1. Land lease
A foreigner may buy a land lease (also called leasehold). The maximum time limit for the land lease is 30 years and the lease must be written in Thai and recorded by and kept at the local Land Office. The process is straightforward and is recognised in Thai law, it offers the buyer legal protection with low maintenance. Any extension to the lease is a private arrangement and the buyer has no formal legal rights after 30 years. A further 30 years is possible as a first option.
2. Limited company
A foreigner may buy land or leasehold through a limited company. The company must be formed in Thailand and should be more than 60 percent Thai owned. The Thai shareholders must have Thai ID cards and sign a shareholder document stating that they are co-owners of the company with profit-sharing and voting rights.
It is advisable to choose the shareholders carefully and to consider the formation of the company seriously. Some methods of forming companies that were popular in the past were illegal for the purpose they were being used for; the advice of a legal expert is essential as laws can change. In 2006, the Thai government began to check many limited companies to ensure they were set up correctly. Please see notes on the right. >>>>
Types of Land & Land Titles
Possession of land is determined by the land title. In Thailand, there are eight different types of titles, but only three that will allow for purchase, transfer and sale of property. The most comprehensive land title – Chanote – shows a true certificate of ownership and is normally accurately surveyed.
It is highly recommended that an independent legal representative makes sure that the land title is correct and free of any claims before purchasing or leasing. Have a surveyor check that the land area on the title is correct. In recent times there have been court cases where even correct land title deeds were shown to be issued by corrupt land department officials.
- Chanote: the premium title issued by the Land Department. The survey is GPS-verified and matched with aerial photographs. A Certificate of ownership is issued and it is favourable for bank loans
- Nor Sor Saam Gor: gives a clearer title and a better survey than theNor Sor Saam. A certificate of ownership is issued and the land can be used by that person
- Nor Sor Saam: allows for rights to use the land and a certificate of ownership is issued. It is surveyed, although not as accurately as theNor Sor Saam Gor and can often be the subject of boundary disputes
There are only two types of land holdings in Thailand:
- Right of Ownership: entitles the individual or corporation to sell, lease or transfer the property. A title deed and documents of ownership are held for the property
- Right of Possession: entitles the holder to use the land for agricultural purposes. The land cannot be sold, only transferred to the direct next of kin of the owner. Building permits will not be issued
Building Permits & Zoning Regulations
The Town and City Planning Act and the Building Control Act are the two main pieces of legislation governing construction of residential properties in Thailand. Under these acts the following responsibilities are enforced:
- Awarding Building Permits
- Enforcing the Building Control Act
- Property Developments
- Zoning Regulations
The Building Control Act is set up to govern the construction of buildings and details restrictions on their size, shape and height, which are specific to certain areas.
Buyers must ensure that their builder is adhering to all restrictions that have been outlined. Individual requirements under this Act do vary between Provinces, so it is necessary to contact the local Land Department office for exact details.
Building permits are regulated by the Building Control Act and issued under the Town and City Planning Act. If the land has a clear and legal title deed, a building permit can be obtained at the Land Department Office. The builder usually applies for building permits on behalf of the owner of the construction.
Use of the land is also a factor when applying for a building permit. If the use of land follows the stated zoning, permission for a permit is possible. If more than nine plots of land are being developed, a sub-division licence is required with all of the infrastructure requirements relating to this.
These document are needed to get a building permit:
- Title deed that allows for purchase, sale or transfer
- Architectural drawings
- Land Development Permits (obtained before the land sale): the Land Trade Licence and Land Distribution Licence
- Infrastructure permits such as water, electricity and housing construction permits
It is important to understand and consider the zoning regulations of the specific area being built in. Keep in mind that when developing a property several zoning restrictions may apply. They may include some or all of the following depending on the Province:
Employing a Builder
- Height of the structure
- Width of the structure
- Distance from the beach and/or shore
- Proximity to another property
- The use of the structure (residential, commercial, industrial)
- Building lot size
- Angle of slope of land
- Height of land above sea level
- Type and colour of roof
- NB many if not most houses are built without seeking any permission
- this avoids paying tax on the property.
The builders play an integral and arguably the most crucial part of a building project. Builders should be responsible for the following:
- Establishing and managing a comprehensive and realistic cost control system
- Preparing engineering documents for construction and modify when needed
- Monitoring building safety and work quality
- Coordinating activities
- Having an information model for project evaluation
- Execution of construction work
It has been reported that some builders in Thailand fail to establish an adequate cost control system. Developers should therefore be aware that a quotation is not always realistic and the final cost may be considerably more than the originally stated contractual amount.
