Property in Thailand.  What you need to know.

On this page you will find some general information about ‘buying’ property in Thailand, followed by Koh Chang specifics.

Can Foreigners own a house and land in Thailand?

If you want to own something Freehold with your name on the title deed then you are limited to a condominium. 49% of the units in  a block fall into the Foreign Ownership quota.  The remaining 51% must be sold Leasehold or held in a Thai name.  You’ll often have to pay a premium to get one of the Freehold units as these will be easier to sell in the future.

Under Thai law, any person can register any type of building in their own name.  So the good news is that foreigners can own their houses.  However, the ownership of land is restricted.  It is virtually impossible for a foreigner to own land freehold. Therefore, most buyers will opt to own their house, but lease the land it is built on.

Foreign buyers can have a 30 year lease with a prepaid option to renew.  Different law firms have different opinions as to the legality of allowing only one or a maximum of two  further periods of 30 years each, making a total of 60 or 90 years.  This grey area arises because a) the law is a bit ambiguous and b) there are no legal precedents.  The contract will also give the foreigner the option to purchase the land should the law change in the future and to sell or transfer the land at any time.   It will also include clauses allowing your next of kin to inherit the lease in the event of your death etc. The lease will be registered at the local government land office.

You must get the lease registered. If this is not done the enforceable period of any lease, regardless of what is written on the contract, is only 3 years.

It is also possible to have a lawyer set up a Thai registered company that is controlled by the foreign buyer.  The company can then own land Freehold. Three shareholders are needed, at least one must be Thai.  The Thai shareholder has to hold at least 51% of the shares.  But the lawyer will set up the company so the foreign shareholders have the voting shares and therefore they control the company and it’s assets and bank account.   Even if you don’t use your company for any business you still have to do accounts and an annual audit.  The cost to set up a company with a good English speaking lawyer is from around 30,000 Baht upwards.  The share capital of the company should be the same or higher than the value of the property being purchased.

This method takes advantage of the company law to allow an indirect method of ownership.  From time to time there are rumours of crackdowns on foreign owned companies that have been set up solely as a vehicle  to own land.  But this has never actually happened.  No confirmed stories of any foreigner who has a home in the name of  a shell company having it seized by the state.

Neither Leasing or Company Ownership is 100% ideal so you have to decide which is the lesser of two evils.

Property Taxes

These are very low in Thailand.  On a lease agreement you will only have top pay approximately 1.1% of the purchase price in taxes when you register the lease at the government land office.  If you were buying a land and a house freehold the tax would be approximately 5% of the purchase price.

There is no annual land tax or inheritance tax on property in Thailand.  Governments have proposed these in the past, but this idea isn’t a vote winner so has never been put into law.

Land Title Deeds in Thailand

There are four main types of Land Title in Thailand:

Chanote -  A Chanote is a title deed that has been issued by using GPS to set the area and boundaries of the land, which is a very accurate method. This is the most secure type of land title.  Small circular concrete markers each stamped with a unique code mark the corners of the land.  The same marker codes are shown on the scale map of the plot on the title deed. The rear of the title deed shows the names of previous owners and also if the title has been used to secure loans or has been leased to a third party.

Nor Sor Sam Kor – This title deed is basically the same as a Chanote.  This title and the Chanote are the only ones that a Thai bank would take as mortgage collateral from a Thai customer.  The front of the title deeds will show the current owners name, the land area and also have a small map of the plot which will show any boundaries such as the sea, river, roads etc.  The rear of the title deed shows the names of previous owners and also if the title has been used to secure loans or has been leased to a third party.

The above two titles are the ones that a registerable right of ownership or lease can exist, and so are the only titles that most buyers will consider.

Other titles include:

Nor Sor Sam -  Land with this title cannot be transferred immediately, a 30 day public notice must be posted before any sale can occur.  However it can easily be divided into many smaller plots.  Unlike a plot of Chanote titled land which is limited to 9 divisions

Por Bor Tor Ha / Sor Kor Neung – These are farmland title deeds.  Only for Thai buyers and expats married to Thais who understand the local way of doing things will consider land with these titles.  On Koh Chang this type of land was cheap a few years ago but now, it too, is rather expensive.  Your lawyer will advise you not to buy it.  If a lawyer advises you to buy it they either own the land or are good friends with the owner.

Land Measurements

You will see large plots of land listed as being a number of ‘Rai’.  Smaller housing plots often use ‘Talang Wa’.

1 Hectare  = 6.25 Rai

1 Acre = 2.5 Rai

1 Rai = 1,600 sqm = 4 Ngan

1 Ngan = 400sqm = 100 Talang Wa

1 Talang Wa  = 4sqm

++++

Koh Chang Specifics

Why Have a Koh Chang Real Estate Section on This Site?

