Buying a property in Bangkok is something that many foreigners consider to be too complicated or even unattainable. Yet, the reality is that there are a few relatively straightforward and easy to understand ways foreign nationals can purchase real estate in Thailand. The exact reason why so much confusion surrounds the issue is hard to pin down. It could be due to the language barrier, misleading and conflicting information online, or the fact that there are certain fallacies often shared among foreigners either living or vacationing in Thailand regarding buying property.
So, to set the record straight, we’ve put together an accurate and up-to-date collection of the methods foreigners can go about buying a property in Bangkok. As not to confuse matters, there are three rules to bear in mind as we go through this guide. The first rule is that foreigners cannot directly own land in Thailand. That is a fact, and simply put, Thai laws prohibit foreigners from owning land in their name; however, the keyword here is ‘directly’, and we’ll get to that later. The second rule, which is one of the lesser-known facts about Thai property law, is that foreigners can own a building or a structure located on a plot of land, and the third and final rule is that foreigners can own condominium freehold titles, which are often simply called condos.
We’ve already written a very in-depth manual on Buying a Condominium in Bangkok, so please check that out if a condominium is what you’re interested in buying. If, however, you intend to buy a house, or any other landed structure for that matter, that is to say, any building that directly touches the land, please read on.
For those who are not quite ready to make a long term commitment and would like to dip their toes in the Bangkok property market, we offer a wide variety of condo rentals in Bangkok. You can experience all the wonderful pleasure Bangkok has to offer before deciding if you ready to make a long term investment. With current market conditions being uncertain due to COVID-19, the option of renting an apartment in Bangkok is an excellent opportunity to gauge the current on potential future conditions of the property market in Bangkok.
Why you Should Consider Buying a House in Bangkok
There are a couple of routes available to foreigners for successful property acquisition, which creates the opportunity to own buildings, including single houses, villas, townhouses, shophouses, etc. Owning properties like these has its unique appeal, and despite all the hurdles you need to jump to attain them, houses in Bangkok are starting to offer an increasingly enticing and largely overlooked investment opportunity, namely value for money! In many cases, houses are offered at much lower rates per square meter than condos in the same location.
As well as this, houses offer the opportunity of redevelopment, meaning you have the option to extend living spaces, obviously provided you follow Bangkok’s building and planning regulations. Even homes with limited extension options such as those located in a Moo Baan (Gated Community), with strict design and building specification requirements, still offer a much higher degree of freedom to homebuyers in terms of remodelling than what you can expect to find in a condominium project.
Benefits for Businesses
Furthermore, owning a house may be of specific interest for investors and entrepreneurs due to this property category’s commercial flexibility. Unlike condos for sale in Bangkok, where rules and regulations stipulate that units can only be used for residential purposes, houses allow landlords to conduct a wide range of commercial activities including but not limited to:
- Standard Rentals
- Hostels & Guesthouses
- Coffee Shops & Restaurants
- Subletting (Renting rooms to sharers monthly)
- Co-Working Spaces & Home Offices
With the good of course comes the bad, and while we mentioned that the procedures to buy a house in Thailand are easy to understand, they are also quite restrictive at the same time. As stated above, foreigners cannot own land in Thailand, but just like everything else in this beautiful country, where there is a will, there is a way. With that in mind, let’s get down to brass tacks and find out how exactly you can make your dreams of landed property ownership in the land of smiles come true.
Buy a Landed Property through your Own Company
For years, foreigners in the know have circumvented the Thai real estate laws, and at present, the most direct way to own a landed property is to start a Thai company. This method takes advantage of a loophole whereby foreigners may not own a house in their name; however, their Thai registered company may own the house.
It’s important to note that as in other countries, there are different forms of business entities in Thailand, and the type most used by foreigners to own a property is a Thai Limited Company. There are, of course, specific business registration criteria for the limited company, and if you decide to go down this path, you must bear in mind that the company must operate a legitimate business to be considered as active. Inactive companies may be delisted from the Department of Business Development, and as a result, the company’s assets, including the property, could be liquidated. Simply put, if you attempt to run a company but conduct no business through it and pay no taxes, there’s a high risk of losing your property.
It’s essential to reiterate that you must use a Thai company, so if you own a registered company in another county, you will need to set up a completely new one in Thailand to start this process. Another caveat here is that when you start a Thai company as a foreigner, 51% of that company needs to be owned by Thai shareholders, so please bear all that in mind if you are thinking about this option as a means to buy a property.
Leasehold Ownership for Landed Properties
The second option of building ownership open to foreigners is through leasehold, and this can be further subdivided into two possibilities. Thai property laws allow for 30-year leases at present, but yet again, there’re ways around this to make the lease last for much longer. The first and most direct way to own a leasehold property is to buy through a Thai spouse or a Thai partner, and obviously, there’s a particular element of trust involved if you go down that route. Just make sure not to put yourself in an exposed situation, and always consult a lawyer if you feel like you’re getting out of your depth.
The other way leaseholds are used to buy property in Thailand can last for up to 90 years and is naturally more alluring for foreign buyers due to the agreement’s length. It’s often the method of choice utilized in coastal areas like Pattaya, Hua Hin, and Phuket. What happens is that the developer or landlord signs a contract with the buyer whereby they automatically agree to two leasehold renewals. This means that you begin with the initial 30-year leasehold, then comes the first renewal that gets you another 30 years, followed by a second renewal that gets you 30 more years, giving a total of 90 years. Retirees looking for a holiday home or those with no family ties may find this solution attractive.
While a leasehold may not offer true ownership, it does offer the leaseholder exclusive rights to the use of that property. Leasehold rights are registered on the Chanote (Title Deed) of a property and can be a simple way to enjoy it without the hassle of additional and ongoing paperwork.
Nothing Ventured, Nothing Gained
With all things considered, our suggestion to foreign buyers looking to make a safe investment in Bangkok or indeed anywhere in Thailand would be to buy an apartment in Bangkok. Of course, everyone’s situation is different, and what applies to one potential home buyer may not apply to another, and it is essential to carefully consider all the things we covered when it comes to landed property.
One snag that could be considered the elephant in the room is that most of the ways foreigners can use to acquire landed property fall within a grey area of Thai law, so it is technically frowned upon by the Thai legal system. What tends to happen in Thailand from time to time is that the Thai government change the laws quite fast, and with little to zero notice, meaning you might get caught out.
For those reasons, we suggest that buyers and investors looking to make a safe bet focus on condominiums, but of course those bold enough to try and own a landed property will reap its benefits, and as they say, fortune favours the bold!