Real Estate FAQ

Property in Thailand & Koh Chang.  What you need to know.

On this page you will find some basic information about buying property in Thailand and a couple of Koh Chang specific point to bear in mind. I suggest that if you are interested in having a second home in Thailand that you consult with a good lawyer before signing any contracts.  By ‘good’ I mean one that isn’t a close friend of the landowner / developer and who isn’t based on Koh Chang.

Can Foreigners own a house and land in Thailand?

Under Thai law, any person can register any type of building in their own name.  So the good news is that foreigners can own their houses.  However, the ownership of land is restricted.  It is virtually impossible for a foreigner to own land freehold. Therefore, most buyers will opt to own their house, but lease the land it is built on.

Foreign buyers can have a 30 year lease with a prepaid option to renew.  Different law firms have different opinions as to the legality of allowing only one or a maximum of two  further periods of 30 years each, making a total of 60 or 90 years.  This grey area arises because a) the law is a bit ambiguous and b) there are no legal precedents.  The contract will also give the foreigner the option to purchase the land should the law change in the future and to sell or transfer the land at any time.   It will also include clauses allowing your next of kin to inherit the lease in the event of your death etc. The lease will be registered at the local government land office.

You must get the lease registered. If this is not done the enforceable period of any lease, regardless of what is written on the contract, is only 3 years.

It is also possible to have a lawyer set up a Thai registered company that is controlled by the foreign buyer.  The company can then own land Freehold. Three shareholders are needed, at least one must be Thai.  The Thai shareholder has to hold at least 51% of the shares.  But the lawyer will set up the company so the foreign shareholders have the voting shares and therefore they control the company and it’s assets and bank account.   Even if you don’t use your company for any business you still have to do accounts and an annual audit.  The cost to set up a company with a good English speaking lawyer is from around 30,000 Baht upwards.  The share capital of the company should be the same as the value of the property being purchased.

Property Taxes

These are very low in Thailand.  On a lease agreement you will only have top pay approximately 1.1% of the purchase price in taxes when you register the lease at the government land office.  If you were buying a land and a house freehold the tax would be approximately 5.3% of the purchase price.

** As of mid-2008, the Thai government announced that property taxes would be lowered to approx 0.2% of the selling price  in order to stimulate house sales. This is still in effect, as of August 2009**

Land Title Deeds in Thailand

There are four main types of Land Title in Thailand:

Chanote –  A Chanote is a title deed that has been issued by using GPS to set the area and boundaries of the land, which is a very accurate method. This is the most secure type of land title.  Small circular concrete markers each stamped with a unique code mark the corners of the land.  The same marker codes are shown on the scale map of the plot on the title deed. The rear of the title deed shows the names of previous owners and also if the title has been used to secure loans or has been leased to a third party.

Nor Sor Sam Kor – This title deed is basically the same as a Chanote.  This title and the Chanote are the only ones that a Thai bank would take as mortgage collateral from a Thai customer.  The front of the title deeds will show the current owners name, the land area and also have a small map of the plot which will show any boundaries such as the sea, river, roads etc.  The rear of the title deed shows the names of previous owners and also if the title has been used to secure loans or has been leased to a third party.

The above two titles are the ones that a registerable right of ownership or lease can exist, and so are the only titles that most buyers will consider.

Other titles include:

Nor Sor Sam –  Land with this title cannot be transferred immediately, a 30 day public notice must be posted before any sale can occur.  However it can easily be divided into many smaller plots.  Unlike a plot of Chanote titled land which is limited to 9 divisions

Por Bor Tor Ha / Sor Kor Neung – These are farmland title deeds.  Only for Thai buyers and expats married to Thais who understand the local way of doing things will consider land with these titles.  On Koh Chang this type of land was cheap a few years ago but now it too is rather expensive.  Your lawyer will advise you not to buy it.

Land Measurements

You will see large plots of land listed as being a number of ‘Rai’.  Smaller housing plots often use ‘Talang Wa’.

1 Hectare  = 6.25 Rai

1 Acre = 2.5 Rai

1 Rai = 1,600 sqm = 4 Ngan

1 Ngan = 400sqm = 100 Talang Wa

1 Talang Wa  = 4sqm

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Koh Chang Specifics.

A few years ago untitled farmland was cheap and could be held in a Thai name so many foreigners with Thai spouses bought it.  But in recent years, as more people come here looking for land, the prices for this type of land have increased.

Problems could arise in the future as there are no ownership rights for this type of land – only usage rights.  In addition it must be held in a Thai name.  Add to this it is impossible to register a lease for farmland at the government Land Office.  All this plus high prices makes me wonder why people buy it.  The answer is usually smooth talking agents who promise the earth.  Sure you can have a 99 year lease in your name and the local village official will witness the contract to make it legally binding.  (Of course, this is nonsense as there is no such thing as a 99 year lease in Thailand and the signature of  an old local doesn’t over rule the Thai Civil and Commercial Code which governs land registrations etc.)

You’ll find people selling small plots of farmland in Klong Son, Klong Prao and Kai Bae valleys.  It is a falsse economy to buy it. You will have problems in the future.  Walk away. It wont be upgraded to titled land any time soon, regardless what the seller or agent might tell you.  ( If it were, they wouldn’t be selling it.) This can be verified by the Land Office in Trat.

The other thing to be aware of is that it doesnt take much to call yourself a developer in Thailand.  You need a friend with some land, a few plans and perspectives of houses or condos and then you just print some brochures and advertise your new project.  (One agent on Koh Chang currently – Aug 2009 – uses the photo of a completed pool villa at a tourist resort here to advertise his housing development online.) It you can convince enough people to sign up for the dream, buy off plan and pay deposits, which cover the construction costs, you go ahead and build and everyone is happy.  But this doesn’t always happen – especially in the current economic climate.

This doesn’t mean you shouldn’t buy off plan.  There are reputable developers here.  However, there are also a growing number of completed new homes for sale. So you can see what you are getting and prices now are cheaper than a couple of years ago.