1. Foreign Freehold Condominium
This is a simple method by which a foreigner can obtain outright freehold ownership of a “condo” in Thailand. It's only available for those properties that properly constitute a condominium under the rules of the Condominium Act. When a building has been designated as falling within the Condominium Act an area amounting to 49% of the total can be made available to foreigners. Once the 49% has been taken the remaining units cannot be sold as foreign freehold; it's either necessary to form a Thai company to purchase a unit or it may be possible to take a lease upon the unit. The 51% cannot be purchased freehold by a foreign individual. Rumours suggest the Thai government will increase the percentages for foreign ownership but certainly nothing is likely to happen until after the elections.

This is not a problem in Bangkok or, to a lesser extent, Pattaya but it can make selling the Thai quota more difficult in Phuket. You'll often find developers willing to offer incentives to sell the 51% and this has created a virtual two-tier pricing within the same development which continues through to resales. If the Thai quota is changed it could turn out to be highly advantageous to those buyers who chose to take the Thai quota at the lower price.

The costs of registration or transfer of a foreign freehold condominium are higher than those of a leasehold property and usually amount to about 6%. These costs can vary and are split into sellers and buyers fees, but it's quite common for both parties to simply split the fees.

2. Leasehold or “Protected Leasehold”
Historically the length of a single lease in Thailand is no more than 30 years, making it necessary to create a contractual obligation within the leasehold agreement for two further terms of 30 years, making a total of 90 years. A typical leasehold for an apartment or condo (architecturally there is no difference) in many parts of the world would be for a similar period. The leasehold structure is also the most common choice when it comes to purchasing a villa within a development. Resort developments use the leasehold structure as most of the common areas fall under the resort management whereas in a condominium building these form part of the Condominium Juristic Entity or CJE and are the condo owners’ collective responsibility. A Protected Leasehold is simply in addition to owning the lease the buyer also owns a share in the Thai Company that owns the land the building stands on thereby protecting the lease in perpetuity as he would, in effect, become his own landlord. Under Thai law foreigners cannot own land however a Thai company can and the ownership can be controlled through preferential shareholding which to all intents and purposes is the same as owning it. The Thai Company, of which the individual leaseholder of the villa or apartment becomes an equal shareholder, is controlled by the leaseholders collectively. Transfer fees and taxes relating to leasehold properties are generally cheaper than those relating to the sale of a foreign freehold condominium.

3. Thai Company
Thai companies are often used when a buyer wishes to obtain the freehold of land, a villa or an apartment. He may choose to use this in conjunction with a lease whereby he leases the land, villa or apartment from the Thai company for additional protection. Setting up a Thai company is a fairly simple and inexpensive process. Taking over an existing Thai company is a straightforward process, however due diligence on the company should be carried out by a lawyer to ensure the company is free from encumbrance – normal practice anywhere in the world.

4. Offshore Companies
You may see a BVI (British Virgin Island Company) or some other offshore entity interjected to purchase any of the above. This is not a tax dodge or a means by which the owner can be invisible (though some owners may see an advantage in remaining anonymous) but can be a tax efficient way to own any of the above. The advantage being that when the owner decides to sell, he only needs to sell the shares within the offshore company as it's the company that owns the asset and not he as an individual. Any subsequent sale can take place offshore in any currency the parties choose. There's a relatively small cost of setting up the offshore company and maintaining it.

And that’s it in brief. I have tried to condense years of understanding and experience into a few paragraphs but I believe the main points are contained herein.

David Wade is a Director of Tropical Homes Real Estate with offices in Kata Beach and Laguna Tel: 081 787 1108, 081 808 8896. Email: david@tropical-homes.net