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Foreign land ownership and alternatives

Thai Law for foreignersUnder the Land Code, foreigners are not permitted outright ownership of land.

Although the Land Code contains a provision that allows foreigners to own land if they are so permitted by provisions of a treaty giving immoveable property ownership rights, no such treaty currently exists.  Further, government policies have generally not permitted foreigners to own land.

Nevertheless, there are a number of exceptional and limited cases where land ownership by foreigners is officially permitted.

  1. Foreigners can own up to one rai (1,600 square meters) of land for residential use, if the foreigner transfers a minimum of 40 million baht from abroad to invest in specified businesses in Thailand, with permission from the Ministry of Interior.
    Said permission is subject to the procedures and conditions set in Ministerial Regulations.
  2. Foreign land ownership concessions granted to businesses with promotion privileges from the Board of Investment (BOI), oil concessions from the Petroleum Act, and businesses in certain industrial estates.
  3. Companies with non-Thai shareholders, provided 49% or less of company shares are owned by foreigners, and the more than half the number of shareholders are Thai nationals or companies.

Alternatives to land ownership for foreigners

Thailand’s Civil and Commercial Code allows foreigners to take other forms of property ownership through leases and the Roman law concepts of usufruct or superficies. Notably, unlike the Land Code, the Civil and Commercial Code does not differentiate between foreigners and Thai nationals.

Leases

There are two types of leases: normal leases, and leases of immoveable property for industrial and commercial purposes.

  1. Normal Lease
    Land and buildings can be leased for up to 30 years. For purposes of legal enforcement, registration of leases of over 3 years is required.
    Lease registration requires payment of the registration fee and a stamp duty whose amount is calculated based on a percentage of the rental fees over total term of the lease. A registered lease will remain effective over the property despite any changes in land ownership.
    Although the lessee can only use the property in accordance to the purposes stated in the lease, as long as permission is obtained from the lessor, the lessee is able to sublease, sell, transfer interest in, change, or improve the property.
  2. Lease on Immoveable Property for Industrial and Commercial Purposes
    Leases of immoveable property for industrial and commercial purposes is subject to the Act on Leasing Immoveable Property of Industrial and Commercial Purposes, and permits such property to be leased for between 30 to 50 years. This type of lease is also subject to conditions set in Ministerial Regulations.

Usufruct interest

An usufruct interest gives temporary ownership rights to things on or arising from the land, and the right to enjoy the products of the land, but does not give ownership of the land itself. For example, the trees or fruits, rocks from a quarry, and so on.
Like a normal lease, an usufruct interest is generally has a timespan of up to 30 years, and can be renewed. Unlike a lease, an usufruct interest will expire upon the death of the holder, and can be sold or transferred.
With an usufruct interest, barring destruction, any use of the land is allowed without need for the land owner’s permission. The usufruct is extinguished upon destruction of the property. The usufructuary is responsible for routine maintenance and is required to take out insurance on the property for the owner’s benefit. Also, the property must be restored such that it is largely unaltered from its original condition upon its return to the owner.

Superficies

A superficies is similar to an usufruct, but gives the holder of the rights greater leeway regarding the property. A superficiary has rights to own things on or under the land such as buildings and other structure, but not the land itself.
Superficies are subject to a maximum term of 30 years, and can be renewed. Unlike an usufruct interest, superficies are not extinguished by the destruction of the buildings or structures, and can be transferred and inherited.
The superficiary must give the land owner the opportunity to buy any buildings or structures on the property at market value prior to the expiry of the superficies. However, the superficiary has the right to remove the buildings and structures on the property upon expiry of the superficies. Similar to the usufruct interest, the land must be restored to its previous condition before it is returned to the owner.