Thailand Property Solicitors

For a country who is a top player in the real-estate market in the region and whose economy largely depends on foreign investments these are crucial questions to consider. Thailand is without a doubt one of the most attractive places for real-estate investments in Asia. It has all the necessary ingredients of a successful real-estate business hub - a strategic location in the region, beautiful and varied terrain, friendly people, great food, world-class service and facilities and a secure environment. At the moment, the country partially enjoys this special privilege as more and more foreigners are coming to Thailand to invest despite the unstable world economy.  But, for the erudite investor, there is something seemingly lacking in Thailand’s real-estate business which is holding him back from his plans to invest or if not to investing more in the kingdom.

A simple comparison of the property laws especially those concerning foreign ownerships among the top real-estate capitals in the region shows that Thailand has not made any monumental adjustments on its property laws to reflect the country’s fast-changing social and economic realities. Over the years, the country has remained self-protective with its age-old property laws thereby limiting the potential growth of the country’s real-estate industry. Foreign investors are looking for security over their investments but the Thai laws are just too tight and do not offer much security on foreign real-estate investments.

It is perhaps the Thai government’s fear, whether cultural or security oriented, which can account for its inaction to revise the country’s property laws towards a more balanced and friendly foreign-ownership and investment policies. Noted countries in the region like Malaysia, Singapore, China, Vietnam and Indonesia who share the limelight with Thailand as the top real-estate investment capitals in this part of Asia certainly share the same protectionist sentiment. However, in response to the current demands of the real-estate market in the region, these countries have been updating their real-estate laws while ensuring the protection of their own interests at the same time.  To understand how Thailand’s real estate laws fare in the region’s real-estate business it would be worth exploring the real-estate laws and practices of the country’s neighboring countries.

Malaysia

Malaysia’s My Second Home Program is perhaps the most popular project that the Malaysian government has come up with in attracting foreign real-estate investors to come, invest and live in Malaysia.

MM2H Program is designed for foreign nationals to live indefinitely in Malaysia based on a 10 year multiple-entry visa into the country.  Aside from the financial requirement which is differentiated based on the applicant’s age (whether above or below 50 years old) the applicant needs to go through a compulsory medical check-up in Malaysia. Also, the applicant needs to possess a medical insurance valid in Malaysia.

Foreign Ownership. In Malaysia, there are no restrictions on the number of housing units a foreign national may hold provided that:

1.    The value of the property is over RM250, 000 (approximately USD78, 125)
2.    The property is not located on Malay Reserve Land
3.    The property is not located on agricultural land unless it is over 5 acres and used for commercial purposes.
4.    Foreign ownership does not exceed the Bumiputera (local) ownership quota in any new developments.  

Titles.  Malaysia land titles are categorized into two:

Leasehold- these are either 60 or 99 year leases which are renewable upon expiry for a further sum based on market value.
Freehold- gives enduring ownership of the property to the buyer.  Condominiums are structured under Strata Title system.
Conveyancing. The conveyancing procedure in Malaysia is quite regulated. The Sale and Purchase Agreements are standardized but may still require review by a lawyer if unfamiliar with the terms.  

Vietnam

Foreign Ownership. Foreigners are not allowed to own land in Vietnam. But foreigner can enter into a lease agreement with the State if they want to have the land.

Starting 2009 certain categories of foreigners are allowed to purchase apartments for residential purposes. Qualified foreigners under the law are however limited to purchasing apartments from developments approved for foreign residency. The term of ownership is 70 years which can be extended for another 70 years, by which time the foreign owners must sell or transfer the property otherwise the property shall automatically belong to the state of Vietnam.

The list of eligible foreigners for the apartment purchase includes foreign firms purchasing housing for their staff, foreigners working for Vietnamese firms, foreigners married to Vietnamese, foreigners with extraordinary skills beneficial to Vietnam’s economy, foreigners receiving special favor from the prime minister and foreigners who have been awarded medals or other honors by the government. There are conditions that apply to the qualified foreigners. The foreigner should be currently living and working in Vietnam and he/she should have the proper visa and work permit valid for a period of one year or longer. The foreigner should have been residing in Vietnam for a period of 5 consecutive years or longer with the proper papers and documentation. The foreign firms on the other hand must have an investment certificate or license issued by the appropriate ministry in Vietnam.

