FAQ

..................................................................................................... How is land in Thailand measured?

Land is measured in Rai, Ngan and Wah.
1 Rai = 4 Ngan (or 1600 Sq.m)
1 Ngan = 100 Wah (or 400 Sq.m)
1 Wah = 4 Sq.m
1 Acre = 2.5 Rai (approx.)
1 Hectre = 6.25 Rai (approx.)

.......................................................................................................

General Information on the THAI LANDOWNING LAWS

• 1. Sor Kor 1

• 2. Por. Bor. Tor 6

• 3. Sor. Por. Gor 4-01

• 4. Nor .Sor. 3

• 5. Nor. Sor. 3 Gor

• 6. Land Title Deed

• 7. Condominium

• 8. Buildings on land

In the beginning, i.e. the Sukhothai era, most of the land in Thailand was in the possession of the people, who reserved the right to individually use said land and to transfer it to their heirs. Later, in the Ayuthaya and Ratanakosin era, the land was owned by the kings.

The people had to request a royal grant in order to obtain land. At present, the possession of land has to be in accordance with the principle land administration laws.

There is the supervising Land Department and some land is still controlled by other governmental authorities, such as the Forestry Department, which is responsible for the management of land in forest zones , Sor. Por. Gor. is responsible for land in reformed land zones, District Offices and Municipalities (Or. Bor. Tor) look after public land zones.

All land under the control of these government departments have no effect as to the rights of people who owned land before the government appointed the land as a forest, public or reformed zone.
The law has no retrospective effect on the individual's rights to land under the law before it became a forest zone. That individual person still maintains its rights to the land.

Back to Top

There are two types of rights to private land:

The first is the right of possession ( Possessory right), i.e. people who possess and use the benefit of land will have the right to possess such land under the Civil and Commercial Code.

The second is ownership by a person who has a title deed and documents concerning the land.

      • 1. Sor Kor 1 is a notification form of possessed land. There is a certificate to show the right to the land. This maintains existing rights. Notification of Sor. Kor 1; on December 1st 1954, the government advised all land proprietors to notify such possession to the government as per form Sor. Kor 1. After it was proven that such a proprietor had possessed the land legally and used the benefit of the land, then the government would issue Nor. Sor 3 or Nor. Sor. 3 Gor as evidence. Nor. Sor 3 and Nor. Sor. 3 Gor are legal certificates provided that any name shown on the title is a person who has the right to the land (according to the principle law). This right will be recognized by the law and can be used as evidence in any dispute with an ordinary person or the government.

      • 2. Por. Bor. Tor 6 is evidenced by the issuance of a tax number for the purpose of paying tax for using the benefit of the land. Such land has not yet been assessed as to the person's right to possess such land. In the event that there is no title for the land , then it may be land in a conserved forest, public land or land which existed under Sor Kor 1, Nor. Sor 3, Nor. Sor. 3 Gor or a title deed. Any of these titles must have a Por. Bor. Tor 6 as tax must be paid, the same as any land without a title. Purchase of such land is possible by handing over the possession of the land to the buyer along with the tax number. The right to land under Por. Bor. Tor 6 can not be used as evidence in any dispute with authorities.

Back to Top

      • 3. Sor. Por. Gor 4-01 is an allotment of land from the land reformative committee, and under no circumstances may this land be bought or sold. It may be transferred to heirs only.

      • 4. Nor .Sor. 3 is an instrument certifying the use of land issued by the government to the proprietor of land not a possessory title, i.e. it is confirmed by law that a person holding Nor. Sor 3 has the legal right to possess the land. This land title can be used as a legal document or to use the benefit of the land as an owner. Nor Sor 3 is a floating map with no parcel points. It is issued for a specific plot of land and is not connected to other land plots. This causes problems in verifying the land area. Any legal acts must be publicized for 30 days.

      • 5. Nor. Sor. 3 Gor is a legal land title with the same legal basis as Nor. Sor. 3. The difference being that Nor. Sor. 3 Gor has parcel points on the map, and is set by using an aerial survey to set the points and the land area. It is possible to verify a nearby land area. It always uses the same scale of 1:5000. There is no need to publicize any legal acts, and it is possible to partition ( divide ) the land into smaller plots.

