Permanent Residence

That foreigners can now buy condominium units in Thailand didn’t just happen because Thais are nice people and like to accommodate foreigners. There were more serious economic reasons. As the Bangkok Post reported on August 10, 1991, the "Honorary President of the Condominium Trade Association (CTA, Apasapong Bhulpol, said there was a big oversupply in the high-priced condominium market... Vice president of the Thai Real Estate Association (TREA), Vinai Pongsathorn, said his association was very happy with the news allowing foreigners to buy condominiums freely."

Thailand has a number of unique measurements, among them the square wah. A wah is 2 meters, a square wah therefore 4 square meters. Land is measured in ngaan and rai. 1 ngaan has 100 square wah (400 square meters), and 1 rai has 4 ngaan (1600 square meters).

The Residential Property Guide 1991 of the Bangkok Post gave the following figures on the price development for residential real estate:

The average selling price for detached houses for middle income people rose from 735,000 Baht in 1987 to 1.6 million Baht in 1990.

In the same period of time, the average selling price for townhouses for middle income people went up from 345,000 Baht to 678,000 Baht. Town houses for low income people were about 175,000 Baht in 1987 and 400,000 Baht in 1990.

Among the condominiums listed in the above cited property guide, there wasn’t much available under 2 million Baht per small unit. Average prices for 1-bedroom units were around 3 million Baht, for 2-bedroom units around 5 million Baht.

Real Estate Contracts

While foreigners were only permitted to own condominium units in mid-1991, it wasn’t the case that foreigners would not have owned de facto condominium units (as well as land and houses) before the new regulations were passed. The Bangkok Post of August 10, 1991 cited the Honorary President of the Condominium Trade Association, Apasapong Bhulpol: "He also estimated that foreigners had bought about 10 per cent of all condominium units in Thailand through illegal means and legal loopholes, such as under the name of a Thai citizen they could trust or making a 30-year lease on the condo with an option for another 30-year extension... ‘What will happen is those foreigners owning condos illegally will make their ownership legal,?Apasapong said."

As anywhere in the world where comparative restrictions exist, foreigners used to buy condominium units, houses and land through dummies. In most countries which don’t permit foreigners to own land or houses, money of foreign spouses is used to buy real estate in the name of the local spouses. In Thailand, this is only legally permitted if the local spouse is the male half of the couple. Thai women married to foreigners are excluded from the right to buy real estate, except if they can prove that the money used is from their own funds.

While this is certainly an unequal treatment of the sexes it reflects the Thai reality that many more Thai women marry foreign men than Thai men marry foreign women. It also reflects the common opinion that a foreign man might marry a Thai women for the material benefit of being able to buy real estate in Thailand while it is considered unlikely that foreign women would act in the same manner.

While the fairly direct way to buy property without being the registered owner, via a marriage with a Thai national, is closed for foreign males, a number of other structures were practiced in the past and continue into the present (though they are now unnecessary for condominium units). As indicated, the simplest method is to buy a property in the name of a Thai nominee (not married to a foreigner) or, in less legal language, a dummy.

In a direct form, this was never legal in Thailand. Not only can according transactions be declared void from the beginning by the Thai government. Nominees also face up to 2 years in jail and a fine of up to 20,000 Baht.

In the case of a number of other possible practices it’s harder to determine to what extent they are legal or illegal. Sometimes, they aren’t much different from dummy transactions except that they are accompanied by more elaborately drafted documents.

By the books, they may often be legal but they could sometimes be interpreted as against the spirit of the law, and there are possibilities under which the Thai government can cancel transactions which have received approval at the first instance. On the other hand, if properly structured and pursued with sound motives, foreigners can get pretty close to full land ownership and in some seldom cases even achieve the goal outright.

By and large, the situation is much more complicated than it is expressed in the simplistic statement "Foreigners cannot own land in Thailand." As mentioned, the Board of Investment can grant a foreign investor the right to own factory as well as residential land if it thinks that wanted foreign investments will otherwise not be undertaken (for details, see the chapter on Business & Employment later in this book).