A special characteristic of real estate transactions in Vietnam is the use of pure gold to pay property purchase. As of June this year, one tael (1.25 ounces) of gold is equivalent to VND11.45 million (US$687).

Registering property in Vietnam is simple and considerably cheap as compared to other countries in the region.  It takes about 2 months to finish the five standard conveyancing procedures needed, with the whole process costing a little bit cheaper than elsewhere in the region.

Singapore

Foreign ownership in Singapore is subject to restrictions under the Residential Property Act. The act restricts foreigners from purchasing vacant land and land properties without permission from the Singapore Land Authority. The act though allows foreigners to buy apartments in buildings of less than six stories without asking the government for its approval. These ownership restrictions do not apply to Non-residential property.

As for condominiums, foreigners can buy them on a free hold basis.  And despite a few foreign exchange restrictions, foreigners can borrow up to 80% of the property cost from local banks to finance their property purchase.

Conveyancing. The conveyancing procedure in Singapore is regulated. Contracts for sale generally follow the standard terms embodied in The Law Society's Conditions of Sale 1994 but may still require review by a lawyer for further advice and guidance.

China

Foreigners can’t own land in China. Rights to use the land however can be obtained from the government. Moreover, a land lease good for 70 years is normally granted for residential purposes.

Foreigners are allowed to buy residential property in China provided that they have stayed in China for at least a year either as workers or students. The acquired property should not be used for commercial purposes as property ownership for investment by foreign companies and individuals are prohibited.

Titles. There are two kinds of property titles in China.
1.    Use Rights/leasehold – lease rights to the property.
2.    Free Hold – has ownership rights to the property.

Conveyancing Procedure. A down payment is required after choosing the property that you wish to buy. This is done together with the signing of the “Beijing Commodity Housing Purchase Offer”. The initial payment follows and this time you will be signing ‘Beijing Commodity Housing Pre-Sale contract. When the contract is finally registered the remaining balance is settled. Property acceptance, title transfer, and obtaining the title certificate follow. In summary, there are three procedures to register property in China, which can take a month to complete. It is recommended to hire a competent lawyer to assist with the real-estate transaction especially if you are not familiar with the real estate system in China.

Indonesia

Foreign Ownership. Foreign individuals are allowed to buy strata-title residential property like condominiums in Indonesia under Government Regulation No. 41 of June 1996.  Foreigners are not allowed to own freehold land. But, they can acquire rights to the use of land.

Conveyancing Procedure. The foreigner has 3 options for buying land property. One is through an Indonesian representative. To safeguard the foreign buyer’s interests, the Indonesian representative must enter into three agreements namely loan agreement, irrevocable power of attorney and permanent right of use agreement with the buyer. The second option is to set up a Penanaman Model Asing company which can operate for 30 years but will be granted additional 60 years if it expands its investments. The third option is through a leasehold title which is good for 25 years and renewable for another 25 years.

It can take up to two months to complete the entire process of registering property which involves seven procedures.

Conclusion

As a leading real estate player in the Asian property market, Thailand is aware of such changes happening throughout its region. Although, foreign ownership laws here have been slow coming, measures have been taken in recent years to make Thailand even more attractive to the sophisticated foreign investor.  There is much debate going on now about offering longer lease terms which would have a huge impact on the property market here for foreigners. Of late, laws have also been introduced to provide greater consumer protection for property buyers. We have also seen an introduction of escrow laws and a host of other amendments all of which are expected to improve the legal development of property law in Thailand. It is still a challenge to the Thai government to update its property laws as antiquated laws and political will plays a major role in this transformation. It is perhaps only a matter of time then that the real estate business in Thailand comes to par with international standards and genuinely become a major player in the region.

Siam Legal

We are Thailand’s largest legal network with eight locations across the Kingdom. Our firm is staffed with 7 foreign attorneys and solicitors who work together with our 25 Thai lawyers. You can visit any of our offices for a free consultation regarding property, legal or immigration matters.