If you’re thinking of investing in property on Koh Samui, from a beachfront condo, a pool villa, to a piece of land, you should be aware of the local legal environment. As a foreign buyer in Thailand and especially in Samui, the rules vary greatly from many other countries. This guide is your way to understand what you can, can’t, and should be doing, offering you priceless tips, traps and advice, and essential keys for investing.
The general rule in Thailand is that land cannot be owned outright by a foreigner. This rule is framed by the Land Code Act, which specifies that the land is the exclusive asset of the citizens of Thailand. This has been done for the protection of national interests, to prevent land speculation by foreigners. Even though this might sound overly restrictive, it is important for any foreigner who wishes to invest in property not to violate the rule. If you are exploring the possibility of acquiring land, already knowing those regulations can be beneficial to you in avoiding potential legal troubles.
The property ownership laws are the same as the rest of Thailand when it comes to Koh Samui. Foreigners are unable to own any land in their name, but they can invest in property by buying condos or entering into lease agreements. Foreigners may own up to 49% of the total floor area in any building through the simplest way for foreign ownership. For villas or houses on land, foreigners usually prefer long-term leases, which can last up to 30 years. Alternatively, some develop Thai companies to own the land, but this is a whole new legal matter.
To make it easy to buy property on Koh Samui for foreigners – here’s a simplified process and legal/time-saving tips.
Step 1 – Define your goals
Step 2 – Property type & ownership route
Step 3 – Due diligence & legal advice
Step 4 – Negotiation & contracts
Step 5 – Transfer / registration
Step 6 – Post-acquisition responsibilities
An example of a pitfall for foreign buyers is unawareness of the foreign ownership quota in condominium buildings. As the quota for foreigners purchasing condominium units limits them to 49% based on total area, offering to buy the property without checking the quota first can result in missing out on the property you want. Secondly, it is vital to have your leasehold agreement registered. If the lease term is not legally registered at the Land Office, it is considered unenforceable by the court. Lastly, if you are considering using a Thai company to hold your property, it is imperative to avoid nominee schemes. It is a criminal act, and being caught can result in legal consequences.
In the future, there are proposals for extending lease periods to 99 years and offering more favorable conditions for foreign ownership of property. Be sure to always check the status of the property at the time of purchase. It is particularly relevant on Koh Samui because the island is popular among foreign buyers, so the demand is high, affecting both the price and the level of legal scrutiny.
However, many foreigners continue to invest in real estate in Koh Samui to enjoy the beautiful scenery, tropical weather, and relatively high standards of living. The laws on foreign ownership of property in the country may seem restricting, but they do not discourage potential investors from trying the island’s prominent tourism and rental markets. Furthermore, numerous developers on the island are familiar with ways to avoid legal issues regarding foreigners’ property ownership. They offer various solutions like leaseholds and condos that do not have any restrictions on the tenant’s nationality. Thus, Koh Samui remains a go-to destination for purchasing property, as it offers both a high standard of life and a decent return on one’s investment through renting the property out to people on vacation or longer lease terms.
DDA Real Estate offers comprehensive property solutions, lists of apartments for sale, specializing in high-quality investments in prime locations. With a focus on customer satisfaction, we provide expert guidance to ensure every client makes a confident and informed real estate decision.
