The breathtaking island of Koh Samui is among the world's most popular island destinations and, as a result, has become a premier beachfront vacation and real estate site in Thailand. There are a handful of real estate developments in the island as of this time of writing, providing an incredible investment opportunity for both Thai and foreign investors.
On that note, is it legal for foreigners to purchase property in Thailand? Yes, but there are some caveats to their ability to do so. Worry not, all of the information about this topic will be available in this special guide.
Foreigners cannot own land in Thailand or Koh Samui. Indeed, non-locals are not permitted to directly purchase Thai land or own landed property or freehold land in their own names. There's a way around this ruling, of course.
The Thailand Limited Company Method: Establishing a Thai company with the majority of its shares (more than 51 percent) held by Thai locals or entities is one popular approach.
Once established, the foreigner can acquire control over the property through their ownership stake in the company, thus allowing the company to buy the property by proxy.
To reiterate, the foreign company owner should not hold more than 49 percent of the company's shares. The majority stake or 51 percent should belong to Thai shareholders.
In other words, these Thai shares may belong to a different "class" or "category" of shares, limiting the owner's ability to vote and exert control over the business.
The 30 + 30 + 30 Leasehold Method: Although the land is owned by someone else, foreigners can still register and legally own the building structure on the land in question.
Leasing the space "for a period of time" via leasehold is another sound strategy for ownership. A leasehold is a contract that ensures long-term usage. The foreigner obtains "exclusive possession" of the rental property upon signing this lease.
You are limited to a lease for roughly 30 years if you are a foreigner looking to purchase a villa or house on the land. You can renew twice, thus allowing you roughly 90 years of leasehold.
Additionally, a foreigner cannot personally co-own land with a Thai citizen, even if they're married to one.
With that in mind, those are just some of the many ways foreigners can purchase Koh Samui properties without breaking Thailand land ownership laws.
The following official documents are linked to foreign Thailand (and Koh Samui) property ownership.
The Land Code Act of 1954: These are the main laws and policies governing foreigners' land ownership in Thailand, particularly regarding what's forbidden and what isn't.
The Investment Promotion Act of 1977: This act establishes the guidelines for Thailand foreign investment.
The Foreign Business Act of 1999: This act restricts foreign ownership in several Thai industries.
The Condominium Act of 2008: These are the laws and guidelines that outline foreign ownership of condos in Thailand.
The Civil and Commercial Code 2: This code covers the rules and regulations for Thailand property ownership specifically.
One of the easier ways for a foreigner to purchase real estate in the Land of Smiles or Koh Samui is by purchasing a condominium.
The Thai Condominium Act of 2008—which permits foreigners to own the freehold of up to nearly half of the total unit space, or 49 percent specifically—is responsible for this development.
Due to fractional ownership, 49 out of 100 identically sized condos are available to foreign buyers.
You are able to have a title deed with your name on it thanks to this ownership law. The remaining 51 percent of the units are only available for purchase by Thai nationals and residents.
According to the Foreign Business Act of 1999, the total floor area of the apartments owned by foreigners cannot surpass 49 percent of the building's total area.
Therefore, the answer is "No" if a building has already attained the maximum amount of 49 percent foreign ownership.
Regardless, foreigners can purchase condominiums and apartments outright and have them in their name.
For many non-citizens and expatriates, this is their preferred option for Koh Samui property ownership. Certainly, maintaining an apartment or condo is easier than maintaining a villa or beach house in Koh Samui.
However, there is a limit on the number of condo units that can be fully owned by foreigners in a given building. Nonetheless, they are still able to purchase and own them.
You can't own Koh Samui land or any other type of land in Thailand as a foreigner, even though certain buildings, like condominiums, can be partially owned with their own respective caveats.
Therefore, foreign ownership of landed properties like houses or villas isn't allowed by Thai law. Nevertheless, alternative arrangements do permit foreigners to legally possess such properties.
To wit, here are the different property types in Thailand that foreigners can or cannot own.
Condominiums and Apartments: Foreigners are allowed to own Koh Samui condo units as long as the whole building containing them has 51 percent Thai ownership of the units.
Land: Foreigners cannot own Koh Samui land or any land in Thailand. To buy property, they need to establish a Thai Limited Company to buy it on their behalf or enter a leasehold agreement and rent out the land for a minimum of 30 years and a maximum of 90 years.
