Call us now:
The legal framework of real estate in Krabi
Real estate in Krabi is subject to a legal framework that foreign investors must navigate with care. The core texts governing this area of law include the Land Code Act B.E. 2497, which prohibits foreigners from owning land, the Condominium Act B.E. 2522, which governs the purchase of condominium units, and the Thai Civil and Commercial Code, which sets out the rules for leasehold agreements and the ownership of structures. Additional instruments such as the Foreign Business Act B.E. 2542 and the Building Control Act B.E. 2522 regulate ownership through corporate vehicles and construction standards. These laws apply uniformly across Thailand, including in Krabi Province.
Table of Contents
Step 1 – Choosing the right type of property for real estate in Krabi
Before investing, foreign investors must identify which real property or real estate they can legally purchase in Thailand. The law places stringent restrictions on land ownership by foreign nationals and allows for only a few exceptions. The three main legal alternatives to property ownership are listed below.
Acquiring a condominium unit
The most straightforward real estate investment option in Krabi is the purchase of a condominium unit under the Condominium Act B.E. 2522. Section 19 bis of this Act allows non-Thai nationals to own condominium units in buildings where the foreign ownership ratio does not exceed 49% of the total floor area of all units combined. Ownership is registered directly in the name of the foreign buyer at the local Land Office, and the buyer receives a separate Chanote title deed for the unit, granting full proprietary rights.
To comply with the law, the funds used for the purchase must be transferred from overseas in foreign currency. A Thai commercial bank will then issue a Foreign Exchange Transaction Form (FETF) for each transfer exceeding the equivalent of 50,000 USD. This document is required by the Land Office to register the ownership and is also necessary to repatriate funds after resale. Furthermore, the buyer must ensure that the building is properly registered as a condominium under the Condominium Act and not a commercial or apartment structure, which would fall under different legal provisions.
Leasing land and building a house
Another option legally available to foreigners wanting to invest in real estate in Krabi is the long-term lease of land, as provided by the Civil and Commercial Code of Thailand, specifically Sections 538 to 571. These provisions allow a foreign individual to lease land for up to 30 years for residential purposes. Although the lease contract may include renewal clauses, it is important to note that under Thai law, such clauses are not enforceable against third parties unless the renewed lease is separately registered at the Land Office.
Once the land lease is registered, the foreign lessee may construct a residential building on the land and retain full ownership of the structure. This is permitted under Section 146 of the Land Code, which recognizes the separation of land ownership from building ownership, provided that the construction is declared as the lessee’s property and was financed by them independently.
The lease must be registered with the Land Office if its duration exceeds three years, according to Section 538 of the Civil and Commercial Code, and the registration fee is calculated at 1.1% of the total lease value. This structure is commonly used by foreigners seeking to build a villa in Thailand while maintaining a legally secure right of use over the land.
Acquiring land through a Thai spouse
A third path, which must be approached with great caution, is open to foreigners who are legally married to a Thai national. In such cases, land may be acquired in the name of the Thai spouse, but this right is subject to strict scrutiny. The Land Code Act B.E. 2497, specifically Section 96, prohibits foreigners from owning land, and Thai authorities are vigilant in ensuring that land acquired by a Thai spouse is not indirectly controlled by the foreign partner.
To proceed legally, the foreign spouse must sign a formal declaration at the Land Office confirming that the funds used for the acquisition belong solely to the Thai spouse and that the land shall be considered separate (non-marital) property. This declaration is made under the requirements of Section 1472 of the Civil and Commercial Code, which allows spouses to own separate property provided it is acquired with personal funds and properly documented as such.
While this route does not grant the foreign spouse any ownership rights, it may allow the couple to build a residence on the land and register the house in the foreigner’s name, subject to a building ownership agreement.
Step 2 – Due diligence for a secure real estate investment in Krabi
Before committing to any property transaction, it is essential to carry out a comprehensive legal due diligence. This process involves verifying the validity of the Chanote title deed, ensuring that the land is free of mortgages and servitudes. And in the case of Krabi, where zoning laws are possibly more stringent due to its proximity to the coast, due diligence should also include checking the zoning plans and restrictions according to the Environment Quality Promotion and Conservation Act B.E. 2535. These can impact rights of construction, especially for coastline areas, national parks or protection zones.
