Buying Property In Thailand

[bdenner]

I found this in the Hua Hin Today newspaper and it is by far the best (simple) explanation I have seen on this topic, it may interest a few of you. The article was written by a farang who appears to have some respect and influence in the province.

The only question I have:- Is ‘Superficies Right’ and ‘Usufruct’ the same thing?

A dream can become a nightmare if you don’t follow the law.

Living in Thailand for six years now and being involved in the real estate business, I have met and discussed these issues with a lot of people. Mostly, everyone has diverse information and a different interpretation of the law.

One thing I realize, speaking to these people, is that none of them have asked questions directly to the Thai authorities. All of them have spoken with "someone he know", this the biggest mistake you can make. Thais are by nature very polite and helpful, this behavior is also true of their government departments. In my experience, every time I need information or to deal with a problem in my work, it has been much easier to deal with in person than to send someone to do the job for me. I never understand why foreigners are afraid to deal directly with the Thai authorities. This is the reason for all these misunderstandings.

In taking the decision to live in Thailand you must also be prepared to follow the rules and regulation of the country. Thais are polite, helpful and smiling. but don't make the mistake of thinking they will not apply the law even if they do appear to leave more breathing space than your own governments. In the end it will be the same, if you do something wrong you will pay for it.

Buying land in Thailand as a foreigner is simply not allowed. There are only 2 exceptions. Investment in bonds of more than USD 1,000,000 to buy 1600 sq.m. (1 Rai) or investment through Board of Investment (BOI ). Yes you can own land via a company, but you have to follow the rules. 49% foreign investment and 51% Thai. That means is that 51% of the company's capital must come from the Thai Shareholders. The only thing the Thai administration asks is that the Share holders are real, what business the company does and if the company pays tax. The government also wants to know how the Thai Shareholders came by the money and most importantly, did they pay tax on that money.

This is no different from the practices of your own governments back home, and we know how strict they are. So if you decide to buy land "via a company" make sure you follow the rules, and run the company legally. Do this and you can be sure you will not have a problem.

Yes, you can own a house or condo in Thailand. Foreigners can own a structure in Thailand in their own name, the law is very clear. And there are 2 ways to do this:

I) Lease the land and register the house in your name, the only thing you have to do is to register your lease contract every 30 years and pay tax (1% of the lease value), to be prepaid every 30 years, the important thing if you follow this solution is to use a good lawyer to review your lease contract and your rights.

2) Superficies right to use the land, is almost the same thing as the lease contract but is a recognized Law in Thailand. This solution automatically gives you the right to own everything you build on this land, you also have to register and pay Lax in the land department every 30 years. This a very common solution for Thais and is also fully accepted by the banks when it comes to finance.

The only difference between the lease contract and the superficies rights is that in the lease contract you have to write all the details in the contract (hence the need of a good lawyer) It should be in English (or your own language if you wish) so you can follow the terms and don't forget to name a beneficiary, or the land with everything on it will return to land owner when you die or the lease expires.

In superficies though, everything is covered by law. Also, you own any structure forever. The only risk you have (and the landowner has to send you a reminder) is if you don't pay the tax every 30 years otherwise you may lose the land.

Don't try to find a solution outside the Thai System, just follow the rules and nobody will come a knocking at your door. My Suggestion to potential buyers in Thailand is:

1) 1f you are a businessman and you want an active company, your property can be used as capital in your company.

2) If you are a retired person or if you want a holiday home, go to the Superficies law or lease contract.

3) If you buy as an investment, check with the developer and your lawyer as to what is the best way for you. Before you do anything ask a registered law firm to review the deal you decide to go with.

By George Mastronikolis

Director: Hua Hin Today

[Colonel_Mustard]

But there is no guarantee that you can renew the lease after the initial 30 years, so that part could be a bit misleading.

An interesting option could be to take a 30-year lease and try to renew it every year which would keep on extending the 30-year period.

Edited August 8, 2006 by Colonel_Mustard