Land Laws in Thailand
Ownership of land in Thailand is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.
Although Thai law stipulates that a foreigner may not own land in Thailand in his name, he has the right of ownership of buildings only. If a foreigner wishes to purchase land in Thailand to build a property, he has 2 options:
1. The land is purchased on a 30-year leasehold with an option to extend the lease for further 30 year periods. Possession of the land is assured by virtue of the fact that property occupies the land. The lessor cannot seize the property upon expiration of the lease, as the property is separate from the land.
In order to be enforceable, any lease for a period longer than three years must be registered at the Land Department, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. Both parties can contractually agree to renewals, but this right can't be registered at the Land Department.
2. If a foreigner is going to operate a business in Thailand then he may purchase the freehold of the land through his Thai Limited Company. The land will be owned by the Thai Company, not by the individual.
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Limited Liability Company
Thai law requires that 51% of the shares be held by Thai juristic persons, however, any company with more than 40% foreign interest that purchases land will be investigated by the Central Land Office in Bangkok (under section 74 of the Land Code) to ensure that the company has not been organized in an attempt to circumvent the prohibition against foreign ownership of land.
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Land Title Deeds
There are 6 different types of title deed in Thailand and it is essential to obtain correct information on the deeds to any property you intend to purchase.
The Chanote and the Nor Sor Sam Kor are the only title deeds over which registerable right of ownership or lease can exist, and are as such the only ones that prudent purchasers should consider.
Chanote (Title Deeds)
Freehold title with the owner able to leave the land unattended. An individual named upon a title deed, may use the title as proof of ownership in all legal undertakings and with the authorities Title deeds are registered at the Land Department in the province in which the land is located, and there is no waiting time required to transfer title. However, any sub-division of the titled plot to more than nine sub-plots must follow the Land Allotment Law, Section 286.
Chanote titles are accurately surveyed, plotted in relation to a national survey grid and also marked by unique numbered marker posts set in the ground. It is the long term goal of the Land Department, that all land in Thailand will be covered under the Chanote title system.
Nor Sor 3 Gor (Confirmed Certificate of Use)
This certifies that the person named on the certificate has the confirmed right to use the land, implying all requirements for the issuance of title deed have been met, and issuance of the title deed is pending. They may be sold, leased, used as mortgage collateral etc. The holder of this certificate cannot leave the land unattended for more than 12 years.
With this documentation the land area is defined with parcel points and is accurately mapped, using GPS system, showing adjoining plots on a map using a standard scale of 1:5000. Land with this type of documentation may be sub-divided and legal acts need not be publicised.
Nor Sor 3 (Certificate of Use)
Similar to the above Confirmed Certificate of Use except that not all of the formalities to certify the right to use have been performed. Before a transfer can be made, a notice of intent must be posted and then 30 days public notice is necessary before any change of status over the land can be registered.
No parcel points are marked and it is issued upon a specific plot with no frame of reference to connecting plots. Problems can occur when attempting to verify the actual land area of such plots covered by this documentation.
Sor Kor Neung (Certificate of Possession)
This recognises that a person is in possession of land but the Certificate does not imply that there are any rights associated with the possession. Land with this documentation cannot be bought or sold, and may only be transferred to the direct heirs of the person who holds it
Por. Bor. Tor 6
This is documentation that all land must have in order for a tax number to be issued and tax to be paid upon the benefits of the land. It does not in anyway infer title, ownership or possessory right of the land, only that it has been assessed as taxable.
Sor Kor 1
This is the form required to notify the government of a possessory claim to a piece of land. This was introduced in December 1954 and was used by the government to verify claims upon the land with the eventual issuance of Nor. Sor 3 or Nor. Sor. 3 Gor certification.
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Land Measurements in Thailand.(measured in Rai, Ngan and Wah)
1 Talang Mett = 1 Square Meter = 10.7 Square Feet.
1 Talang Wah = 4 Square Meters = 42.7 Square Feet.
1 Ngan = 100 Talang Wah = 400 Square Meters = 4,277Square Feet.
1 Rai = 4 Ngan = 400 Talang Wah = 1,600 Sqare Meters =17,108 Square Feet.
1 Acre = 2.5 Rai = 10 Ngan = 1,000 Talang Wah = 4,000 Square Meters = 42,772 Square Feet.
1 Hectare = 6.25 Rai.
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History of Land Ownership Laws in Thailand
In the beginning, during the Sukhothai era, most of the land in Thailand was in the possession of the people, who reserved the right to individually use said land and to transfer it to their heirs. Later, in the Ayutthaya and Rattanakosin eras, the land was owned by the Kings. The people had to request a royal grant in order to obtain land.
At present, the possession of land has to be in accordance with the principle land administration laws. There is the supervising Land Department and some land is still controlled by other governmental authorities, such as the Forestry Department, which is responsible for the management of land in forest zones, while the Sor. Por. Gor. is responsible for land in reformed land zones and District Offices and Municipalities (Or. Bor. Tor) look after public land zones.
