build/sell home & work permit issue

[seb1405]

Hello,

first a quick brief of my situation: will be moving to Chiang Mai for a 5 year period. my wife has contract and work permit and will basically fund our daily life. I'm planning to build a home on leased land in chiang mai. we're both from EU.

question 1: since I will be managing and coordinating our construction site, is it considerd work? do I need a work permit for this?

question 2: can I sell our house after 5 years on leased land? are there contracts that allow this if for example the land selling price is negotiated beforehand with the owner? I guess in case a foreigners buys it, the lease will be transfered and in case its a thai both land and house should be sold.

question 3: if this works I could actually do this as a business, build/sell houses, is there anyone who could advise if this is even a considerable option without having a company there? i probably know the answer already but maybe some people have something interesting to say about this. Is there an option with an oversea company (e.g. in Singapore)?

renting etc is not an option for now. I'm an architect and want to build. building permit will go through my architect friend's office in BKK.

thank you.

[thaiexpat21]

You most likely will need a WP and some serious legal advise !

[digitalchromakey]

1) Yes it's work and it's work restricted only to Thai citizens (architect, civil engineer and site supervisor). You will certainly need Thai employees and a level of provable indirection to get away with it.

2) Yes, but you would be selling a property with 25 years lease remaining - an ever decreasing asset; many complexities here.

3) Absolutely not legally in Thailand and questionably using foreign proxies.

Building Permit has to negotiated with the local authority in the area where the property is to be built and normally with the permission of the land owner (can sometimes be worked around for new builds)..

[seb1405]

ok thank you very much fpr the first replies.

serious advise is on the way. I will be meeting a hopefully good lawyer in 2 weeks.

@digitalchromakey

1. it's considered work if I manage the site on behalf of these 3 professions you mentioned which I will not do, therefore I will pay the architect, site coordinator etc to do their work. this seems appropriate. I actualy just play my role as a home owner/client and supervise the quality.This shouldn't require the WP for me.

2. ok if the lease remains to 25 years it lowers the value somehow, got it. What if the lease can be extended? What if a Thai citizen wants the house? This should happen quite often. I was hoping to get some first hand experience in the forum.

3. this makes sense....and doesn't require any further investigation. so the first sold house is considered private business/needs and the second house sold will be considered a business requiring a proper company? where is the red line?2 or 3 houses or more? this is a question for the lawyer i guess....

I add a 4th question: if I decide to keep the house and rent it, can it be done without a company? some taxes will apply of course...

thx

[digitalchromakey]

ok thank you very much fpr the first replies.

serious advise is on the way. I will be meeting a hopefully good lawyer in 2 weeks.

@digitalchromakey

1. it's considered work if I manage the site on behalf of these 3 professions you mentioned which I will not do, therefore I will pay the architect, site coordinator etc to do their work. this seems appropriate. I actualy just play my role as a home owner/client and supervise the quality.This shouldn't require the WP for me.

2. ok if the lease remains to 25 years it lowers the value somehow, got it. What if the lease can be extended? What if a Thai citizen wants the house? This should happen quite often. I was hoping to get some first hand experience in the forum.

3. this makes sense....and doesn't require any further investigation. so the first sold house is considered private business/needs and the second house sold will be considered a business requiring a proper company? where is the red line?2 or 3 houses or more? this is a question for the lawyer i guess....

I add a 4th question: if I decide to keep the house and rent it, can it be done without a company? some taxes will apply of course...

thx

1) You would need to hire a company to do the building and if you also appoint Thai project managers and architects in your own right then you shouldn't need a WP to build the house.

2) Not aware of 30 Year Leases under Thai Law being extendable, but am not expert in this area; Thai Lawyers often talk about 30:30:30 Year leases which are as yet legally untested, as the law has not yet been extant for 30 years and are anyway of questionable legality as they may not cover the orginal landowner selling as regards the post-dated second and third 30 year lease papers' validity is concerned. Question is, who owns the land you plan to build on and what is your relationship with that person/juristic person? Yes a Thai might buy your house, they would without doubt also want to buy the land the house stands on and probably wouldn't be interested in your remaining lease. Leases are mainly attractive to foreigners who cannot own Thai land.

3) If you buy the house from a company, plus pay the requiste taxes, register yourself as the lessee and building owner then the first one should be ok. Thing is if you don't own the company that builds the houses, then how do you make a profit, as the house will not sell for more than the commercial cost of construction?

4) You mean build the house then rent it to some one else? This is a commercial activity that requires tax to be paid and a company or an agency used to manage the rental, manage the property, etc thus serving to legitimise the rental activity.

There are for sure ambiguities and lots of people who get away with stuff without being spotted, but the best approach is to only undertake what is wholly legal and above board, partticularly if you intend to make Thailand your home.

[falang07]

Selling a house on leased land to a Thai national is out of question, they will not buy it without the land (would you?)... and if the land owner will not want to sell, you are doomed, after 30 years you can either demolish the house (can be costly having to get rid of the remains), or just keep it to the land owner.

