An exciting opportunity or a legal minefield? in fact it is both.

Compared to western values, property prices in Thailand are
very low. This is due to the level of economic development, a
catastrophic depression that hit Thailand in 1997 but, most importnatly, the country's land laws which radically limit foreign ownership. Nevertheless, there are some exciting opportunities in areas such as Bangkok, Pattaya and Phuket, where land and property prices are increasing nicely. Condominiums in Bangkok and holiday properties in key centres frequented by foreigners have good rental potential. If you are a farang and thinking of retiring to Thailand, then the prospect of a beautiful property at a fraction of the price in an exotic climate can be simply irresistible.

Caution is the watchword

Like everything in Thailand, your watchword word should be caution.
Familiarise yourself with the whole situation, and then think it over more before deciding to proceed with anything. The old property rule that ‘the day you buy is the day you sell’ also certainly applies in Thailand. Be careful of whatever deal you might be proposing to get yourself into. Thailand’s foreign ownership laws drive the market. One can describe the property laws in Thailand as designed to protect the country from being ‘bought out’ by foreign interests.

Hire an independent lawyer

Certainly never buy anything in Thailand unless you have the services of an independent lawyer. Independent means that your lawyer is not linked to those selling the property. All Thai property transactions are in Thai and you are truly at the mercy of your advisors in any transaction. We would also warn all farang about entering into a property transaction without first doing the homework. This would include, but is not limited to, taking 2-3 legal opinions before deciding on a lawyer to handle your business.

Two ways to deal with ownership restrictions

Firstly, foreigners can purchase condominiums and apartments subject to a restriction on the percentage ownership of each scheme. Aside from this, there are two popular ways which foreigners in Thailand have used to buy land and property. One is to set up a company to purchase the land or a property. This can be a house as well as a commercial property and land. Foreigners cannot own more than 49% with the largest shareholding possible being 39%. However, Thai shareholders can hold shares but these may be non-voting giving control to the foreigners.

30 year lease with an option

The second option is to enter into a 30 years lease on the property with the option to renew for another 30 years. Foregners can enter into such leases and it is also possible to combine this with option one in a hybrid approach. There are taxes and legal requirements also to be considered. Any prospective foreign purchaser should talk this through in detail with his/her lawyer and allow for the legal costs involved in addition to the price of the property. These routes have been successful up to now but the Thai government, in recent times, has been looking closely at foreign ownership of companies and property with a keen eye to reform of the law so that abuses do not occur.

Horror stories about property and relationships

One of the other methods of purchasing a house has led to countless horrors stories from farang all over Thailand and elsewhere. It is to buy the property in the name of your Thai wife or girlfriend. Obviously, the horror stories develop when the relationships break down. Farang who purchased property in this fashion and who failed to secure their position through a lease or contract have been known to be evicted.