Buying a House in Thailand
Foreigners can’t own land in Thailand so be sure to set in place a lease or usufruct legally guaranteeing your right to inhabit the property undisturbed before even considering building a house. It is best to build on a Chanote property but a Nor Sor Sam Gor is acceptable. While an active, trading Thai majority owned’ company can purchase land, beware of setting up a company solely to purchase land as this is illegal and may result in legal problems. Additionally, Thai majority owned companies using nominee shareholders are being investigated as the use of nominee shareholders is illegal. It is important to note that theoretically a foreigner who invests 40 Million Baht in Thailand and receives ministerial approval can purchase 1 Rai of Non-inheritable land for residential purposes.
The first thing to consider when building a house in Thailand is, like everywhere, location location, location. Make sure that you have guaranteed access to your land, if possible ascertain if there is any major construction planned for nearby. Check for flooding issues, and, if out in the country, water and electrical access. Make certain there are no liens registered on the title deed or conditions from the previous sale at the Land Office and if possible, ascertain that the land is fully legal. Check for zoning laws or building restrictions. This should all be done before implementing a lease or usufruct.
Further information on leases and usufructs can be found below:
Further safeguards can be in place by implementing a right of superficies on top of the lease which further specifies the rights of the owner of the building towards the land. For instance, the right of superficies, which is also registered on the title deed could include rights of possession, ie what happens to the house when the lease expires. So, let’s say you have finally legally acquired use of the land and are now ready to build. First you will need to obtain a building permit, the person named in the building permit is assumed to be the owner of the house. It is important to remember that the House Registration Book or Tabien Ban does not indicate ownership but merely residence at an address. The land owner will be charged a tax of 12.5% of the yearly rental from the lease agreement or the annual value assessed by the Land Department, whichever is higher.
You will need to have house plans drawn up and registered at the appropriate office (it will differ if you live in a municipality or in a village), often the person who does the drawing is also the official who approves it. Finding a reputable building team can be difficult and its best to check neighboring houses and talk to people in the area to find out who built their house and who they recommend. Most builders work on a payment/work schedule so that you pay progressively as the building goes up. It is highly recommended that you do not pay the full amount in advance or pay per day.
Additionally, it is important that both you and your builder are aware that he is legally obligated to warranty the house per the civil Commercial Code, Book III, Title VII (Hire of Work), Section 600 which states: “Unless otherwise provided in the contract the contractor is only liable for defect appearing within one year after delivery of the work, or within five years if the work is for a structure on land other than a wooden building.” Finally, sourcing supplies may be done by the foreman but you will save money if you do it yourself. It’s best to have a Thai person you trust help you with dealing with the foreman, purchasing supplies and supervising the day to day construction.
You need to make sure that you have obtained the necessary power supply. It is possible to take the electric plan from the building plan to your local PEA (Provincial Electric Authority) and have them help you determine if you will need a transformer or simply a meter, how much line will be needed to run it to your house etc.
Normally, the final payment is made when the house is fully constructed. A walk through is highly recommended at this point to make sure that it meets your requirements before paying off the builder. It must be stressed that if you sign off on the inspection sheet, it means that you have accepted the building as it is and it has passed inspection.