For anyone who is looking for a country to retire to – or just a warm bolthole for escaping the winter blues – Thailand is a place that is pretty hard to beat. The country already has a very large ex-pat population, attracted by the low cost of living, the friendly and accommodating people, warm tropical climate where temperatures rarely drop below 80F, the golden sandy beaches, blue skies and lush rainforests, not to mention the world-famous local cuisine.
In the past, there was a barrier for anyone wishing to spend lengthy amounts of time in Thailand, which was the country’s strict and less than generous policy with regards to issuing visas. However, Thailand is now actively attracting retirees to the country – providing that they bring a little cash with them when they come!
In order to be eligible for a ‘Non-Immigrant Type O-A Retirement Visa’, applicants need to be age 50 or over, pass a simple medical exam, invest a minimum of THB 800,000 (around $25,500) in the country and show that they receive a regular income, such as a pension or investment income, of no less than THB 65,000 (around $2,000) per month. The minimum investment of THB 800,000 is just about enough to buy a small condo in Pattaya, which is home to Thailand’s biggest ex-pat community after Bangkok, and buys a lot more than that outside the main tourist areas of the country. Rents in the more desirable parts of the resort cities can be relatively expensive – it’s hard to find somewhere nice for much less than $600-700 per month. However, with no rent to pay, $2,000 a month is enough for anyone to enjoy a very pleasant lifestyle in the country.
It’s hardly surprising, therefore, that the numbers retiring to Thailand each year and investing their minimum THB 800,000 into real estate so that they can live rent-free are increasing constantly.
The question most often asked by those interested in purchasing real estate in Thailand is, “Can I legally own real estate on a freehold basis in Thailand in my own name?”
If you’re happy living in a condo (which is going to be the only option available to you unless you’re able to invest substantially more than the minimum), the answer to this question is a resounding YES! As a result of revision to the Condominium Act in 2008, foreigners are now able to own up to a maximum of 49% of the total habitable area of any project registered as a condominium. There are now many projects – both finished and under construction – which are classified as condominiums, so there should be plenty of choice available in the most popular areas of Thailand.
But what if a condo is not what you are looking for? Maybe you have your heart set on retiring to a villa in the country with its own garden?
Ah – now things get a little more complicated!
While foreigners are able to own property on a freehold – i.e. the bricks and mortar that the building is built from – they are not able to own the land beneath it. But are there any ways around this law that will allow a foreigner to live in a villa of his or her own?
Yes there are, but none of them are ideal. Here are your options:
1. Buy in your spouse’s name
Many single guys come to Thailand looking for love. And many of them find it remarkably easily! If you have found the love of your life and are 100% sure that the pair of you are going to live happily ever after, the easiest way of owning real estate is to buy it in your spouse’s name. Be aware, however, that the real estate will belong to your spouse and your spouse alone – it won’t be in joint names. So you need to understand that if your Thai marriage does not have a fairy tale ending, you’re probably going to end up homeless.
2. Buy on a 30-year lease
Foreigners are able to lease land for a maximum period of 30 years. After the 30-year period, ownership of the land will revert back to the lessor. Many companies trying to sell land on a leasehold basis will try to reassure you that it will not be a problem for them to renew the lease for 30 years after that – and another 30 years after that too – for a total of 90 years. Unfortunately, however, it’s not that simple. Leasehold agreements for longer than 30 years are not legally binding and so a lot will depend on the goodwill of the original seller (and whose lawyer drew up the lease agreement).
3. Become a big-time investor
Have you got a spare THB 40 million ($ 1.27 million) to invest in Thailand? If so, you will be welcomed into the country with open arms and will be allowed to own one ‘rai’ (around 17,250 square feet) of land on a freehold basis.
4. Buy as the minority partner in a Thai company
The most common method of owning land is to form a Thai company of which you own a maximum of 49% of the shares. The remaining 51% must be owned by a minimum of two other nominee shareholders, both of whom must be Thai citizens.
“But they own most of the company – they can just take it away from me!”
This is the most common fear from people given this option. This is not something you need to worry about though. Your shares can all be ‘Preference Shares’, with ten voting rights for each of your shares versus just one vote for each ‘Ordinary Share’ that the nominee shareholders own, so you are guaranteed total control over the company and all its assets. The costs for forming such a company is around $1,000 to establish it in the first place, plus around $300 for an accountant to file the company’s annual returns each year.
Sounds simple enough, doesn’t it? And many tens of thousands of villas and apartments are currently being held by foreigners in such a way, with none of them having faced any difficulties. So where’s the problem?
The problem is that, according to the letter of the law, owning real estate by means of a Thai company which uses nominee shareholders is illegal. Currently it is the Thai shareholders that are most at risk, because they have to sign a declaration that they are not acting as nominee shareholders and may face prosecution and possible jail time if they are found to have lied during the company formation process.
To date, no Thai citizen has ever been prosecuted for making a false declaration and no foreigner has ever lost his or her property this way. However, there are regular rumblings from inside the government that more action should be taken to stop foreigners owning land in such a way and that seizures should be made. Thai politicians have been making such suggestions for many years now and no action has ever been taken. However, should you decide to own real estate in such a way, always be aware of the fact that you are technically in breach of the law and so there is always a risk involved – probably only a slight one, but a risk still the same – in using this method of ownership.
One final word of advice/warning should you look to purchase land using any of the methods outlined above – you should always take legal advice before buying real estate. Good legal advice is only going to cost you a few hundred dollars, but could possibly make the difference between your keeping hold of your little piece of paradise, or losing it.
Nick Pendrell is an international real estate analyst, journalist, author and realtor living in Pattaya, Thailand. His latest book, Pattaya Property and Thailand’s Real Estate, was published in August. Feel free to contact him with any additional questions you may have at firstname.lastname@example.org.