Buildings: Foreigners can partially own Koh Samui buildings. To be more specific, they can buy less than 49 percent of the building units but not the land it's standing on.
Villas and Houses: Foreigners cannot own villas or houses directly, but they can create a company to buy it for them by proxy or enter a leasehold agreement for the land.
Joint-Ownership Property: Foreigners cannot co-own Koh Samui land even if they're married to a citizen of Thailand. It's at most owned by their spouse.
Do you have your sights set on a beach house and a villa? The leasehold approach would be the most straightforward bet, followed by the Thai Limited Company method.
To have the chance to own land and properties in Coconut Island, foreigners only need to marry a Thai national. If you're a foreign spouse of a Thai person, you should be able to buy land for sale in Thailand's Koh Samui through your spouse.
However, you should be aware of some restrictions with such an agreement, especially in regard to ownership and division of assets between spouses.
For example, the spouse who isn't Thai should give up any claims to the property and declare that they have no ownership rights over the land being bought.
Rich non-citizens can also benefit from an exception made for foreign governments whose embassies require Thai property.
The potential owner must meet additional requirements and invest a minimum of 40 million Baht ($1.2 million) into the Kingdom of Thailand for this exception to be granted.
However, most people who want to own property in Thailand are unable to afford this option.
Thailand's property laws for non-citizens may irritate some, but in reality, they serve to safeguard the nation's real estate industry from the risks associated with too much development by foreign investment.
Prevents Overdevelopment: These laws prevent Thailand from becoming as overdeveloped as some of the world's most urbanized cities, including Hong Kong, San Francisco, and London.
Only the wealthy elites are able to purchase real estate in such places due to their exorbitant property prices, which drive out the poorer locals residing there.
Preserve Natural Beauty and Property Prices: The ruling also enables Thailand to preserve its natural beauty while keeping land and property values accessible to its own people rather than have them snatched up by foreign entities everywhere.
This system was essentially devised by the government to maintain justice and equity for the Thai people living there. However, this doesn't necessarily preclude foreigners from purchasing real estate in Koh Samui altogether.
As previously mentioned, foreigners aren't permitted to personally own land in Thailand... until recently.
By the end of 2022, an Interior Ministry proposal regarding foreign land ownership was tentatively approved by the weekly cabinet meeting.
According to the proposal, foreigners should only be able to own up to one rai or roughly 0.16 hectares of land in Thailand for residential use. However, the proposal was opposed heavily by its harshest critics.
When purchasing property in places in Thailand like Koh Samui, several legal documents are typically required:
Tax Documents
Title Deed (Chanote)
Land Office Documents
Power of Attorney (if applicable)
Sales and Purchase Agreement (SPA)
Foreign Exchange Transaction Form (FETF)
Please take note that notarization of documents isn't required by law in Thailand. All parties named on the deed must sign the purchase agreement, and all copies of documents must be acknowledged as authentic copies of the original.
At this point, the buyer typically pays a deposit (from 20 to 30 percent of the property value in Bangkok, and a little bit more outside of Bangkok, like in Koh Samui).
There are several distinct Land Title Options available in the Thai real estate market. For Thai properties, you're likely to encounter the "J," "Chanod," or "Chanote" titles. It alludes to the freehold land's official title deed.
Certificate of True Ownership: In other words, it's the land ownership certificate for Thailand. It is also the only land title deed with actual ownership rights. It should contain your full name, contact information, and your property's GPS coordinates.
Why is GPS used? GPS guarantees a more precise method of verifying the location and boundaries of your Koh Samui property per the National Survey Grid.
Benefits: GPS plotting of lands with Chanote titles provides the most accurate of surveys. Additionally, unique numbered market posts erected on the grounds surrounding it serve as valuable perimeter markers.
Garuda Stamp: A red rubber stamp known as the "Garuda" should be placed at the top of the Chanote title. It's not a genuine deed if the mark is colored in any other color than red or if it's missing.
Don't forget to always consult with a Thai property lawyer before signing any documents or making a deposit for a lease, registering superficies over a Koh Samui property, or obtaining a Chanote title.
