Phuket Property & Phuket Real Estate
Thailand has a developing legal, political and economic climate and this requires investor’s advisers to be up to date with the most appropriate considerations that a prospective property investor should take into account from the point of first interest in a property investment until completion of acquisition or investment. This article sets out a summary of key considerations from the perspective of a ‘buyer’.
Land Title Searches: In Thailand, it is necessary to engage lawyers to conduct a thorough check of the history of land title. The land will either be bare, and ready to develop, or there may be construction on it. Regardless, the legality of land title is crucial to the security of investment. It is not appropriate to rely on a third party land title search or an ‘earlier’ title search especially if the party which conducted the search owes no duty of care to you as a client.
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Method of Acquisition: Foreigners may legally own buildings in Thailand and that right extends, for tax purposes, to ‘foreign entities’. In relation to land, there will generally be the most common option of leasing the relevant land plot on which the building is constructed or will be constructed and in the current market, more rarely the opportunity for a freehold acquisition which would have to involve the use of a Thai company. There are numerous criteria that you as a prospective investor into a property would have to fulfill to use a Thai company which I summary would comprise of: entering into a partnership with Thai shareholders in respect of the investment; ensuring the company conducts business and is not just a ‘vehicle’ to ‘hold’ land. Other criteria applies, and that is why it is necessary to liaise with the agent and lawyer early on when selecting prospective property.
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Leasehold is a simpler way for investors to comprehend security over property assets in Thailand. Leases can be registered for 30 years and the lease can also provide for series of renewals normally of two additional 30 year periods. The quality of the lease; the parties entering into the lease, the actual development and legal corporate structure or standing of the landlord must be considered. The best types of leasehold structure also provide for protection of owners in managed estates through ‘collective participation’ in an owners committee which can control the renewal of a lease. Due diligence into the quality of the structure is necessary.
Access: Aside from physical inspection of the property, the actual legal status of ‘private’ and ‘public’ roads in relation to the property or development where you wish to invest is necessary. If access runs across a third parties land, this can be solved by arranging with the seller and the third party, a ‘registered’ access which in Thailand is referred to as a servitude.
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