Buying land and houses

Last edited: June 26, 2024 at 03:30:21

Artist impression of new housing project in Chiang Mai: Baan Ploen

While buying a condominium is the most straightforward and safest way to invest in property in Thailand, buying land and / or houses is more complicated however, especially in land the returns can be much larger.
Land prices in and around Chiang Mai have jumped in the past 5-10 years, especially due to the wave of new construction projects and some relocation / diversification of capital from Bangkok to Chiang Mai. Had you bought a plot of land near one of the new shopping malls 10 years ago, the value of your investment would have tripled or quadrupled by now. These kind of price rices we haven't seen in the condominium market which, after many years of sluggish growth, has gone up in the past few years but nothing comparable like land.

Unfortunately for some, land is not an easy playground because foreigners are simply not allowed to own land in their own name. This is the bottom line restriction of all real estate dealings in Thailand. Foreigners can own a unit in a condominium building that is drifting in the air, however the land on which the building is built belongs to the Juristic Person and the maximum surface area inside the building that can be owned by foreigners is 49%.
Foreigners can also own an object, such as a house, however the ground on which it rests still belongs to a Thai.
This is the essence of all real estate dealings and whatever legal construction you have heard to own land or houses is basically an attempt to circumvent this problem.

Most foreigners who want to live in a house while not renting it make a choice between two "evils":
1. to put the land in the name of their wife or girlfriend
2. to put the land in the name of a company.

Both options have their limits, risks and inconveniences.

ad 1. Putting the land / house in the name of a Thai nominee
Putting a valuable asset such as land and a house in the name of a Thai person, a friend, a girlfriend or your (long-married) wife, is not without risk and you should only do that when you are very sure that you can trust that person. Perhaps you are lucky one and your partner is really trustworthy but the truth is that there are numerous cases of heart-broken foreigners who have lost their life savings to someone whom they thought they could trust. Even though you have paid for all expenses, you have known that person for many years, or whatever other reason, the Thai nominee only has to say one word to expropriate you. The police won't be on your side, all that matters is which name is on the title deed.
Now there are some legal constructions that could make it more difficult to be expropriated, such as: making a loan agreement with the Thai nominee that he/she has borrowed a certain amount of money to buy that land / house and have it attached to the title deed while registering at the Land Registry Office, however this is not a sure game and in the end all in Thailand can be done with some money.
So, yes putting land and a house in the name of a Thai nominee is the easiest way to indirectly "own" it, however it is far from safe and ultimately the assets will belong to the Thai nominee.

ad 2. Putting the land / house in the name of a company
The alternative to using a Thai person is to use a Thai company, that you own. This is a more formal way which some foreigners consider fairly safe, however that is still a relative concept in a country such as Thailand where laws regarding this could be changed overnight. In the past, a change in laws has already happened, causing a lot of unrest amongst foreigners and a relocation of capital from houses to condominiums.
In order to do this, you have to set up a company, appoint co-directors and hire an account for annual reporting, so there are some fixed and recurrent costs and paperwork involved in this process.
In theory you could loose control of the company if the other directors are revolting against you, but lawyers have found tricks to circumvent such problems: for example by "sourcing" and appointing the directors "randomly" so that they don't know each other and by having them sign a resignation letter without a date a the day of their appointment. All tricks with questionable legality, however serving your best interest and probably applied widespread by lawyers, foreigners and Thai.
In addition to this, officially a Thai company cannot serve as an empty shell just to hold your assets, so there must be evidence of "normal" business activities. Accountants fake that, for example by arranging for fake regular transfers in and out of the company, but again this is barely legal.
It's therefore not unimaginable that at some stage the Thai authorities take (sudden) measures to restrain the use of companies as shells for foreigners to hold their assets, and even this option is not free of risk.

This summary serves as an orientation, we do recommend you to go by a lawyer if you wish to pursue either way.

Artist impression of housing estate Baan Ploen

Copyright: Chiang Mai Locator
DISCLAIMER: Any information about property on these pages reflects the personal opinion of our financial reporter and is meant purely informatively. No claim is made as to the exact accuracy of facts and figures nor about any future returns you can make by investing in property in Chiang Mai. Investing or di-vesting Thai property is not without risk, and the risk is to be assumed by you as an investor, and you only. Neither our financial reporter nor this site accept any responsibility to your financial decisions, which you make alone.

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