Open your real estate agency in Thailand: legal requirements and key considerations

Can foreigners open a real estate agency in Thailand?

Foreigners cannot fully own a real estate agency in Thailand due to restrictions under the Foreign Business Act (FBA). According to Thai law, foreigners can only hold up to 49% of the shares in a Thai limited company that operates a real estate business. The remaining 51% of the company must be owned by Thai nationals.

While foreign nationals cannot fully own the business, they can still play an active role in managing the agency. Foreigners are allowed to be directors of the company, meaning they can oversee operations, handle management tasks, and make executive decisions. However, all property transactions and direct interactions with clients must be conducted by Thai real estate agents, as only Thai nationals are legally permitted to act as agents.

This legal structure means that while a foreigner may not have majority ownership, they can effectively manage the company, provided that they comply with the ownership regulations and hire Thai nationals as real estate agents.

What are the visa requirements for opening a real estate agency in Thailand?

Foreigners planning to open a real estate agency in Thailand must ensure they hold the appropriate visa for conducting business activities. The Digital Nomad Visa (DTV) is not suitable for this purpose, as it is designed for remote workers and does not allow business activities within Thailand.

The following visa options are more appropriate for foreigners looking to establish a real estate agency:

• Non-Immigrant Business Visa (Category B): This visa is suitable for individuals intending to start or run a business in Thailand. It allows for a stay of up to one year, with the possibility of renewal. To apply for a Non-B Visa, a Thai company must sponsor the applicant, usually the company they are establishing.

• Work Permit: In addition to a Non-B Visa, a work permit is required to legally work in Thailand. This permit is linked to your specific business activities and is typically issued once your company is set up and registered.

• Investment Visa: Foreigners planning to invest substantial capital into a business in Thailand may qualify for an Investment Visa. This visa requires a minimum investment of 10 million baht in Thai property or business ventures.

• SMART Visa: While primarily for entrepreneurs in innovation or technology sectors, the SMART Visa could be an option for those incorporating tech-driven real estate services. It offers a more flexible structure for foreign investors.

What are the key steps for setting up a real estate agency?

• Company Registration

The first step to establishing a real estate agency is registering the business with the Department of Business Development (DBD). Foreigners typically opt for a Thai limited company structure. According to Thai law, foreigners can own up to 49% of a limited company, while Thai nationals must hold the remaining 51%. However, you do not need a specific license for running a real estate agency, as it falls under general business activity regulations.

• Capital Requirements

For foreign-owned companies, the minimum registered capital required is 2 million baht per foreign work permit. This capital requirement ensures that the company can support its foreign employees and meet the legal obligations tied to business operations in Thailand.

• Hiring Thai Agents

As per Thai law, only Thai nationals can be employed as real estate agents. This means that while foreigners can own and manage a real estate agency, they cannot personally handle property transactions or represent clients. Employing Thai nationals as agents ensures compliance with Thai regulations and allows the business to operate smoothly.

What are the legal responsibilities of real estate agencies?

• Fiduciary Duties

Real estate agencies are bound by fiduciary duties, requiring them to act in the best interest of their clients. Under the Civil and Commercial Code, agents must act with care, honesty, and integrity. If an agent misrepresents material facts about a property or acts negligently, they can be held liable for any resulting damages.

• Transparency in Fees

Agencies must be transparent about their fees and commissions. Typically, real estate agents in Thailand charge a commission of 3-5% of the sale price, which must be clearly disclosed to both the buyer and the seller. Failure to communicate these fees can lead to legal disputes, with clients having the right to take action for breach of contract.

• Compliance with Tax Laws

Real estate agencies in Thailand are also required to comply with tax regulations. This includes registering for value-added tax (VAT) and ensuring that VAT is charged on their services. The current VAT rate in Thailand is 7%, and agencies must file monthly tax returns and comply with all relevant financial reporting requirements.

How do foreign investors benefit from using real estate agencies?

Foreign investors face a unique set of legal considerations when entering the Thai property market, particularly due to restrictions on land ownership for non-Thais under the Land Code Act of 1954. While foreigners cannot directly own land in Thailand, they can still invest in property through permissible channels such as purchasing condominiums or leasing land under specific legal frameworks.

Real estate agencies play an essential role in assisting foreign investors to navigate these legalities in full compliance with Thai law. Agencies provide services that help investors secure long-term land leases—up to 30 years with an option to renew—as well as facilitate condominium purchases, which foreigners are permitted to own under Thai law (up to 49% of the units in a condominium building).

These agencies ensure that transactions are legally sound, particularly when it comes to registering leases with the Land Department or advising on permissible investment structures that comply with Thai regulations. By relying on a professional agency, foreign investors can ensure that all procedures are followed properly, reducing the risk of legal disputes or regulatory issues in the future.

What should investors look for in a reputable real estate agency?

Foreign investors should carefully select a reputable real estate agency when entering the Thai market. Here are some key points to consider:

• Proven Track Record: Look for agencies with a solid reputation and extensive experience in the local market. An agency’s ability to handle transactions involving foreigners and a deep understanding of Thai property law are critical.

• Qualified Thai Agents: As only Thai nationals can serve as real estate agents, it is important to ensure the agency employs well-trained and professional Thai staff who understand the legal intricacies of property transactions.

• Professional Memberships: Real estate agencies that are members of organizations such as the Real Estate Information Center (REIC) or the Agency for Real Estate Affairs (AREA) tend to adhere to higher ethical standards. Membership in these organizations can provide added assurance that the agency operates within the law and provides reliable service.

• Legal Support: Ensure that the agency’s contracts and agreements are reviewed by a qualified lawyer familiar with Thai real estate law. This is particularly important for foreign investors, who face additional complexities regarding land ownership and property transactions.

Conclusion

While there is no specific license required to open a real estate agency in Thailand, the process involves navigating several legal requirements, especially for foreign investors. Foreigners can own and manage a real estate agency, but they must hire Thai nationals as agents to comply with Thai law. Additionally, obtaining the appropriate visa and work permit is essential for foreigners intending to operate a business in Thailand.

Real estate agencies are invaluable for foreign investors looking to enter the Thai property market, offering critical services that help navigate the complexities of land ownership and property transactions. By working with reputable and licensed agencies, investors can ensure compliance with Thai law and secure their investments in a dynamic and growing market.