Phuket, a tropical paradise in Thailand, has become a sought-after destination for real estate investment. Many foreigners are captivated by the beautiful beaches, vibrant culture and great investment opportunities. However, before entering the Phuket real estate market, it is essential to understand the regulations and processes involved in buying or owning real estate as a foreigner. In this comprehensive guide, we’ll explore the different ownership structures, legal restrictions and key considerations for foreigners looking to invest in Phuket real estate.

Understanding Property Ownership Structures in Phuket

Phuket offers a variety of ownership structures that allow foreigners to buy and own real estate. The most popular options include buying an apartment, purchasing rental property, leasing land and owning the building, or purchasing land through a Thai limited company.

Buying a Condominium Unit

Phuket’s booming real estate market includes many condominium developments targeting both experienced developers and newcomers. Thai law allows foreigners to own condominiums under certain conditions. Foreign buyers can purchase a freehold apartment or enter into a rental agreement, commonly known as a lease.According to the law, foreigners can own up to 49% of the total salable area of ​​a condominium project, while the remaining 51% must be owned by Thais. Leasehold ownership grants the right to use and own a condominium for a specified period of time, usually 30 years, and is fully transferable. Some of the benefits of owning an apartment in Phuket include:

1. Foreigners can own an apartment in their name under the foreign ownership limit.

2. Apartments are considered profitable investments and are relatively easy to manage.

3. The apartment comes with a title deed that can be used as collateral in Thailand.

4. Apartment prices in Phuket are relatively lower than other destinations in Asia.

5. Apartment ownership comes with fewer maintenance and repair responsibilities.

Buying property under a lease

Although condominiums are the only type of freehold property that foreigners can own, non-Thais can still acquire rental rights to with other types of real estate, such as villas, houses, townhouses and land. Leasehold means holding a property under a lease from the owner or developer.

Foreign buyers typically benefit from a 30-year lease term, with the option to extend the lease for two additional 30-year terms. The lease guarantees the right to occupy the property and prohibits any interference by the owner or building owner. The benefits of buying rental property in Phuket include: , Greater choice of property types available for rent.Complete control over asset maintenance.

Potential for good investment returns over the lease term, with the possibility of lease extension.

Land lease and building ownership

Thai law considers all construction on leased land to be part of the land. However, foreigners can own a building on rented land in Thailand as investors. If you are a foreigner with a Thai spouse, you can sign a rental contract with your spouse stating that you are the tenant when building a house or villa on their land.This allows for co-ownership of the structure on the land.

Buying land through a Thai Ltd company

Foreigners are not allowed to own land in Thailand but many investors choose to establish a Thai Ltd company. Buy land as part of a business, not as an individual. To ensure legal compliance, the company must be a legitimate enterprise with Thai shareholders as legitimate investors. Nominee shareholders are illegal in Thailand. Foreigners joining the company must hold no more than 49% of the shares, while Thai shareholders must hold a majority of the shares. This ownership structure allows foreigners to own land indirectly through the company.

Legal restrictions and considerations

Although foreigners can buy and own property in Phuket, there are still legal restrictions and considerations to be aware of. It is essential to navigate the legal landscape and follow procedures to avoid any conflicts or legal issues. Here are some key points to consider:

Restrictions on land ownership

Thai law prohibits foreigners from directly owning land.However, there have been discussions about allowing foreigners to own land, especially for long-term visa holders and high-potential investors. The draft directive proposing land ownership rights for foreigners was withdrawn following public backlash, so it is important to stay up to date with any changes in the regulations.

Nominal shareholders

Using nominal shareholders to circumvent foreign ownership restrictions is illegal in Thailand. It is essential to ensure that any Thai LLC created to own real estate has legal Thai shareholders actively participating in the business.

Lease Renewal and Renewal

When purchasing rental property, it is essential to understand the lease renewal and extension process. While the initial lease is guaranteed for 30 years, subsequent renewals are contractual agreements between the parties involved.It is advisable to consult with legal experts to ensure your rental interests are protected.

Conclusion

Phuket offers a great opportunity for foreigners to invest in real estate and own a piece of this tropical paradise. Understanding the different ownership structures, legal restrictions and key considerations is essential to making informed decisions and successfully navigating the real estate market. Whether you choose to buy an apartment, rent a property or set up a Thai Ltd. company, conducting thorough research and seeking professional advice will help you make the most of your real estate investment.

Remember to stay up to date with any regulatory changes and consult with legal experts to ensure compliance with Thai law. With the right approach, you can realize your dream of owning property in Phuket and enjoy the benefits of this wonderful destination.