All land under the control of these government departments have no effect as to the rights of people who owned land before the government appointed the land as a forest, public or reformed zone. The law has retrospective effect on the individual's rights to land under the law before it became a forest zone.
That individual person still maintains its right to the land.
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Buying a condominium
Purchasing a condominium is the simplest process for overseas buyers as Thai law allows foreign freehold ownership of condominiums. It states that 49% of a condominium block may be owned by non-Thais, some blocks may even allow 100% foreign ownership if the developer has acquired the appropriate condominium license.
Developers will usually offer a choice of two ownership options, “freehold” or “leasehold”.
A freehold may be purchased if a condominium block is within its' quota for foreign ownership i.e 49% . The freehold will give you rights over the building but not the land.
A leasehold will be offered if the condominiums have had their freehold quota to foreigners fully subscribed. The initial lease duration with an option to renew for two additional 30 year terms effectively giving the buyer a 90 year lease.
The land on which a condominium sits is owned collectively by the individual condominium owners with a majority Thai shareholding. It is governed by a coporate body which is usually set up by the owners.
To qualify for freehold ownership of a condominium in Thailand overseas buyers must send the funds for the purchase in foreign currency from a bank outside of Thailand. They must be accurately recorded as such by a Thai bank in the form of a foreign Exchange certificate, “Thor Tor 3”,
This certificate provides evidence of the sale or deposit of foreign currency in an authorized local bank. This form must bear the bank's authorized signature and seal in the authorized bank column. The Thor Tor 3 must specify that the purpose of the remittance of foreign currency is for the purchase of a condominium unit or units and must in total equal or exceed the price of the condominium. The Thor Tor 3 certificate is readily available from all major banks in Thailand.
The other circumstances in which a foreigner can purchase the freehold to a condominium are;
1. Individuals who are permitted to have residence in Thailand under the Immigration Act.
The documents required are either a passport, residence permit and house registration.
2. Individuals who are permitted to enter Thailand under the Investment Promotion Act.
The documents required are a passport plus a letter from the Board of Investment of Thailand certifying permission to live in Thailand under the Investment Promotion Act.
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Thai Property Taxes and Land Transfer Fees
Whenever a property in Thailand is bought or sold three taxes have to be paid. Many buyers (especially foreigners) fail to take these into account. It should be decided beforehand whether the buyer or seller will be responsible for paying these. Because of the local system of taxing property on an arbitrary
assessed value as determined by the Land Department rather than true market value, these taxes could amount to a considerable percentage of the purchase price.
There is a property sales tax of 0.11% of assessed value or the sale price, whichever is higher, as well as a transfer fee of 0.01% of the assessed value of the land. Also a stamp fee of 0.5% of the assessed value or the sale price - again whichever is higher.
There is no property sales tax if:
- The seller has owned the property for at least five years.
- The seller received the property as an inheritance.
- The seller has used the property as his primary residence..for at least one year prior to the sale.
If you haven't determined during the negotiations that the seller will pay the taxes upon transfer, you could get a shock when a tax bill arrives - often some 2 or 3 months after the sale is completed - since the seller often neglects to mention this liability.
Once you have acquired the property, you must pay property taxes on it.
If you rent out the property, the tax is 12.5% per year on the annual rental revenue.
There is also a tax on non-rental property. This depends on location and land classification, and varies from 0.25% to 0.95% a year.
In addition, if the house is purchased through a company, one has to bear in mind that corporate tax is higher than personal tax, and the cost of setting up the company has to be considered as part of the initial investment outlay. Then, when you want to sell the property, it is simply a matter of transferring the shares of the holding company to the buyer, without the necessity of re-registering the land titles. There are of course costs and fees involved in this exercise, but typically only a few thousand Baht all told. Again, get a professional business representative or lawyer to do it all for you.
Selling a property, without a company holding the title, you may be liable or all of the fees that were applicable at the time of purchase (see above). You would also have to pay income tax on the sale amount.
- For sale of inherited, non-commercial or non-investment property, the final tax figure must be no more than 20% of the sale price.
- No matter how long you have held the property, the number of years you use in the division and multiplication process for the tax calculation cannot exceed 10.
There are also certain special cases where the income tax does not apply:
- The property is inherited or is an unsolicited gift, and is in a rural area, and the sale price is no more than 200,000 Baht.
- The property is given to your children, or is appropriated by the government.
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Chiang Mai Provincial Land Office
The land office holds all records which relate to land and real estate ownership. In Chiang Mai the Provincial Land Office is located a short distance from the town centre at the City Hall.
The land office records transfers of title and ownership. When a purchase is made written evidence, such as a title deed, should be presented to the land office and the corresponding fees paid. A Lease of 3 years or more should also be recorded at the land office.
Your lawyer will carry out due diligence at the land office and he will check the following information;
1. The title of the land is legitimate and complete in detail. Chiang Mai Lifestyle advises that only land titles of the type Chanote and Nor Sor 3 Gor are registerable land titles and caution is strongly advised when considering the purchase of land with any other type of title.