The general prohibition for aliens to own land in Thailand is found in Section 86 of the Land Code. Considered aliens are all natural persons who do not possess Thai citizenship as well as juristic persons, not organized under Thai laws or juristic persons organized under Thai laws but where the majority of the capital is held by non-Thai citizens or where half or more of the shareholders are non-Thai citizens, regardless of the capital distribution.

Furthermore, juristic persons (corporations, limited partnerships) with predominantly Thai shareholders and more than half of the capital in Thai hands are also considered aliens if they are managed by a non-Thai citizen. Also considered alien are associations and cooperatives where half or more members are non-Thai citizens, as well as foundations who pursue non-Thai interests.

Though juristic persons with less than half foreign capital or foreign shareholders and not managed by a foreigner can own land, the Land Office will examine carefully each case where foreign participation exceeds 20 percent.

One of the possible set-ups for aliens to get a fairly secure hold on land are long term leases. Natural or juristic persons can lease land in Thailand for up to 30 years under one contract which may include an option for a 30-year extension. However, leases for periods longer than 3 years require registration at the Land Office in charge for a certain property, otherwise they will just be considered ordinary leases with a validity of no more than 3 years. Standard lease contracts carry certain limitations. Typically, a lessee cannot sublease a property without the written consent of the lessor, and the lessor has a right to access the property for inspections.

However, Thai law, as the law of many Western countries, also knows the system of usufruct. An usufruct is similar but not identical to a lease in so far as it permits the usufructor to exploit the natural resources of a lot. Commonly, an usufruct also includes the right to sublease the property or to transfer the rights to a third party without the necessity to secure the permission of the owner.

As the Natee International Law Office of Bangkok pointed out in its column in the Business in Thailand issue of April 1991, "the ban on foreign ownership relates only to land, not structures or fixtures, so the right of superficies is available to foreigners." This means that a foreigner can take a long term lease on a plot and build his own house.

When the lease expires, the alien will either have to find a settlement with the owner as to what is a fair price for structures or fixtures, or the lessee will have to dismantle the structures and return the plot to its original condition. Obviously, it’s an option only for those entering long term contracts, and even then one should not lay out structures as if they were meant to last eternally. The lessee has few choices if an owner should intend to take over structures at a price far below the value.

It may often be the case that a natural or juristic alien is interested in a particular plot of land which may not be for lease but for sale. Aliens then may be inclined to finance the purchase of the plot by a Thai national from whom the plot can then be mortgaged or leased for 30 years.

To decide to what extent such constructions are indeed legal or not, will in many cases depend on a number of circumstances. Should the arrangement be made with a bank where the foreigner agrees to deposit an amount for a long term, and should the bank be the purchaser of the land and lease it on a long term to the foreigner, such a deal would most probably be considered legal. But when a foreigner finances a girlfriend to purchase the land and then mortgages or leases it from her, suspicions could arise.

Condominium Ownership

Foreigners who want to buy condominium units in Thailand have to fulfil one of three conditions: either a foreigner must be a legal permanent resident of the kingdom, or he must have been given investment promotion privileges, or the money used to buy a condominium unit must be brought in full into the country from abroad.

In principle, this means that any foreigner with sufficient cash can now buy one or more condominium unit in Thailand. However, foreigners are still not permitted to buy land, except in some cases of foreign investments coordinated closely with the Board of Investment (for details, see chapter Business & Employment).

Searching for Homes

Advertising in English language newspapers is expensive in Thailand, even by Western standards. Usually no line ads, only box-type ads are accepted and one column-inch is the minimum size. In times of little demand, apartment owners can easily spend a month’s rent in advertisements to find a renter for a unit.

To avoid these substantial expenses, many condominium offices market their luxurious residential space direct by sending regularly offers to multi-national companies with branches in Thailand.

Many owners of apartment buildings don’t advertise when they have just one or two units empty. Most better apartment buildings also offer units through real estate agents - the potential renters pay for their services.

Continued