Conditions for Acquiring Land in Thailand – Who Can Buy Property
In October 2022, the Thai Interior Ministry issued and approved a draft proposal to allow several categories of foreigners to purchase land in Thailand. For many years, foreigners in the country have only been allowed to buy condominiums, and now a new era seems to be dawning. However, not all members of the Thai government were in favor of such an initiative. Let’s keep an eye on the situation and see if buying villas in Thailand for expats will get competition shortly.
1 Under what conditions are the authorities willing to sell land in Thailand to foreigners
However, the Thai government is not willing to liberalize the purchase of native land by foreigners just like that. At present, the country’s government has identified the following categories of citizens suitable as candidates for the purchase of land in Thailand:
- Wealthy people,
- Those who want to work from Thailand,
- Talented working people who are also suitable for a long-term visa to Thailand.
So far, unfortunately, the details of who the first two types of citizens are exactly are not fully understood. Also, besides categorizing citizens, the Thai government has created restrictions on the size and value of such land:
- the land must be no larger than one rai (approximately 0.4 acres),
- the investments must be worth at least 40 million Thai baht,
- the land should have residential purposes rather than farming or commercial applications.
2 The purpose of the project allowing foreigners to buy land in Thailand
With a law allowing foreigners to buy land in Thailand, the Thai government hoped to attract investment and replicate the success of 2002 when a similar decision helped Thais pay a commitment to the International Monetary Fund, which in turn saved the country from the crisis of 1997. That year, Thailand faced an unprecedented financial crisis: the country nearly dragged other East and Southeast Asian countries with it. The Thai baht then suffered because of insufficient foreign currency circulation to support the baht’s peg to the U.S. dollar. In two years, however, the government managed to cope with the situation and calm the general panic.
The government also hopes to raise funds for the national treasury through domestic spending by investors over the years they will be living in Thailand.
3 Criticism of the motion by Thai opposition
The main criticism of the decision is that the housing problems of the local Thai population must be solved first, and only then should the land be opened for foreigners to buy. It is also worth considering that once a wave of foreign investors rushes into the country, real estate prices are likely to start rising, which will make the situation even worse for locals.
Also, opposition parties have expressed fears that the success of 2002 is unlikely to be possible, as the example of Malaysia, which has adopted a similar law, shows that the willing foreigners are not as much as it appears to members of the government. The influx is there, but the sums spent by the investors do not seem to be worth the trouble. The initiative, however, can only attract more Chinese investors, leading to the formation of new Chinese districts in Thailand.
4 Property Taxes in Thailand
Continuing the storm of criticism faced by the Thai government, opponents of allowing foreigners to buy land in the country have raised the topic of property taxation in Thailand. Indeed, the percentage paid by property owners in Thailand is much lower than in other countries. It is precisely this, according to opponents of the initiative, that is likely to attract real estate speculators rather than long-term investors.
Let’s compare the numbers. So, if you own an estate worth more than 50,000,000 baht, you will need to pay an annual tax of only 0.5% of the value of the estate. By comparison, in the UK, such tax ranges from five to 12 percent, and in Japan, it is three percent. To calculate the exact numbers and see if it is indeed lucrative to own real estate in Thailand, you can see the current offerings of housing units in the country here Thailand-Real.Estate.
There is another tax that property owners can pay if they decide to sell their property. It is commonly referred to as capital gains tax and is imposed on real estate speculators who wish to sell their newly bought housing units to record a quick ROI. Thus, selling a newly bought property in Thailand, foreigners will pay only seven and a half percent of the value, while in the UK, such a tax would be 28%, and in Japan – 30% or 15%, if from the date of purchase of the property has passed more than five years.
5 How can the motion to let foreigners buy lands in Thailand develop further
It is not yet clear what will be the next step in Thailand’s legislation. If the draft is passed, an influx of investors can probably be expected. However, given the fact that the law is unpopular among members of the opposition parties and, probably, residents of the country, we can assume that it will be adopted with several amendments. For example, a foreign citizen who bought a piece of land may not sell it for less than five years after the purchase. An amendment to allow for such land to subsequently be sold only to a citizen of Thailand is also being discussed.
One way or another, Thailand remains one of the most popular destinations for investment tourism or relocation among citizens of many countries in the world, and, of course, the current situation in the country’s government is now receiving a lot of attention. To explore other investment opportunities in Thailand, go to Thailand-Real. Estate and explore the deals available.