2. The owners of the land are the actual people selling land and not relatives.
3. The location of the land.
4. The size and dimensions of the land.
A condominium has a different title deed, referred to as Nangsue Kammasit Hong-Chut. This document shows the owner of the condominium unit and is registered in the land office.
Buying and selling property can be a complex matter, and it is advisable to always consult a lawyer for complete advice.
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Visas and Work Permits
Tourist Visa
The majority of visitors enter Thailand on a tourist visa. A tourist visa permits you to stay in Thailand for reasons of tourism for a period of up to 60 days.
Tourist visas are available from Thai Embassies and consulates in your home country. On arrival in Thailand you will be required to pass through immigration where your passport will be stamped with your arrival date and a departure date.
If you wish to apply for a 60 day or multiple entry tourist visa then this should be obtained from a Thai consulate in your home country or another country outside The Kingdom of Thailand prior to your arrival. A multiple entry tourist visa will entitle you to enter Thailand on the same visa up to 4 times and each time for a maximum stay of 60 days. This visa has a validity of 6 months.
If you would like to apply for an extension beyond the expiry date of your visa you will need to visit the Immigration department in Thailand. At their discretion, they may offer an extension to your stay, normally up to a maximum of 15 days on a 30 day visa or 30 days on a 60 day visa.
Please note: A tourist visa is for tourist purposes only. Should you wish to conduct business or work in Thailand you will need to apply for a Non-immigrant 'B' visa before leaving your country of residence.
Non-Immigrant Visas
If you are entering Thailand for any purpose other than as a tourist you will need to apply for a non-immigrant visa. Although it is not necessary, it is recommended that this should be done in your home country at a Thai Embassy or consulate.
There are two main categories of non-immigrant visa.
Category 'B' business visa.
Category 'O' dependent visa.
A non-immigrant B visa should be obtained by anyone wishing to work within Thailand. Once you have your visa you can apply for a work permit. Both a non-immigrant category B visa and a valid work permit are required to legally work within the Kingdom of Thailand.
If you are bringing your spouse and children with you they will need a non-immigrant O visa. This visa type (nom-immigrant O-A) is also issued to foreigners who plan to retire in Thailand. Certain capital and other criteria must be met before this visa will be granted.
If you are already in Thailand then it is recommended that you apply for your non-immigrant visa in a neighboring country.
Entry levels
There are two different entry options for a non-immigrant visa
1. Single entry
This visa is valid for 3 months from the date of issue and allows the holder to enter Thailand for a single period of up to 90 days. After 90 days the holder must leave Thailand and apply for another visa in a neighbouring country or can apply for an extension of up to 30 days from the local immigration office.
2. Multiple entry
This visa is valid for 12 months from the date of issue and allows the holder to enter Thailand as many times as required for a maximum stay of 90 days on each occasion. This visa can be extended by a further 3 months by leaving Thailand at the end of the visa and obtaining a new entry stamp on your return.
Categories non-immigrant visa
Categories of non-immigrant visa are listed below. Should you require any further information please do not hesitate to contact us.
Business visa (B).
Business approved visa (B-A).
Diplomatic visa (D).
Mass media visa (M), issued to accredited press representatives.
Educational study or observation (ED).
Expert visa (EX), issued to those performing skilled or expert work.
Official visa (F), issued to officials on duty (involving the Thai government).
Investor visa (IM), issued to foreigners who set-up their companies under the Board Of Investment.
Investment and business visa through the Board of Investment (IB), subject to the provision of the laws on investment promotion.
Others (O), including dependents and retired persons.
Missionary work or other religious activities (R).
Research and Science visa (RS).
Participation in an officially recognized sports event (S).
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Work Permit Information.
All foreigners, with a few exceptions, who wish to undertake any kind of work in Thailand, must hold a valid work permit and visa. These are issued by the department of Employment.
Working without a work permit is a criminal offence and employers who violate the law can face fines of up to 60,000 Baht and/or jail terms of up to 3 years. Foreign employees who do not hold a work permit may be jailed for up to 3 months and can face fines of up to 5,000 Baht.
There are a few types of work that are reserved only for Thai nationals. In the main these are related to manual labour and productions of handicrafts, but they also include jobs such as hairdressing. A full list can be obtained from the department of employment.
How do you apply for a work permit?
If you will be working for a company then your employer should apply for a work permit on your behalf. Companies are limited to the number of foreign employees they have and must have a registered capital of at least 2 million Baht per foreigner they wish to employ.
If you wish to apply for your own work permit you must first set up a Thai company and obtain a non-immigrant B visa. You can apply for your visa at a Thai embassy or consulate in your home country before entering Thailand. Chiang Mai Lifestyle will be happy to recommend a legal professional who can assist you with this process.
Your work permit will entitle you to perform the duties within the business and work premises stated on your application form. Should you move company or location you will have to apply for a new work permit.
What use is a work permit to me?
Once you have a work permit you are legally entitled to work and run a business in Thailand. You can open a company bank account, obtain credit cards and bank loans, contract a mobile phone, purchase a car or motorcycle and import your personal belongings to Thailand without import duties.
You will, of course, be eligible for income tax and social security payments. |