[seb1405]

you're right falang07...the question is when the landlord agrees to sell the land for a certain price during the land lease and you include this as a condition in your lease contract, you could be selling land & house when the right Thai buyer comes...

if the buyer ever comes...

if these kind of contracts are even possible...

if you can find a landlord willing to do this....

the thing is that I believe I can bring a new value to the land since I'm an architect and have designed qualtiy resort style projects in Thailand before working for a thai company. in my point of view most houses lack architectural quality and my project should stand out and attract buyers

[falang07]

With so many new developments, no Thai will accept such offer unless it is well below the standard price.

[jbrain]

you're right falang07...the question is when the landlord agrees to sell the land for a certain price during the land lease and you include this as a condition in your lease contract, you could be selling land & house when the right Thai buyer comes...

if the buyer ever comes...

if these kind of contracts are even possible...

if you can find a landlord willing to do this....

the thing is that I believe I can bring a new value to the land since I'm an architect and have designed qualtiy resort style projects in Thailand before working for a thai company. in my point of view most houses lack architectural quality and my project should stand out and attract buyers

So why don't you buy the land in company name ?

[moe666]

You are asking for a whole lot of trouble, that more than likely will not end well for you. Just buying and renting condos here can entail a lot of pit falls as a friend found out.

[philw]

ok thank you very much fpr the first replies.

serious advise is on the way. I will be meeting a hopefully good lawyer in 2 weeks.

@digitalchromakey

1. it's considered work if I manage the site on behalf of these 3 professions you mentioned which I will not do, therefore I will pay the architect, site coordinator etc to do their work. this seems appropriate. I actualy just play my role as a home owner/client and supervise the quality.This shouldn't require the WP for me.

2. ok if the lease remains to 25 years it lowers the value somehow, got it. What if the lease can be extended? What if a Thai citizen wants the house? This should happen quite often. I was hoping to get some first hand experience in the forum.

3. this makes sense....and doesn't require any further investigation. so the first sold house is considered private business/needs and the second house sold will be considered a business requiring a proper company? where is the red line?2 or 3 houses or more? this is a question for the lawyer i guess....

I add a 4th question: if I decide to keep the house and rent it, can it be done without a company? some taxes will apply of course...

thx

Go for it and do what you want to do, but take it out of the public domain................

[Mario2008]

Your intention is to work and make money: you need a work permit. Also for the first house. You might get away with it if you build only 1 house, but building and selling other houses makes it clear that you work and need a work permit including for the first house.

Renting your house out can probably be done without a work permit, but again if you would build more houses and rent them it would be a business activity. in that case you might rent them out through an agency, but doing it yourself, maintaining them etc would suggest a business activity to me.

[rgs2001uk]

you're right falang07...the question is when the landlord agrees to sell the land for a certain price during the land lease and you include this as a condition in your lease contract, you could be selling land & house when the right Thai buyer comes...

if the buyer ever comes...

if these kind of contracts are even possible...

if you can find a landlord willing to do this....

the thing is that I believe I can bring a new value to the land since I'm an architect and have designed qualtiy resort style projects in Thailand before working for a thai company. in my point of view most houses lack architectural quality and my project should stand out and attract buyers

You are thinking like a farang and not like a Thai.

A Thai can go to a company such as Landy and choose from about 50+ designs, Smile Homes has even more.

Why would I want to buy your design, when I can buy a custom built house.

Not yet mentioned is taxes if the house is sold within a certain time period its considered to be a business and you will get hit with a higher tax rate.

Most Thais want a new house not a second hand, there are Thais who buy second hand just for the land, they will then demolish the original house and build new..

You can not bring any new value to the land, the land is worth what it is worth, eg 50k per tw, having a fancy farang designed house on it doesnt add anything to the value of the land.

[seb1405]

ok thank you guys for the input. I'm not thinking like a thai.......this kind of summarizes it ;-)

I've been away for too long.....

over.out.

[rgs2001uk]

^^^^,

please dont be put off by anything I have said, but you may want to reconsider what you plan on doing,property developer or bespoke house designs.

One of the first problems you will encounter is getting hold of competant house builders, who will you target as potential buyers? etc etc.

Now onto house designs and the difference I have observed in farang/Thai houses.

Kitchen farang style or Thai style incorporating an outside cooking area.

Maids room downstairs, some Thais convert this to an office or storage room.

Living room as farang call it, when I look at Thais house plans its called a hong rap kaek, or reception room.

Upstairs, I see many Thai houses have an open plan area sort of like a family room with tv etc, Bhudda room etc etc.

Next onto the sighting of the house, mostly determined by the shape/size of the land plot and sun direction.

A whole area many farang are ignorant of, Thai feng shui, some examples, placement of doors (dont want the money to flow out of the house), a wall column directly in front of the front door? bedroom, the bed can only face a certain direction, placement of a spirit house,mirrors placed outside on the wall to deflect bad luck, and so it goes on.

Not a profession I would wish to engage myself in, dont think the blood pressure could stand it, of course you guys and builders love it when a client starts wanting changes made to plans half way through a build, ching ching as the money keeps ringing up due to changes.

There is a house up the road from me, now for sale, the couple ran out of money after making too many changes, exceeded the budget, house needs about another 1 million to be completed.

There is at least one farang I know of who is doing something similair to you, but he has set up a company to do it.

Dont give up, do a bit more research, good luck.