The answer is simple, I’ve seen the prices some people pay for land on Koh Chang and I can’t believe that people have that much money to burn.  True, finding a small plot of land for a house or small resort is very hard but buyers who rush in and buy land from a smooth talking agent are asking to have their wallets emptied.  Far better to take you time in order to find something suitable.

Dodgy dealings are in the main related to land sales & rentals rather than renting shop units or buying homes or condos from serious developers on Koh Chang.

How to be a property developer . . .

A few developments have been advertised but never got off the ground.  As with many developments run by expats the arrangement is often the same.  They get together with a Thai land owner and have an architect draw up some plans for a condo or villa project. Of course no one has the cash to pay for any real construction work and no Thai bank will lend to them.  But they do have money for advertising and sticking up a few billboards.  A construction firm might also be brought in.  The architect and construction form will receive payment for their services in the form of a few units in the development – which they can then sell.   Buyers will hand over deposits and this money will be used to begin construction.  All is fine so long as the development proves popular, the income will be enough for the project to be completed.  However, if buyers are thin on the ground then nothing or just a couple of units will be built.  Fortunately scenarios like this are still rare on Koh Chang, unlike on say, Samui, where it is an all too common occurrence.

So you’ll find agents and lawyers based on Koh Chang are more than ready to dispense outright lies and bullshit order to get you to sign on the dotted line.  Especially when the economy isn’t so good and buyers are a rarity.

A couple of examples:

From Nov 2008, on the website of an agent based on Koh Chang, that has since changed names but is still in business. It would be hard to write so much incorrect, misleading & scaremongering information in a single paragraph even if you tried, so I’ve no idea how they managed it:

‘The biggest economic risk about buying property in Thailand is when you have to pay the money. You have to pay at least 30% as a deposit, then the original owner of the house is committed to you. If the amount is less than 30% there is a risk that the house will be sold one more time; even though you thought you had bought the house!! It is not necessary to pay the whole amount at once – wait until you are at the chartered surveyor office and the same day get the house or land transferred to the name of your firm.’

And from emails sent by an agent to a potential buyer regarding plots of farmland for sale.  (These were forwarded to me by the potential buyer in early 2009) As this type of land has no title deed and therefore no legal lease can be registered and so three years is the maximum you can be sure of having use of the land for.  Yet, they will have  a real lawyer draw up a 99 or 999 year lease – neither of which actually exist in Thailand and claim it’s fine because the contract is witnessed by a local official.

When I sell a 99yrs lease, I also get the head village as one of the witnesses to the lease. This is to let the people in the village know that you have already obtained a 99yrs lease. In the event of a dispute you will be defended by the village chief.

Unless of course the village chief , his family or close friends, who he has known for decades, want their land back.

In the whole Thailand, sale of Por Bor Tor land must be approved by the head of the village, not going thru land office. Therefore the 3yrs registration does not apply. Separate laws.

Unfortunately for ‘buyers’, local customs on Koh Chang and an old guy’s signature don’t take precedence over the Thai Civil & Commercial Code which governs property and land leases not only on Koh Chang but in Thailand as a whole.

Other contacts that I have seen for  ‘sales’ of farmland to foreigners often don’t even include details of the plot size and location or have vague promises that the title deed will be upgraded as soon as possible – which may well be never*, and so are, basically unenforceable and useless.  Unwary buyers may think they are legit because a lawyer draws up the contract.  In reality most lawyers on Koh Chang will draft any contract they are paid to write by  a landlord who brings them regular business.

(* The Land Office in Laem Ngop on the mainland will be more than happy to give you the official line on if and when upgrades to farmland may take place.  I’d place my faith in them, rather than someone selling land or one of their friends.  Sor Kor Neung land will be upgraded, this is taking place across Thailand as of mid 2010.  However it is a different story with Por Bor Tor land.  Owners will tell you an upgrade is on the way “next year”, but they have been saying that since we have been here- i.e. since 2003.  The Land Office will tell you that there are no plans in the near future to upgrade this type of land. )

Far better to get a lawyer based in Bangkok, or even Pattaya, to act on your behalf in any property or real estate purchase.

‘Caveat Emptor’ as the ancient Romans used to say.

If you liked this page then you might also be interested in:

1. *Price Reduced* 900sqm, Chanote, Plot with Sea Views For Sale on Koh Mak
2. Price Reduced – Cosy House on 1 Rai Sea View Land For Sale
3. 3 Rai Chanote Title, Beachfront Land For Sale