Starry Research | "Land Purchase and Factory Construction" Series Issue 3: Principal Methods for Foreigners to Obtain Land Use Rights in Thailand

In the previous issue of the "Land Purchase and Factory Construction" series, we introduced the classification of factories in Thailand and key points for their construction and operation. In this issue, we will discuss the principal methods by which foreigners (companies) may obtain land use rights in Thailand, along with the relevant considerations.

I. Basic Provisions of Thai Law

As a fundamental principle, Thai law expressly provides that foreigners may not own land within the Kingdom. This restriction reflects the core national policy of reserving land rights — land is regarded as a fundamental national resource — and is designed to prevent foreigners from excessively accumulating or monopolising land, which could potentially affect national security and the overall economy.

The Thai Land Code also contains restrictive provisions regarding the acquisition of land ownership by foreigners, including:

Section 86 of the Land Code provides that foreigners may acquire land only by virtue of a treaty granting the right to own immovable property, and such acquisition shall still be subject to the conditions prescribed by this Code.

Section 84 of the Land Code provides that foreigners may acquire land for the purposes of residence, commerce, industry, agriculture, burial, public charity, or religious purposes, subject to the conditions and procedures prescribed by ministerial regulations and with the approval of the Minister.

It is therefore evident that Thai law permits foreigners to acquire land-related rights only through limited channels.

In general, the methods by which foreigners may obtain land use rights in Thailand fall into two main categories: leasing and purchasing, each involving distinct legal considerations.

II. Land Leasing

(I) Lease Term

Foreigners may enter into land lease agreements with the land owners in Thailand in order to use land on a leasehold basis.

Thai law permits a single lease term of up to 30 years, which may be renewed twice, with each renewal period also up to 30 years, resulting in a maximum total lease term of 90 years under a single land lease arrangement.

(II) Purpose of Lease

Leased land may be used for residential purposes or for the conduct of commercial activities, such as for use as an office, factory, or warehouse.

(III) Execution and Registration of Lease

A land lease agreement must be made in writing and registered with the Land Office in order to have legal effect and be enforceable.

A foreigner, as lessee, is entitled to use the land in accordance with the terms of the lease agreement. Where the lease agreement so permits, the leasehold interest may be assigned to another party, and any such assignment must be registered with the Land Office.

III. Land Purchase

(I) Acquiring Eligibility to Purchase Land Through a Thai Legal Entity

Where a foreigner invests in Thailand through the establishment of a company, and more than 50% of the shares or the invested capital in the shareholding structure is held by Thai shareholders (including Thai natural persons or Thai-controlled companies), such company is regarded as a "Thai entity" rather than a "foreign entity" under Thailand's Foreign Business Act and is therefore not subject to the restrictions under Thai law on the acquisition of land ownership by foreigners, and may lawfully own land.

It should be noted, however, that if such a shareholding structure is designed to circumvent the restrictive provisions of the law by having Thai persons hold shares on behalf of foreigners (i.e., nominee shareholding arrangements), such conduct constitutes an illegal act and may give rise to serious legal consequences, including fines or imprisonment.

(II) Acquiring Eligibility to Purchase Land Through Obtaining an Investment Promotion Certificate Issued by the BOI

Under the Investment Promotion Act, foreign enterprises that have applied for and been approved by the Thailand Board of Investment ("BOI") to receive an Investment Promotion Certificate (commonly referred to as a "BOI Certificate") may acquire the corresponding land in accordance with their approved investment plan for the construction of offices, production facilities, and employee accommodation.

1. Land for Office Use

A foreign company holding a BOI Certificate is entitled to own land for office purposes, subject to the conditions prescribed by law and BOI notifications. In such cases, the company's paid-up registered capital must not be less than THB 50 million in order to apply for approval of land ownership.

Furthermore, the maximum area of land that a BOI-promoted foreign company may hold for office use is 5 rai (approximately 8,000 square metres), so as to prevent excessive accumulation or monopolisation. This restriction is intended to strike a balance between the opportunity for foreigners to hold land for commercial operations and the need to protect national land resources.

2. Land for Employee Housing

In addition to office use, a BOI-promoted foreign company may hold land for the purpose of providing housing for its workers, up to a maximum area of 20 rai (approximately 32,000 square metres). The land must be equipped with basic facilities in accordance with labour standards, including parking areas,  first aid room(s),  kitchen or dining area(s), and recreational space, in order to comply with the policy objective of promoting workers' welfare. Furthermore, the employee housing must be located within 10 kilometres of the workplace so as to facilitate commuting, reduce the burden on traffic, and enhance work efficiency.

3. Permitted Land Uses

Although a foreign company may hold land pursuant to a BOI Certificate, the permitted use of such land is strictly limited to the scope approved by the BOI, such as offices, production facilities, or employee housing. BOI legislation and notifications expressly prohibit the use of land for immoral or unlawful purposes, including unauthorised commercial activities or the leasing of land to third parties for purposes unrelated to the promoted business.

4. Land Ownership Following the Expiry or Revocation of BOI Certificate Benefits

The right to hold land pursuant to a BOI Certificate is tied to the company's promoted status. When a company's BOI Certificate expires or is revoked, the company must sell or transfer the land within one year from the date of expiry or revocation. This provision is designed to prevent foreign companies from retaining land ownership after losing their legal basis for doing so, and to ensure that land rights revert to the framework of Thai law, in accordance with the fundamental principle that "foreigners are, in principle, prohibited from holding land."

(III) Acquiring Eligibility to Purchase Land Through Admission to an IEAT Industrial Estate

When a foreign company qualifies for admission to a special industrial estate supervised by the Industrial Estate Authority of Thailand (IEAT) — such as a General Industrial Zone (GIZ) or a Free Zone (collectively referred to as an "IEAT Industrial Estate") — it becomes eligible to enjoy a range of non-tax incentives, including the right to hold land ownership within the IEAT Industrial Estate.

A foreign company may enter into a land purchase intention agreement with the landowner within the IEAT Industrial Estate, and upon obtaining admission approval to the IEAT Industrial Estate, may pay the land purchase price and complete the land transfer registration procedures in order to acquire land ownership. It should be noted, however, that the use of land acquired by a foreign company within an IEAT Industrial Estate is limited to industrial production or other related purposes (such as the establishment of an office, factory, or warehouse).

(IV) Acquiring Ownership of the Corresponding Common Land Areas Through the Purchase of a Condominium Unit

Under Thailand's Condominium Act, foreigners are permitted to purchase condominium units and to enjoy co-ownership of the common land areas, provided that the aggregate foreign ownership does not exceed 49% of the total unit area in the project.

The Condominium Act separates unit ownership from land ownership, with the land portion being held collectively by all unit owners in the form of co-ownership.

In brief, a foreigner may purchase an eligible condominium unit in Thailand and thereby indirectly enjoy co-ownership of the common land areas corresponding to that unit through the holding of the condominium title.

1. Foreign Ownership Quota

The aggregate area of condominium units held by foreigners must not exceed 49% of the total unit area within the project. For example, in a project with a total unit area of 10,000 square metres, the aggregate area held by foreigners must not exceed 4,900 square metres.

2. Co-ownership of Common Land Areas

Although foreigners may not directly own land, the purchase of a condominium unit confers on them co-ownership of the common areas (such as walkways, lifts, parking spaces, gardens, and swimming pools). This co-ownership is indivisible — meaning it is proportionate to the area of the individual unit — and cannot be sold separately from the condominium unit.