      • 6. Land Title Deed is a certificate for ownership of land. A person having their name shown on the deed has the legal right to the land, and can use it as evidence to confirm the right to government authorities. The title deed has been issued by using GPS to set the area and boundaries of the land, which is a very accurate method. Any legal acts may be done immediately, as per the right of ownership. Land partition of more than 9 plots must be carried out according to the Land Allotment Law, Section 286.

      • 7. Condominium ( may be used as drafted )

      • 8. Buildings on land. Foreigners have the right to ownership of buildings only, where land is not included. Legal acts are unlimited. A suggestion for foreigners is to lease the land for 30 years with an option to an extension of the lease, then purchase ownership of the house built on the land. Certainty of possession of land and house is assured, by being the owner of the house. The ownership of the land shall be leased out. If arranged as stated above, then the house will be separate from the land, and will not be a component part under the Civil Law. Ownership of buildings can be confirmed, and the lessor can not seize the house upon expiration the lease.

Back to Top

.....................................................................................................

Foreign Ownership Rights

One of the most frequently asked questions a developer or estate agent receives is : Can a foreign national own land outright? The answer is No. Furthermore, they cannot own more than 49% of the shares in a Thai company that owns freehold land but there are legal ways, within the Thai company structure, that will allow a foreigner to exercise sole control over the company and thus their investment

.....................................................................................................

Freehold vs Leasehold

There are many questions asked as to which method is better and there are arguments for both sides. Since foreigners cannot own land outright, registered leaseholds with appropriate extensions and purchase options can, as mentioned above, to all intents and purposes, be seen as equivalent to freehold.
Freehold means exactly that. The Thai company that you control owns the property. As additional safeguards(if required) you can lease the land in your own name form the company that you control. You can even have the company create a mortgage over the land in you favour.

.....................................................................................................

Controlling Your Investment

There are 2 distinct methods of controlling your investment I.E. either through a registered 30 year lease with options to renew or through the registration and effective control of a Thai majority owned company to purchase and hold the freehold. Leasehold control is secure and easily implemented. Freehold requires a broader explanation which is given below.

The freehold Method of Control

Under the Land Code, subject to certain exceptions, “aliens” may not own title to freehold land in Thailand. According to the Code, any juristic person (including Thai private limited companies with foreigners holding shares in their own names exceeding 49%) would be considered ”alien”.

The Land Code along with the Foreign Business Act(FBA) does not, however, prohibit foreign control(voting and management)of a Thai majority owned company.

Given the above, it is of paramount importance that a proper legal structure is adopted to retain effective control over a Thai majority owned company whilst at the same time avoiding anti-agency and anti-nominee provisions.

A number of means can be used to ensure that the foreign minority share holders have effective management and financial control of the company.

These include but are not limited to creating different classes of shares with different voting and director appointment rights.

As an additional safeguard you may set up a company to control the freehold land which you as an individual then lease from the company you control.

You may also have the company register a mortgage over the land in your favor. This is considered by many as overkill but the option is there non the less.

In Conclusion
You should only consult professionals who will adopt the proper legal structure to protect your interests and who are able to explain the same to you in detail, in your own language or at least in a language that you understand well.

Property Taxation
There are 2different types of Tax levied on property in Thailand and they are called:
- Land Tax, and
- Structures Usage Tax
Land Tax is a very small tax levied on land ownership equivalent to just a few Baht per Rai per year. This amount is so small that the land office rarely bothers to collect it and if they do may wait a few years before the amount is worth the effort of collecting. In any commercial sense this tax can be largely discounted.

Structures Usage tax is applicable at the rate of 12.5% on the actual(or assessed) gross rental value of the property. Lessees are not subject to this tax but may be required by the Developer to pay “annual ground rent” instead.

Company Taxation
There are legal responsibilities and tax implications in respect of owning and running a Thai company. Wherever in doubt, please consult a professional.