of a legitimate Buy-To-Let Villas, then this can be an option, so the answer to this question is Yes.
The businessman in question will not be the owner of the Villa though as it must be purchased through a Thai Company. We touched on this earlier, but these companies cannot be opened by using a proxy/straw man Thai Shareholder, they must be legitimate partners in the business that have also both invested and have a role to play in the company.
The company itself must be structured correctly and within the boundaries of full legal compliance. It must also be operating normal business activities in Thailand, and be seen to be contributing to the Thai economy with Tax and Employment.
The shareholders must be able to receive profits, be able to file balance sheets, hold annual shareholders meetings (with minutes), and pay taxes.
The company must comply with the business laws of Thailand to further dispel any doubt that the company was solely created to circumnavigate Thailands property laws and to allow a foreign national the ability to own land.