In addition to reviewing the title, it is necessary to examine existing building permits, any prior lease contracts, and agreements with tenants if the property is already occupied. Particular attention should also be paid to rights of access, especially for landlocked plots. Due diligence is a vital protection for the investor and should be handled by a qualified law firm.
Step 3 – Reservation agreement
Once the due diligence has confirmed that the property is legally secure, a reservation agreement is typically signed. This agreement formalizes the buyer’s intention to purchase and temporarily removes the property from the market. A reservation fee is paid to the seller or developer, and this amount is generally deducted from the final price.
The reservation agreement should state who the parties are, the price at which the purchase is being made, a description of the property, the time scale for signing the final Sale and Purchase Agreement (SPA), and how any relevant fees would be refunded if the agreement is cancelled. Although it is not mandatory, this agreement is common practice and plays an important role in securing the transaction before entering the final contractual phase.
Get expert legal guidance.
Step 4 – Sale and Purchase Agreement
The SPA is the principal contract governing the transaction. It should be drafted in both Thai and English, and tailored to the nature of the deal — whether it involves a condominium, a villa on leased land, or another type of structure. It must include detailed clauses on the payment terms, the date of transfer, the responsibilities of each party, liability in the event of a breach, and the allocation of taxes and official fees.
If the transaction involves a leasehold structure, the SPA must also address subletting rights, renewal provisions, succession planning, and any clauses relating to the ownership of buildings constructed on the land. The SPA must be signed before the appointment at the Land Office and should be accompanied by all supporting documents, including a valid passport, proof of funds, the Chanote, and, where applicable, construction permits.
Step 5 – Transfer of funds to execute a real estate investment in Krabi
According to Thai regulations, the purchase of property by a foreigner must be funded via an international transfer. This requirement ensures traceability and allows the issuance of a Foreign Exchange Transaction Form (FETF) for amounts exceeding 50,000 USD. This document is crucial for registering the property in the foreign buyer’s name and for potential future repatriation of funds.
Taxes must be calculated and paid at the time of transfer. These may include a transfer fee of 2%, withholding tax (typically 1% for individuals), stamp duty (0.5%), and specific business tax (3.3%), depending on the seller’s status and duration of ownership. For leasehold contracts, a registration fee of 1.1% of the total lease value applies. Accurate documentation of all transactions is necessary for tax reporting and legal compliance.
Step 6 – Registration at the Land Office
The final legal step is the registration of the transaction at the local Land Office. In the case of a condominium purchase, the Chanote is amended to reflect the name of the new owner. In a leasehold arrangement, the lease contract is recorded directly on the title deed of the land. This registration process gives legal effect and enforceability to the transaction.
At this stage, all fees and taxes are paid to the Land Office, and the legal documents are officially issued. The buyer then becomes the lawful holder of the property rights according to Thai law.
Additional steps: Yellow House Book and Pink Thai ID
While not strictly necessary, your life in Thailand can be made simpler if you have a Yellow House Book (Tabien Baan) and a Pink Thai ID card. The Yellow Book serves as proof of residence, whereas a Pink ID card is an ID card issued by the local District Office. Both can simplify day-to-day procedures such as opening a bank account and obtaining visa extensions.
To obtain these documents, the foreigner needs to bring a valid visa, the registered title or lease, the passport and, in some cases, a work permit or long-stay visa.
Conclusion
Krabi’s real estate represents an invaluable market for foreign investors. Thai law strictly forbids direct land ownership by foreigners, but there are alternative secure legal methods to hold property in Thailand, such as the ownership of condominium units and long-term leases. It is recommended to get the assistance of a law firm to preserve your rights as a buyer and enforce all transactions properly.
FAQ
Foreigners are prohibited from owning land in freehold but may legally own condominium units and buildings constructed on leased land. The lease must be registered, and building ownership should be clearly declared.
Automatic renewal clauses are not enforceable. It is necessary to re-negotiate a contract and re-register it with the Land Office.
Foreigners can inherit rights over condominiums and leasehold interests. A Thai will drafted according to local formalities is strongly recommended to ensure enforceability.
Taxes include a 2% transfer fee, 0.5% stamp duty, 1% withholding tax, and, in some cases, 3.3% specific business tax. Lease registration costs 1.1% of the lease value.
The buyer must present a valid passport, the Foreign Exchange Transaction Form, the Sale and Purchase Agreement, and the Chanote. Additional documents may be requested.