The only tax that a buyer must pay when buying a property in Thailand or Koh Samui is the Transfer Tax. This tax is equivalent to 2 percent of the property's registered value.
It's also important to remember that there are additional taxes associated with real estate transactions, but usually the seller bears this burden instead of the buyer.
.jpg)
In addition to the brokerage and property registration fees, there are also legal fees to consider.
The buyer may hire a lawyer to help with the purchase process because the cost of legal counsel varies based on the complexity of the transaction. These fees usually fall into the $300 to $900 range.
Moreover, the buyer might have to reimburse the real estate agent who assisted them in finding the property in the first place for a brokerage fee. Usually, this costs about 2 percent of the purchase price.
Lastly, to register the property in their name, the buyer must pay a fee to the Land Department. Usually, they charge about 1,000 baht (or $30) for this.
In Thai culture, it's very important to establish a good relationship with the person on the other side of the table—the Thai owner of the property. Start by being courteous and respectful of them.
The Wai Gesture: When you greet someone, make the "wai" gesture, which entails slightly bending your head and putting your palms together in a prayer-like motion. Don't overdo this, though.
Be Humble and Courteous: Keep your language modest and courteous when negotiating. Don't appear haughty and have more self-awareness with your actions.
Indirect Communication: As you may already know, Thai people tend to communicate indirectly, expressing their thoughts and desires instead.
Read Body Language: Thai people could also make use of nonverbal clues, silence, or hints.
Observe Patience: Be patient and aware of these subtle cues when negotiating. It's critical to interpret any implied messages from the seller by reading between the lines.
Don't Be Argumentative: Keep in mind that being overly combative or aggressive with someone from Thailand can sour the relationship and impede development.
Finally, you can also depend on the agents of Conrad to serve as your liaison to these Thai owners when push comes to shove.
When the time comes to buy Koh Samui property, your best bet should be finding an experienced property agent like us here at Conrad Properties.
It certainly isn't the time to try your hand at navigating the property laws of Thailand on your own! We at Conrad can assist in the following ways.
Save Time: We'll help you save time by only offering you property within your price range and preferred location through our intuitive website and comprehensive property portfolio.
Ensure Value: Koh Samui properties for sale are usually offered at fixed prices by the current owner. Let our agency work as your liaison to ensure you're only getting the best prices and the most value for your money.
Avoid Scams: We'll also assist you in making sure that the seller actually has the deed or the legal title and the right to sell the property to prevent legal entanglements down the line.
Legal Guidance: Without our assistance, it will be difficult for you to understand property, environmental, and zoning laws involved in purchasing Koh Samui properties as a foreigner.
Let us save you the hassle of finding other experts who are familiar with foreigners like retirees and expatriates availing retirement homes or vacation beach houses in Koh Samui. We already have that covered.
.jpg)
In conclusion, the main methods for a non-citizen of Thailand to acquire Koh Samui land include the following:
The establishment of a Thai Limited Company that can hold the land on their behalf. As a result, they are able to indirectly own the land via the business.
Additionally, foreigners and landowners can agree on a leasehold contract that grants the lessee the right to use the lessor's property for a predetermined amount of time (up to 90 years).
Other methods like the spouse method or investment method are too impractical to use. Now that you know the options available to foreign buyers of Thai real estate, it's time to locate the property or properties of your dreams within Coconut Island.
Start your search now by looking through Conrad's Koh Samui properties for sale!
Investing in Koh Samui's commercial real estate sector offers a gateway to both financial success and contributing to the island's growth....
Are you considering to invest in Thailand? This article highlights 5 reasons why buying real estate in Koh Samui is an opportunity that will benefi...
When buying property in Koh Samui or even Thailand in general, foreigners face a major restriction—they cannot own land in their name or have...
You can’t go with Thailand as far as making it your family holiday vacation destination of choice. It’s a country full of wonder and de...
Thailand’s Koh Samui (fondly called Coconut Island) is well known for its luxury accommodations, particularly its stunning beachfront propert...
When planning on retiring in paradise, Koh Samui should be right up there in your list of choices. Conrad Properties has a multitude of options whe...
Unsure whether to invest in a condo or a villa in Koh Samui? Uncover the unique advantages of both and find the perfect property for your lifestyle...
Leave a reply