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LAND TITLING & RELATED .
Apart from Condominium ownership and erecting buildings on land not owned (both covered below), land titling can be quite complicated. There are various levels of land titling - from a simple right of possession through to a full title as we know it in the Western world. This full land title deed is called a "Chanot" and is backed up by being recorded by the government, using GPS to record both the area and its boundaries. The Chanot paper itself is normally of a few pages and shows a surveyed plan of the land, various registration numbers, previous owners and mortgage history. Beware of photocopies and make sure that official chops, notations and the Garuda (the official Government authority crest) are all clear and readable. This is an extremely valuable document - just like title deeds in Europe and losing it will give all sorts of problems. Fortunately, most land and property that is traded on the Eastern Seaboard has a Chanot title. However, there will still be cases where a lesser title is only available - such as Nor Sor Saam and Nor Sor Saam Gor - usually in undeveloped areas in the countryside. This may still be acceptable and it is often possible to upgrade to Chanot over time. However, we are getting into a very specialized area and it is essential to seek Cosy Estates legal advice in these cases. Although land prices may well be lower for these lesser titles, it may well be prudent to discount any property without Chanot title. Buying land for subdivision is also a specialized area and involves many local and central government departments, building codes and suchlike. There are waiting periods before titles may be issued. Again, an area for experts. We are currently hearing some disturbing stories about the authorities clamping down on land subdivisions. Any scent of foreign ownership in the overall development might well mean that the issuance of eventual titles to individual owners is a problem. One precaution that an end-purchaser might take is to have some sort of break clause covering any problem in the issuance of the individual end titles. Condominiums are looked at below under 'Ownership by foreigners'. Erecting buildings on land not owned does happen and this is invariably where a foreigner has taken a long lease (usually 30 years). Ownership by Foreigners
Basically, Thai law does not allow a foreigner to own land in Thailand, although they can own the buildings thereon. There are two notable exceptions to this strict law. Firstly, where a foreign company has Board of Investment ("B.O.I.") approval and the land is part of the project (usually manufacturing). Even then, the ownership is very much tied in with the overall B.O.I. terms. Secondly, a new law (Land Code Section 96, 2002) allows an Alien to buy up to one Rai for his or her residential purposes in metropolitan areas such as Bangkok or Udon Thani providing they also invest at least 40 million Baht for five years in government bonds, recognized property, mutual funds or B.O.I. projects. Permission for this must be obtained from the Interior Ministry and the ownership is monitored by the Lands Department. Apart from these two rare exceptions, both partnerships and companies also fall under the strict land ownership by foreigners' prohibition - should the foreigners control too large a share. The Alien Business Law, which regulates the investment in land by foreigners, states that "land trading" is prohibited to foreigners. A foreign-controlled company is defined under Thai land law, and states that any Thai registered companies or partnerships with more than 49% of the company's total capital, or more than half the shareholders being non-Thai, are considered foreign. It is often difficult for even a company with a 51% Thai. 49% foreign ownership to purchase land - particularly if you are using an inexperienced lawyer. Cosy Estates have professional experienced lawyers on hand to ensure acquisitions are made legally and expediently whenever foreign ownership is in question. Condominiums The relatively new condominium law that was created some years ago allowed for up to 40% foreign ownership on new condo developments. This was then raised to 49% of the units and extends now to most existing condo blocks. Then an unlimited foreign ownership share concession started to apply to developments in Bangkok and Udon Thani, providing the developments were more than 40 units and being on no more than five Rai. This relaxation was stopped in 2004, meaning that a Thai (or a Thai company) cannot now sell a condo unit to a foreigner if the total foreign ownership level is over 49%. Selling foreigner to foreigner appears to be OK, regardless of foreign ownership level. Foreigner to Thai is no problem, whatever the level. Care must be taken with bringing in the funds for the acquisition - following Thai banking procedure to the letter. This means creating a Foreign Currency Account in order to qualify for a "Tor Tor 3" certificate - issued by your Thai bank to verify that the originating funding came from outside Thailand in a currency other than Thai Baht.
