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Phuket Property Law – What You Should Know Before You Buy
Phuket Property Law
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First and foremost, Phuket property law prohibits foreign nationals from owning land.
However negative this may sound, the law does not prevent you from owing property in Phuket, and should not put you off your dreams
of owing a Phuket property.
Thousands of others have realised their dream using 1 of 4 legal vehicles.
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A Unit in a Registered Condominium Development
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If you want a quick, easy and simple property purchase, buy a condominium unit.
Phuket property law allows foreign nationals to own 49% of the units in a condominium development on a freehold basis.
Usually foreigners buy the penthouses and larger apartments, however there are many well-to-do Thai's competing for this market as well.
You can buy your condominium unit off-plan if you like. It involves a little extra work, however the advantage is that the first units are often
sold at tremendous discounts to stimulate demand and raise the cash to fund the project.
This method of buying condominiums is a bit more risky although the saving can be 100% plus.
Buying off-plan means you must completely trust the company you're dealing with, and you should make sure they have a history of
successfully completing projects before you put any money down.
In order to qualify for a condominium purchase, the funds must be remitted internationally and correctly recorded by a Thai bank.
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Immovable Buildings that are Distinct From the Land
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If a condominium is not for you and you want a house, then you can purchase the house and obtain a registered leasehold agreement for the land for
30 years.
Ideally, you'll negotiate a 90 year lease (the maximum allowed), by prepaying two 30 year lease extensions upfront.
Make sure you, or your lawyer, does an in-depth search of the title deeds.
If you want to build, you can.
First, you make sure the land title allows you to build, then organise the lease, then organise the building permission.
Your security with respect to the possession of the land, even after the lease has expired, is guaranteed by virtue that you are the owner
of the buildings that occupy the land.
The lessor cannot repossess the property when the lease expires because under Phuket property law, the property is separate from the land under Civil Law.
The lessor would have to buy the property to repossess the land.
If you're not happy with the idea of acquiring a leasehold property or building a house on leasehold land, then you can...
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Buy Land Via a Thai Incorporated Company
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Thai law allows foreign nationals to own 49% of a Thai incorporated company, and it's possible for foreigners to own 100% of the company's
voting rights, by issuing preferential and ordinary shares.
You will however need to find 6 Thai investors if you go down this route. This method however, can be fraught with problems.
Firstly, the business must be bona fide. You must submit a tax return yearly. Failure to do so will lead to the business being de-registered.
In which case your land ownership lapses.
Additionally, the law states that you can only own 49% of the company.
If the Thai government wants to enforce this law (which it currently doesn't), you would be hard pressed to produce evidence to prove that your
Thai partners contributed 51% of the capital for the land purchase.
In this case you would be deemed to have unlawfully purchased the property.
Caveat emptor.
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Buy the Land in a Thai Spouses Name
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Thai Ministerial regulation now allows Thai women married to foreigners (and visa-versa), the right to purchase land. However, the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it.
This usually requires the foreign spouse to sign a declaration that the funds used in the purchase belonged to the Thai spouse prior to the marriage and are beyond his/her claim.
There are also title searches to be conducted, taxes and fees to be considered as well as a raft of building regulations to contend with if you're thinking of building yourself.
If you then want to rent the property out, you'll be glad to know that Phuket property law protects the lessors interests, but not unfairly.
And then of course, there are the issues and costs of property management.
Whichever way you choose to purchase your Phuket property, you'll need a good lawyer to advise you if you don't want to become a victim of the complicated Phuket property laws.
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