Leasing (owning) land in thailand

[Bill2]

I am a Thai resident (with work permit and residency certificate) who is hoping to acquire (own) a house on land in BAngkok.  I think I may have already located the one I would like to buy and am currently checking out the channot at the LAnd Office to ensure that it is clear of any liens.  After this I will hopefully be able to say "yes" and put down a deposit.  However, I now need to find a way to do this and ensure as much control over the proerty once bought as is realistically possible.  

Before I proceed I should explain that while once married (and registered) to a Thai lady, she recently died and hence having her own the property for us is not an option.  As I understand it there are 2 options for ownership as a single Farang male:

1. a Thai nominee owner who provides me with a lease of 30 years with a renewable option for a subsequent 30 years

2. establishment of a limited liability comapny to hold the land with me as director holding 39% of the shares and a controlling interest

From what little I know, the first option seems to fit my situation the best since I have two people who could potentially hold this property for me who are Thai and whom I trust.  Moreover, I understand that setting up a company involves a great deal of subsequent difficulties and expense in annual accounts and so forth.  However, if anybody disputes this and would tell me that "it is not thta difficult" I would be interested to know why!

Assuming that I go the lease route (ie #1 above) my questions are:

1.  what are the steps in the process that must be followed to undertake this?

a) Do I need the ultimate nominee owner present at the time of a down payment (unfortunately the person is out of the coutnry at present) or can I use another Thai person at that time and have the "real" nominee appear at the time of legal transfer?  

I have heard that farangs can own the buildings but not the land.  If this would reduce costs of fees of registration of lease to the government it might be worthwhile.  If one were to separate out the building from the land, a) can it be done and would this have to be done at the time of purchase from the existing buyer with 2 contracts - one for the land and another for the building?  How would one assess the vaue of the buildings from the land?  Presumably the Land Office would have to OK the value of each.  

c) would the lease need to be signed on the same day as the legal transfer of the property from the existing owner to my nominee (presumably so) and what supporting documentation would be required?  Presumably the lease needs to be registered at the Land office on the same day.

2. what are the costs involved in

a, the purchase of the property - presumably there are no more than the normal stamp, transfer fees and income tax requirements

b. the costs involved in registering the lease (eg fees and any taxes) - related to this, how is a "reasonable fee for the 30 year lease value" set? Who detemrines this? And what % of this has to be paid in fees to the government?

c. the basis for calculation of the rental fee that one has to "pay" (even if one doesn't) to the nominee owner - is it a % of the vlaue of the property or does the 30 year lease value have to be equivalent to 100% of the purchase price of the property spread over the 30 years?  This will obviosuly affect the "income" of the nomineee and affect d below  

d. the tax liability of the nominee owner - presumably this will affect that person's tax position (income tax?) and hence as the real owner one would have to be responsbile for the tax that the nominee incurs as a result of receiving lease rental also - is there any linkage between teh LAnd Office where the lease is registered and the tax authoriites who might have a come back on the nominee?  

e. hiring a lawyer to handle all the paperwork (separate from teh fees)?

3. on the death of the nominee holder

a. what safeguards can be built into the lease to provide protection in the event that the nominee dies prior to the end of the 30 years ( I understand that the estate beneficiaries cannot withdraw the lease for the 30 years - but what happens thereafter?)?

b. what does the nominee need to write into his/her will in order to protect the true owner?  

Any help anybody could give on this - espeicaly costs - would be most appreciated!  

Thanks

[sevinnow]

Hi Bill

having don much research on the lease aspect of your question my understanding is as follows:

The cost of transfer of land/house to the nomanee depends on the area and and size of the land acquired.   I recently had a land transfer to my g/f name in N/E Thailand and the cost was 1,000 baht for land just under 1 rai.

As for the "clause" situation you can build into the lease as many clauses you wish providing the nomanee agree but once the lease is signed you are unable to change without another lease being contracted.

The "rental" should be suitable over the lease period in conjunction with what the house is worth but there is  much conflicted advice on this subject, a lawyer should advise I think best.

Simple advice do the same as you would buy a car "shop around" and a wealth of info will be acheived..you can even send me some free if you like!

Not much but hope it helps

Sev

[Bill2]

Thanks Sev:

I have shopped around a little more and I am being told so far that the ONLY way to really control everything is to set up a company and hold 39% of shares.  But still on the lease issue you are right regarding the value being calculated on the basos of the assessed value of the land.  

It seems at this point that the "assessed value"/rental might be equivalent to the total sales price (as declared to the Land Department) of the lease multiplied by either 1% or 5% - not quite clear which yet! - as a registration fee.  

The rental may be assessed as being the total value of the property over 30 years - even though you are not buying but only renting - divided by 30 for a per annum charge.  I am not sure about the latter "fact" as it would be tantamount to paying for the whole thing spread over time (albeit with no interest) and so I do wonder of this is accurate.  I guess more shopping around is needed!  

If you or anybody else can clarify either of these "facts" would be appreciated!  Meanwhile thanks for your response.  

Bill2

[jonboy]

Hi bill. It seems that we are both interested in doing the inpossible(well nearly!!) although I'm going down the "setting up your own company" path to achieve buying my own property. I would like to know what you have found out about all this and where you found it all out. I went to see a lawyer 2-3 days ago so maybe we can share a few ideas. also if you do a search on my posts you will be able to follow them. my members name is jonboy. hopefully speak to you soon. e-mail me on [email protected]  

[Bill2]

Thanks Jonboy.  

Does anybody out there have a lawyer they can recommend in Bangkok for this kind of thing?

A Thai lawyer is fine - but they probably need some experience of doing this kind of thing before just to be safe.