Property and Land Ownership Rights
Buying a property in Koh Samui is a very attractive idea when you think about its spectacular landscapes, idyllic ambiance, vibrant culture and numerous touristic attractions. It is a place that encapsulates the perfect beach paradise where the weather is sunny all year long and the locals are friendly and hospitable. Samui tempts us to visit it on long holidays or even move here for changing the modern city life with the serene island experience.
But purchasing a property on Koh Samui isn’t as simple as it sounds. The most important thing you should know about this island is that the Thai law does not allow foreigners to own land. If you aren’t a local but don’t want to give up your dream of owning a property here then there is still hope. Apparently, foreign nationals have the right of owning a building, but not the land on which it was built. This form of ownership is most often represented by condominiums.
The Thai law clearly points out that foreign nationals have the right of owning a building distinct from its land, a unit in a registered condominium or registered leasehold of up to 30 years regardless of the titled land or buildings.
It is strictly prohibited for foreign nationals to own a freehold land or more than 49% of the shares in a Thai firm that owns freehold land.
If you are considering purchasing a Condominium then you should know that Thailand has very strict rules about this investment opportunity. The Condominium Act (1979) clearly states that foreigners have the right to own a maximum of 49% of the total unit space in any legally registered condominium building. Upon transfer of ownership, the buyer has to request a letter of guarantee from the juristic person of the condominium as a proof that the proportion of foreign ownership has been respected. This letter will be submitted to the Land Department.
Foreign exchange transactions need to comply with very strict rules. A foreign buyer has to bring all the overseas funds in foreign currency. He will need to submit a proof of this to the Land Department by requesting from the Thai Bank a Foreign Exchange Transaction Form (FETF). Thailand has very strict money laundering regulations and the FETP is needed for avoiding any complications and tax remittance when repatriating money if you should decide to sell the condominium after a couple of years.
A Foreign Exchange Transaction Form can be issued only for inward remittance amounts that exceed $20, 000 USD. On the payment order form, you must write clearly the purpose of the payment, the name of the condominium and the unit number. This is usually written in the section "Message for the Beneficiary”.
When it comes to owning land in Thailand, the two most easy and advantageous ways of purchasing land are long term leaseholds, limited company liability and Thai woman married to a foreigner. Below we will explain the advantages and legal aspects of each one of these three possibilities.
It is relatively simple and secure to opt for the long term registered leaseholds. If it is correctly structured and defined, this can be as good as a freehold ownership. Usually, you can lease a Thai land for up to 30 years and there is also the choices of renewing the leasing contract for another two times, thus resulting in a total of 90 years. This ownership form offers security because legally you are the owner of the buildings that are located on that land. For this reason, the lessor cannot claim the land upon expiration of the lease. Under the Civil Law, the building is separated from the land and isn’t considered as a component part.
Limited Liability Company
If you feel that the leasehold method isn’t suitable for you then you have the alternative of setting up your own Thai company. This firm will be managed by you and it can legally buy land. The thing is that as a foreigner you can own only 49% of the shares of any Thai company. The rest of 51% of shares need to be held by Thai juristic persons and the trick is that these persons will sign over the control of their shares to you. The company will be the owner of the land, but you will be the manager of that firm and the one who controls the other shares. In conclusion, you will have complete ownership of the land.
Thai Women marrying ForeignersBelieve it or not, before 1998, any Thai woman who decided to marry a foreigner was forced by the law to give up her rights of buying land in Thailand. But if she owned land prior to her marriage with the foreigner then she could keep her ownership rights over that land. In 1999, the law changed and the current regulations specify that Thai women married to foreigners have the right to buy land in Thailand. The only condition is that the Thai wife has to certify that the funds used for buying the freehold land belong to the married couple and that there are no foreign claims to it. Usually, everything needed for proving this is for the foreign husband to sign a declaration where it is stated that the money used to buy the land belonged to the wife before they got married and that he is giving up any claims for those funds.