Why Buy Property in Phuket?
When considering purchasing property in Phuket, it is important to be aware of Thailand’s laws and restrictions on property ownership, which can appear complicated at times. This section of our website is intended to help ensure you make a well-informed and trouble-free property purchase.
Reasons that make Phuket an attractive location for your permanent base, holiday home or the place to spend your retirement. Phuket is Asia’s premier resort island with amazing natural beauty including idyllic beaches, amazing diving, firstclass hotels, spas, magnificent golf courses, yacht marinas, a plethora of fine restaurants, vibrant nightlife and excellent shopping. Phuket has one of the fastest growing property markets in the world with an increasing number of high quality projects by internationally-renowned real estate developers. Environmentally-friendly planning laws and height restrictions ensure that developments are low key and low density. Phuket is Thailand’s wealthiest province and also the jewel in the crown of Thailand’s tourism industry, therefore receiving a high degree of protection and investment from the central government in Bangkok. The cost of living in Phuket is very low compared to Europe or other premier resort destinations. In an article titled Paradise Found: Where to Retire Abroad Fortune magazine recently named Phuket as one of the top five places to retire to, “where you can still live like a king on your savings”. Phuket’s appeal is so strong that it was one of the only places in Asia that was unaffected by the Asian economic crisis during the late 1990s. Property values also remained strong even after the 2004 Indian Ocean Tsunami. Rental returns on apartments and villas continue to remain high as more and more holidaymakers are opting for the privacy of a rental property over a hotel room. With visitor arrivals predicted stabilize around 5 million annually, the demand for holiday rentals will continue to grow. Infrastructure and services continue to improve at a fast pace. With two international standard hospitals on the island, quality healthcare is available at a fraction of the cost in the West. English language primary and secondary education is available on the island with international schools that follow the British or American curriculum, including the British Curriculum International School, formerly Dulwich International College. Property & Land Ownership Rights
If you are considering buying property in Phuket, the first thing you should know is that under Thai law, foreigners are not allowed to own land. However, foreign nationals do have the right to the ownership of buildings distinct from the land such as condominiums. Foreign nationals may own: • A unit in a registered Condominium • A building distinct from its land • A registered leasehold of up to 30 years for all types of titled land or buildings Foreign nationals may not own: • Freehold land • More than 49% of the shares in a Thai company that owns freehold land Important: Before purchasing property in Thailand, make sure you have a good lawyer. Purchasing a Condominium Under the Condominium Act (1979) foreigners can own the freehold of 49% of the total unit space in any legally registered condominium building. The purchaser must request a letter of guarantee from the condominium juristic person setting out the proportion of foreign ownership which must be submitted to the Land Department upon transfer of ownership. Foreign Exchange Transaction Form A foreign purchaser must bring in 100% of the funds from overseas in foreign currency and will need a Foreign Exchange Transaction Form (FETF) from the Thai bank in order to provide evidence of this to the Land Department. Due to strict money laundering regulations, a FETF is also necessary to avoid complications and remittance tax when repatriating funds should the foreigner sell the condominium at a later date. Note: You can only obtain a FETF for any inward remittance for amounts not less than the equivalent of USD 20,000. You should clearly indicate the payment purpose on the payment order form in the field for a message for the beneficiary, including the name of the condominium and the unit number. Owning Land
Long-Term Leaseholds Registered leaseholds are secure and relatively straightforward. Long term leasehold can be structured to be tantamount to freehold ownership. Typically, the land is leased for a period of 30 years, renewable a further two times giving a total of 90 years. Security of the possession of land is assured by the fact that you are the legal owner of the buildings which occupy the land. Therefore, the lessor cannot take possession of the property upon expiration of the lease as the property is separated from the land and will not be a component part under the Civil Law. Limited Liability Company If you are not comfortable with the leasehold method, the alternative is to set up a Thai company that you control, and which can legally purchase land. Put simply, as a foreigner you are allowed to own 49% of the shares in a Thai company. The rest of the shares must be held by Thai juristic persons (which your lawyer can arrange), who will sign over control of their shares to you. The land will be owned by the company. However, as managing director of the company, you control the voting of the other shares, and therefore you have control over the ownership of the land. Note: Recently the Thai government announced that it will begin investigating the source of the money used by the Thai shareholders who own 51% of the shares in the company to determine if they are nominees. The use of nominee Thai shareholders is prohibited under the Foreign Business Act (1999). Thai Women married to Foreigners
Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai women married to foreigners the right to purchase land, but 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 is usually achieved by the foreign spouse signing a declaration stating that the funds used for thepurchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim. Thailand Land Titles As a buyer you need to be aware of the various land title deeds which exist to understand what you are beingoffered. A large percentage of the land in Phuket is not titled or even accurately surveyed. Actually, it is because there is a lack of complete surveys that comprehensive titling does not exist. As a foreigner buying land in Thailand, you should only consider land that comes with a Chanote, Nor Sor 3 or Nor, Sor 3 Gor. These can be sold, leased and used as mortgage collateral and are the only titles over which a registerable right of ownership or lease can exist. “More importantly, you cannot apply for or obtain approval to build on such land without one of the aforementioned titles. In any event, make sure you have a good lawyer look over the paperwork before you commit to anything. Chanote True land title deeds are officially called Nor Sor 4 Jor or more commonly Chanote. This is a certificate for the ownership of land and can be used as evidence confirming the right to government authorities. It is issued by the Phuket Provincial Land Office using GPS to accurately plot and survey the boundaries of the land. This is the most secure type of land title but land with a Chanote can often be hard to find. Nor Sor 3 The Nor Sor 3 is a document certifying the use of land issued and maintained by the District Land Office to the proprietor of the land but is not a possessory title. That is to say the person holding theNor Sor 3 has the legal right to possess the land in question and can use it as a legal document. Nor Sor 3 is a floating map with no parcel points issued for a specific plot of land and not connected to other land plots, but its boundaries are recorded according to its neighbouring plots. Therefore, it may cause some problems in verifying boundaries due to lack of accurate surveys. Any change in ownership of the land must be publicised for 30 days before it can be registered. Nor Sor 3 Gor The Nor Sor 3 Gor has the same legal basis as the Nor Sor 3, with the difference being that in generalNor Sor 3 Gor has parcel points on the map of the land area set by using an aerial survey with a scale of 1:5000. It is a more accurately surveyed title as each plot is crossed referenced to a master survey of the land area and a corresponding aerial photograph. Therefore, it is possible to verify the boundaries of the land. However, it is still less accurately surveyed compared to a Chanote. Sor Kor 1 Sor Kor 1 is a notification form of possessed land, which shows and maintains the existing rights to the particular land. On December 1st 1954, the government advised all land proprietors to notify their possession of land to the government using a ‘Sor Kor 1’ form. After it was proven that such a proprietor had possessed and used the benefit of the land legally, the government would then issue ‘Nor Sor 3’ or ‘Nor Sor 3 Gor’ as an evidence, which are legal certificates stating the owner’s name that they have the right to such land according to the principle land administration law. This right will be protected by the law and can be used as evidence in any dispute with a private individual or the government. Condominium Title A condominium title is a title to a part of a building or buildings with multiple owners, a fractional interest in the land, other common assets (such as a swimming pool) and common parts of the building (such as the stairwell or lobby).