Insurance is highly recommended, but is only legally required for building high rise buildings and for large construction projects. Insurance can cover the land construction site, the construction employees, building materials, machinery and legal liability for property damage or bodily injury.
Construction and Erection Risk Insurance policies can be taken out by the contractors as well as the investors of the building site. Check to see whether the insurance company will be liable to pay indemnity when there is loss of property or damage to the building caused by an "Act of God" such as a natural catastrophe like bad weather or tsunami. The insurance company should also assume liability if a death, accident or health issues arise from or to a third party while working on the property.
Additional coverage needed may include:
- Overtime fees
- Property loss or damage resulting from a civil commotion
- Extended maintenance of construction works
- Damage to underground cables and pipes caused by the work on the property
- Architectural risk
- Unstable structures
The premiums for building insurance can greatly vary depending on the size of the property, the materials used and in many cases the construction company's reputation and success rate may contribute to the cost for insurance.
***The information above was obtained through independant sources and as such was not produced by us, part or all of the information in this left hand column only may be copyright.
NB The thousands of Ex pats who come to Thailand to live on a semi or permenant basis use the methods listed on the left. We recommend the company route in most cases but not all. This in our view is the most secure method and with some small additional refinements is next to fool proof.
We for example use a company structure which gives the Thai share holder 61% and the ex pat 39% We use a number of directors (Thai) who are paid a modest one off fee and are not known to each other and come from different parts of the country. The ex pat director is the only one who has executive power and as such can control the asset as he/she see's fit, buy, sell, rent etc.
Many company set ups use known directors who make a modest living by being company directors of many companies.
Company set up should always be done through ourselves or a lawyer from a reputable company with experience in corporate set up and company law.
WARNING: Never be tempted to short cut this aspect of house purchase in Thailand, Protect your assets at all costs.
Construction and or renovation:
We recommend this method:
Building is a common skill in Thailand and good builders are quite easy to find. Management of a project of any size is best done by us or an experienced qualified person. We exclusivly project manage buying all the materials ourselves as required, obtaining pro-former invoices and estimates beforehand, workers are paid by the job for their skills only.
Example: A new roof is to be installed on your house. You choose the type of tiles and the design you want, an estimate will be produced for the steel, fixings and tiles. A price will be quoted by the roofers for their work (Labour) they will be paid when the job is completed. All the materials will be paid for by you direct to the supplier. This insures you get he best price and that control of finance is always in your hands. It is worth remembering that often workers will demand a commission from suppliers for introducing you as a customer. This commission will be added to the price of your materials un-beknown to you of course, unless, you go direct to the supplier first on your own or your project managers initiative.
We never pressure owners to use our services, we encourage you to look around and get as much information as you can. We do however strongly recommend that you completely control your project either yourself or through someone you can trust.
Construction in Thailand is pretty cheap and a few thousand Pounds goes a long way. If you purchase a modest home for example: £20,000 and it requires renovation, additionally you might have to spend another £5 - 6 thousand on renovation and £600 on legal set up.
Once every year you must submit accounts to the tax department showing your company is trading and therefore legitimate. The easy way to do this is to rent the property from yourself (the company you own) at a peppercorn amount and pay tax on same. You will also have to pay a licenced Thai accountant to file your accounts for the company. This will cost in the order of about 25,000 baht around £500 pounds. In total you should end up paying £14 to £15 a week on your property, less than £750 per year all found.
We have a very reasonable Accountant that we use and can put you in tough with.
NB many land owners do not seek permission to build a house on their land and perhaps more than 50% of all houses especially in rural areas are unregistered. This is of course a way in which owners avoid tax. We advise clients to register their properties because if and when you want to sell your property it makes it more easy to do so.
© http://thaihouses.page.tl. 2010/2553
Construction Prices 2011 / 2554
Economy Quality Build: 8,000.00 Baht
per meter ²
Medium Quality Build: 9,750.00 Baht
per meter ²
High Quality Build: 11,690 Baht per
Luxury Quality Build: ( includes
insulated walls and roof, double glazing,
air conditioning, Marble or Granite tiles
throughout etc 17,950.00 per meter ²
*** Build contract prices as above
include Architects plans and design,
structural engineering report and
consulting, materials list with current
costings and planning permissions
*** ( not included are specialist
constructions such as Atrium's, Under
ground, Swimming pools or water
Build time after September (end of rainy
season) is approximately 5 months, any
structure or structures, this of course
would not apply to any very large