This certificate is needed by the Lands Department. This is by far the safest way to own property in Thailand as an individual. On making a condo selection, it is important to check such as the condo sits on freehold land, the level of foreign ownership pertaining and current outgoings. Good ongoing management is also important - needless to say, you will also need to find out exactly what your ongoing service charges will be and what they cover. Major expenditure such as an external repaint and lift replacement in the future may come as a rude shock if they are an extra. Practical Solutions to Land Ownership
65. Leasing the land - Currently, Thai law allows a maximum term of 30 years for a lease of land. It is usually possible to extend this lease each 30 years. Currently, at the end of each term, both the lessor and lessee ('seller" and "buyer") must register the renewal with the Land Department and pay government fees, and other expenses, such as stamp duty. This gives effective "ownership" of the land and has become a popular choice. The downsides include the Lessor not wishing to renew, any future law changes and the fact that you have invested capital into a very personal investment, not easily tradable. 66. Nominee - all you need is a Thai national who is prepared to be the "legal" owner on your behalf. A matter of trust and not recommended. A well-known English writer living in Bangkok a few years ago bought a small condominium and placed it in the name of his long-term and trusted maid. After an extended holiday in Europe, he returned to find that she had sold the property as she was broke. At least she was not all bad - she held all his personal items (including a safe) for his return. It appears that there was simply too much temptation and, whilst we realize that there are many trustworthy people out here, it really is a case of proceed with extreme caution in this regard. 67. Nominee with Mortgage - this interesting method was found on an obscure website. Get the maid or other person to sign as owner as above, but you take out a mortgage with yourself as the "lender". There will be a small fee to pay to register the mortgage with the Lands Office, but the property cannot be sold without your consent (i.e. you have not discharged the mortgage). Holding a blank transfer document signed by the Nominee would help with any future Nominee changes. 68. Company Ownership - This is probably the most popular method of property ownership. This is normally done through a lawyer's office and provides effective control. Being a company, there will be such as ongoing accounting and legal fees payable, but not much. Setting up the company does cost (see Company Formation below), but at a fraction of the purchase price. The company is normally sold as part of any on-sale.
Thai Spouses
This is a difficult area and great care must be taken on marriage to ensure that any property elements are correctly dealt with. The general rule is that Thai nationals who marry foreigners are not allowed to own land in Thailand, unless the foreign spouse signs a document which declares that the property is separate, and that he or she has no interest in the property in any way. The Thai spouse must also declare that the money to buy the property was his/hers in the first place. So, putting land into your Thai spouse's name is difficult and fraught with difficulties. Legal help should be sought so as to protect all interests - including the rights of offspring of the marriage (such as their inheritance rights).
Mortgages
The chances of getting a mortgage within Thailand are slim, but not impossible. Expatriate workers with a large local salary are in the best position as they will undoubtedly have substantial collateral along with the relevant Visa and work permit, which is favored highly amongst the local banks. Most non-Thai property buyers here in the past will usually have enough funds to buy outright. Wills
An often-ignored aspect of Thai property ownership is to register your Will here. Not doing so means huge problems for your Executors and Beneficiaries, even if you have created a cast-iron Will overseas. If you plan to purchase or have purchased property, please do make a will. Find a lawyer who will make a will on your behalf and on behalf of your partner. This really is a MUST!! There have been numerous 'horror stories' about foreigners who have died here and their families / beneficiaries have been unable to gain their inheritance. Advice on such matters can be sought from a number of sources here in Pattaya such as the Pattaya Expats Club for example. Taxation
