This is usually the first question asked by foreigners. Although Thai law prohibits foreigners from owning land in Thailand, structures have developed to enable foreigners to effectively own land, and still comply with existing Thai laws. Mainly these are through the following three procedures;

1. The purchase of land through a Thai-registered limited company. (See below).

2. The taking of a leasehold interest, which is becoming increasingly popular. A registered lease is relatively uncomplicated and easy for your lawyer to set up. It can be held in your own name (no company required). Foreigners are permitted to lease land in Thailand for a maximum of 30 years with an option to renew for a further two periods of 30 years each. A lease registered with the Land Office remains in force throughout the term of the lease, regardless of whether the freehold owner sells or otherwise transfers the freehold. However, even though the owner may agree to a renewal clause in the lease agreement, it is uncertain at present whether this right can be enforced against a purchaser/successor of the freehold interest.

3. Condominiums.

 Foreigners can own forty nine percent (49%) of the aggregate unit space of a condo development. A condo is defined as a building that can have its separate portions sold to individuals or groups for personal property ownership. Foreign investors as well as other foreigners may own condos in the Kingdom of Thailand under certain circumstances.

The classes of land title

Once you have chosen your property, it is vitally important to determine the class of title of the land. Your lawyer will advise you fully on this matter.
The following is a brief description of the acceptable classes of land you will meet in Samui which are recommended to foreigners.
Chanote - Nor Sor 4 Jor is the only document that can be described as a land title deed, because it alone confirms ownership of land. The land is accurately surveyed and plotted in relation to a national survey grid. Unique numbered marker posts set in the ground mark its boundaries. It is possible to subdivide the land into smaller plots.
Nor Sor 3 Gor signifies the land occupier’s right to possess the land, but without conferring actual possession. The land is in general accurately surveyed and each plot is cross-referenced to a master survey of the area and a corresponding aerial photograph. Unique numbered marker posts set in the ground mark its boundaries. It is possible to subdivide the land into smaller plots. The second best title available, but as it can be readily upgraded to Chanote title.
Chanote and Nor Sor 3 Gor are the only land titles where registered right of ownership or lease can exist, therefore any land titles lower than these are not recommended for foreign investment

What will your lawyer do for you?

Once you have identified your property, your lawyer must carry out due diligence on your behalf. A Land Search will be carried out at the Land Office to ensure the identity of the owner, and whether there are any encumbrances against the property. There may be a Deposit Agreement to be drafted, and subsequently a Sale and Purchase Agreement. Your lawyer will check the access to the property – i.e. is there a public or private road leading to the property and if private he will ensure a servitude (registered access) is marked on the relevant title deed at the Land Office upon completion of the purchase. Your lawyer will attend the land office on completion of the transfer, to ensure the property is transferred into your Company name, or your personal name if leasehold, prior to the delivery of the full purchase price.

Company set up

Your lawyer will, if appropriate, advise you upon the incorporation of a Thai Limited Company. Buying land/property in a Company name is currently the most popular choice among foreigners who wish to acquire an interest in land in Thailand. The recent enforcement of existing regulations by Government Departments relating to Thai nominee shareholdings (which are forbidden) has led to a change in the Company set-up by law firms in Thailand to comply with the law. Your lawyer can discuss the practicalities with you. The forms can be signed in person in Samui, or they can be couriered to you back home. Once all are received by the Law Office, it will take about 2-3 weeks to form the Company. All companies need to file audited accounts yearly.

What fees are payable upon buying land

There are basically two types of fee payable when you buy land; firstly, your lawyer’s fee. You should negotiate a fee with your lawyer upon engagement. Most lawyers in Samui have standard rates for the buying of land and property, although it must be said that some are more expensive than others! The second set of fees you will be liable to pay are at the Land Office upon transfer of the land.
There is no Capital Gains Tax in Thailand, unlike many countries and Withholding Tax on property is the comparable replacement. Although one might expect the Seller to pay the withholding tax, in practice, this is not always the case and really depends on what has been agreed during negotiations. Often all Land Office fees are shared equally.

The Thai system of land measurement

You will often hear Thais and foreigners talking about the “rai”. Land is measured in Thailand by Wah, Ngan, and Rai. The following is an easy conversion table;
1 Wah = 4 m² = 42.7 ft²
1 Ngan = 100 Wah = 400 m² = 4,277 ft²
1 Rai = 400 Wah = 1,600 m² =17,109 ft²
1 Acre = 2.5 Rai = 4,000 m² = 42,772 ft²
1 hectare = 6.25 Rai

Summary

You are strongly recommended to seek the advice of a lawyer when considering the purchase of property in Samui just as you would do back home. Whilst the system may be alien to you, most law firms in Samui offer an excellent service and you can be confident that they will look after your interests.