Investing in real estate in Thailand is not as easy as in some other southeast Asian countries. Thai law states that foreigners can only own up to 49% of a company except for American citizens. However, a foreigner has the right to buy a complete building without the land it was built on.
When it comes to ownership, foreigners can only own condominium units for a maximum share of 49%. Thai law also allows foreign ownership of landed property with an investment of at least 30 million Baht. However, this requires special approval from authorities.
Foreigners also can get an investment visa for one year by investing at least ten million baht in a Thai condo and/or buying Thai stocks, bonds or mutual funds.
Making the Most of Loopholes
The best option to invest in real estate in Thailand is to set up a private limited company with mixed ownership. Foreign nationals can own up to 49% of the land while the rest has to be owned by a local. Implementing a system where foreign directors get majority control by assigning greater voting rights through an attorney will shift the control of the company back to the foreign national.
Another option is to invest at least 40 million Baht into a project which is approved by the Thai Board of Investment. A foreigner will then get permission to purchase up to 1600 square meters of land.
Buying a property through a leasehold agreement for 90 years is also an option. A foreign national can register for a standard lease and extend it further for 30 years at a time. However, this process would cost around $2000.
The total fees and property tax in Thailand usually are estimated to be 3% of the property purchase price. The transfer fee and solicitor costs amount to 2% while the stamp duty is 0.5%. The business tax would be an additional cost if a property is bought through a business venture which amounts to up to 3.5% of the purchase price.
In a bid to encourage investors, the Thai government does not impose a capital tax while the stamp duty could also be abandoned in some cases.
Obtaining property insurance would also prove useful when investing in Thailand given its high tendencies of natural disasters, especially floods. The company responsible for the management of the property is required by law to cover the insurance costs. Most property insurances do not cover third party activities including burglaries. Therefore, a keen inspection of the insurance deals offered would go a long way in terms of safety and security.
It’s also important to know about the political landscape of the country and the economic consequences fuelled by it. Travel guidance from the British government indicates a volatile political situation in the country. The website advises avoiding protests, political gatherings, and marches of any kind. There have also been attacks in Bangkok in the past years coinciding with national holidays and key diplomatic events.