Admittedly there is not a great deal of information readily available on this issue and advice should be sought from accountants and tax lawyers. How much Stamp Duty is payable on purchase/sale? What are the ramifications of owning a property through a company structure? (see details below on the formation of a Thai Company). The general combined government taxes payable on a sale (Transfer Tax, Transfer Fee and Stamp Tax) appear to be some 5.5% of the land value - as set by the Land Office. Who pays this (vendor, buyer or shared) is negotiable. On an ongoing basis, there appears to be two main taxes applicable on property owners in Thailand, Land Tax and Structures Usage Tax. The former is a very small tax levied on land ownership equivalent to just a few Thai Baht per Rai per year. Structures Usage Tax is applicable at the rate of 12.5% on the actual (or assessed) gross rental value of the property. Lessees are not subject to this tax but may be required by the developer to pay an "annual ground rent" instead. A third tax is Withholding Tax - payable on most income streams earned in the Kingdom. Mainly applying to payers of income (i.e. employers) so as to capture tax at source, rents also fall under this category. This form of Income Tax may also apply to sales of immovable property if the sale is made for a commercial purpose and it is essential that such income must be included as assessable income. Nevertheless, from January 2003, gains from sales of residential buildings shall not be included as income if such gains are spent on purchasing a new home within one year before or after selling the primary residence. Again, it is vital to assess the ramifications of taxation on buying and selling property, whatever method is used to "own" the property or properties in question. Building Codes, Planning
Moving into the area of construction, you will need professional advice from qualified people such as architects and engineers - so as to understand local planning codes and practices. Like Hong Kong and most other SE Asian countries, the principal engineer or architect "signs off" once a building is completed, taking responsibility that the building is sound and that it complies with the prevailing building codes. In the event of any failure or breach, that person is held liable. In the Western world, such professionals would carry adequate indemnity insurance to cover any claims against them. It might be a good idea to see what type of indemnity your selected "authorized person" carries - or whether he or she is financial enough not to do "a runner" in the case of a building collapse for example. Such an event is treated as a criminal act in the Kingdom and penalties can be very severe where there is loss of life. Please note that The Thai laws are always subject to change, so please contact us if there are any aspect of these details you are unsure about. This is not a legal document and whilst care has been taken in compiling this information, we would be taken as a guide only. THAI LAND MEASUREMENTS.
Thai land measurements are fairly simple, even if at first it all looks somewhat confusing - being a combination of imperial and metric measurement systems. On all title deeds here in Thailand all measurements are made using the Thai system and are also written in Thai, therefore it is beneficial for you to gain a little knowledge if you are thinking of buying property or land here. Below you'll find a quick comparison between the two which hopefully will help you gain a better understanding.
* Wah = 2 Metres
* 1 Sq Wah is called a Talangwah = 4 Sqm
* 100 Talangwah = 1 Ngan = 400 Sqm
* 4 Ngan = 1 Rai = 1600 Sqm = 400 Talangwah
So, when you see measurements of say 2 Rai - 3 Ngan - 35 Talangwah or 2-3-35 this means: 3200 + 1200 +140 = 4500 Sqm
* 1 Acre = 4047 Sqm = approx 2.53 Rai
* 1 Hectare = 10000 Sqm = 6.25 Rai
INSURANCE.
If you are considering relocating to Thailand you owe it to yourself to research the subject of Insurance, covering not only personal and health, but enveloping building insurance, house contents etc. This is often overlooked and is especially important if you are considering buying property here. Home Insurance
When you have moved into your new home, you should take out insurance to protect your investment. So how much coverage should you have on your new home? What does a basic policy cover? What happens if there is a fire? Again, please feel free to consult with us and arrange for a quotation. We'll be pleased to shop around for you and find the best value and level of cover that suits your own needs, tailored to your requirements. Premiums can vary depending upon the size of your home, features, location, and construction e.g. security system, fences, keyed locks on all windows and doors etc. Be sure to maintain your home i.e. check for loose roof tiles, electrical fittings, plumbing, wiring etc. Also note that some insurance policies in Thailand don't cover against "Acts of God", such as lightning, hail, earthquakes and floods etc. For contents Insurance, coverage can be for replacement value or cash value. Say your THB 5,000 fridge is destroyed, full replacement ensures a new one. Cash value would only give you the depreciated value, say THB 3,000, but full replacement policies are dearer. You should always keep receipts for major purchases and detailed inventory records wherever possible for insurance purposes. Standard content policies in Thailand don't cover you against burglary and theft of your valuables, e.g. video recorder, computer, jewellery - for those items you will need a burglary and robbery (special risks) policy. If in doubt, please ask us and we'll be pleased to point you in the right direction.
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