The Thai real estate market has not seen increased demand in 2023 and prices have not yet returned to pre-pandemic levels. Thai property may not be the best investment in the short term, but is worth considering for the long term. Tourist numbers are increasing and it is hoped that a market recovery will soon follow.
This situation is quite advantageous for buyers who are looking to purchase a home for themselves. However, anyone planning to buy real estate in Thailand should be prepared for certain legal limitations.
Read on to learn more about Thai real estate transactions and what you should bear in mind when buying a home in Thailand.
Can Foreigners Buy Property in Thailand?
Thai law technically allows foreigners to own land. However, there are many conditions attached and foreign nationals must also obtain permission from local authorities, which makes the process extremely difficult. Until 2006, foreigners often created a fictitious firm for the purposes of registering the purchased plots, but Thai authorities are cracking down on this practice. Thai law does not prohibit local companies from buying land but all transactions involving companies with foreign capital are carefully screened.
It is for this reason that law-abiding buyers prefer to rent plots. Fortunately, local legislation allows such agreements, without making any distinction between locals and visitors. The most important thing is to register the lease with the land office. The lease term can reach 30 years with the possibility of extension.
There are no restrictions on the ownership of real estate built on leased land in Thailand.
MayRome. Photo: Dexman Ten-Hwe (Unsplash)
Which Documents Confirm Ownership of the Building?
The document that certifies land ownership in Thailand is called chanote or Nor Sor 4 Jor (NS4J).
In addition to this there is Nor Sor Sam (NS3), Nor Sor Sam Gor (NS3G), and Khor. These documents confirm land rights registered and issued by the land office. These are not title deeds, but their counterparts. They allow you to own and use land as a private owner.
As for buildings, with the exception of condo units, they cannot be owned separately from the land.
The local municipality confirms the validity of your residence in a particular house or condo with a document called a tabien baan. Foreigners sometimes consider this a document of ownership of a purchased house or apartment, but this is not the case. It is more accurate to describe tabien baan as a kind of address registration.
You can prove the ownership of real estate either through land lease with the right to build (in the ideal case, in the name of the tenant), or through purchasing the building itself together with leasing the land. The fact of property transfer and lease is confirmed by a document that is issued, signed, and certified by the local land office.
How Can I Buy an Existing House in Thailand?
There are two ways you can become an owner of a house: through officially permitted private construction on the leased land or through transfer of rights to the building itself, separately from the land. The second option involves concluding a written agreement registered with the local land office. Violation of these rules makes the agreement ineffective.
Here is the sequence of actions for all cases:
- The seller and the buyer both go to the local land office. A buyer who cannot visit the office can send a representative using a special form of the power of attorney, Tor-Dor 21. As the Thai procedure for purchasing real estate is complex and rather confusing, it is always better to engage local competent lawyers.
- In addition to the power of attorney, if any, the seller and the buyer should bring a building permit or a previous sales agreement, tabien baan (a house book), and passports of both parties.
- Next comes the work of the land office. After accepting your application for the ownership transfer and conclusion of the relevant agreement, the land office sends a notification about the upcoming deal to the Or Bor Tor (a sub-district administrative institution), the district office, the Thai official (Kamnan), and to the property address. The latter is meant to inform the neighbours about the sale. They have 30 days to contest the sale if they have any grounds to do so.
- After the 30-day period has expired, the seller and the buyer return to the land office to complete the process.
This procedure is relevant in all cases, even if you buy a house from a developer, who concludes two agreements with the buyer, for land lease and house purchase, after going through all the procedures described above.
KoChang. Photo: Ragnar Vorel (Unsplash)
How Can I Buy a Flat in a Condo?
Foreigners and foreign legal entities can own a flat in a condo, but bear in mind that there are also restrictions on foreigners buying flats.
Foreigners are allowed to own up to 49% of the total area of one building. If this quota is already full, you will not be able to purchase the desired property, only rent it.
In addition, a potential buyer has to bring foreign currency into the country and exchange it for Thai baht directly at a local bank. To register the sale with the land office, you will need to provide the relevant certificate.
All this applies exclusively to officially registered and licensed condos; foreigners are not allowed to buy flats in other buildings. If a flat building does not have such a status, ownership transfer to a foreign national is out of the question. You can rent a flat or conclude other agreements simulating the purchase and sale, but there will be no ownership transfer. It is therefore important to check the legal status of the building before starting the process of buying a property.
Inheriting a flat in a condo from a Thai national is also an interesting question. A foreigner can enter into ownership if the 49% quota is not violated. If a condo already houses this amount of foreign owners, the heir must dispose of the property in some other way.
In a Nutshell
Foreigners who want to buy a house in Thailand face a number of restrictions. Experts recommend engaging a local competent lawyer who can guide you through the process.
Foreigners are, in reality, prohibited from owning land. Getting around this rule by establishing fictitious local companies can have negative consequences. The best option is to buy a house separately and rent the land plot where it is located.
If you want to buy a flat, there are some ins and outs there too. You can only purchase a flat in a condo building and a quota applies for the number of foreign owners allowed in one building. In other building types, you can obtain a property under a long-term lease agreement with the transfer of all the owner’s rights to the tenant.
Coverphoto: Chiang Mai. Peter Borter (Unsplash)
