Nominee Structures in Phuket: 3 Years in Prison and Fines up to 1 Million Baht

A buyer from Shenzhen purchases a villa in Layan for 42 million baht. The land is registered to a Thai company: 51% held by two local 'partners' he met once in a lawyer's office, 49% held by him plus preferred shares carrying voting rights. The deal closes in three weeks. Eighteen months later, Thailand's Department of Special Investigation (DSI) starts looking into the company, and it turns out the Thai shareholders have no income and no verifiable source of funds for their stake. From that moment, the villa is no longer worth 42 million baht. It is worth whatever it can be sold for in a hurry.

The short answer for anyone shopping for a villa in Phuket right now: nominee ownership is illegal, and neither an LTR visa nor a 'lawyer-approved' preferred-share scheme changes that. Foreigners cannot own land in Thailand except in a handful of narrow cases, and a Thai company created purely to buy a house breaches both the Land Code and the Foreign Business Act.

Legal alternatives do exist, roughly three and a half of them, and they offer less than a nominee structure promises: a registered 30-year lease, a right of superficies over the land, usufruct, and ownership of the building itself in your own name. A condominium held under the foreign freehold quota remains the only route to full freehold ownership.

Quick Answer

• Foreigners cannot own land in Phuket directly. Section 86 of the Land Code allows exceptions only under international treaties and special statutes.

• Nominee ownership via a Thai company falls under Section 36 of the Foreign Business Act: up to 3 years in prison and a fine of 100,000 to 1,000,000 baht for both sides, plus a daily penalty until the violation is corrected.

• An LTR visa grants no land rights. It is a 10-year residence status (5+5 years), with a 50,000 baht fee, annual reporting instead of the 90-day rule, and a digital work permit. It has no bearing on land ownership.

• Land leases can be registered at the land office for up to 30 years (Section 540 of the Civil and Commercial Code). Registration fee: 1% of total rent plus a 0.1% stamp duty.

• The building itself can be owned outright. A structure is legally separable from the land: the construction permit and house sale agreement are issued in the foreigner's name, while the land is leased or held under a right of superficies.

• The 49% foreign quota in condominiums remains the only unconditional path to freehold.

Key Facts

• Phuket authorities are promoting LTR visas and 'legal ownership structures' in 2026 as an alternative to gray-area schemes for Chinese villa buyers, a clear signal that old workarounds no longer fly under the radar.

• Chinese nationals remain the largest group of foreign condominium buyers in Thailand: according to REIC data, they consistently account for roughly 38-46% of all foreign ownership transfers, depending on the quarter.

• Thai authorities have investigated 33 luxury properties across Phuket and other resort regions worth a combined 1.27 billion baht for using nominee ownership structures, according to reporting on the government's enforcement push.

• In a separate operation reported by the Bangkok Post, more than 500 officers took part in a crackdown across Phuket, Phangnga, and Krabi, resulting in 48 arrests (27 Thais, 21 foreigners) under 59 warrants, with 10 nominee-backed companies in Phuket alone found holding land plots worth 116 million baht.

• Section 96 bis of the Land Code technically allows a foreigner to own up to 1 rai (1,600 sq m) of residential land by investing 40 million baht in approved assets for at least three years, subject to Ministry of Interior approval. In more than two decades since the rule took effect, approved applications number only a handful.

• Under Section 113 of the Land Code, a Thai person holding land on behalf of a foreigner faces up to 2 years in prison and/or a fine of up to 20,000 baht.

• A proposal to extend leases to 99 years and raise the foreign condominium quota to 75% was discussed by the Thai cabinet in 2024 and shelved after public pushback. As of early 2026, the 30-year lease cap remains in force.

Why the Thai-company structure is collapsing now

For a decade, Phuket operated on an unspoken rule: a company with three Thai shareholders, a foreign director with sole signing authority, and articles of association giving one foreign share ten times the voting weight of a Thai share. Land offices registered these deals without much friction.

What changed is not the law itself but enforcement. Phuket land offices now request proof of source of funds from Thai shareholders for their stake, the DSI is actively pursuing nominee cases in the villa and short-term rental segment, and parallel investigations are targeting hillside developments above the 80-meter elevation mark, where a number of villas were built in breach of zoning restrictions.

For a buyer, this fundamentally changes the risk calculation. A nominee structure used to be a 'someday' risk. Now it is a risk triggered by any company audit, any resale, any inheritance, or any attempt to open a bank account or secure a mortgage.

What the LTR visa actually gives you, and what it does not

The program has run since September 2022, with the Board of Investment easing criteria in October 2023. Categories include wealthy global citizens (assets of at least 1 million USD, income of at least 80,000 USD a year, and a minimum 500,000 USD investment in Thailand), wealthy pensioners aged 50 and above, remote workers employed by a foreign company, and highly skilled professionals taxed at a flat 17% income rate.

The real benefits: 10 years without annual visa renewals, annual rather than 90-day reporting, a simplified airport lane, and family members included in the same application. Property investment does count toward the qualifying assets, but it creates no land ownership rights whatsoever. A land office official will not issue a chanote title on the strength of an LTR visa.

By promoting the visa alongside 'legal ownership options,' Phuket is honestly separating two different things: the right to live somewhere and the right to own it. Many sellers have learned to blur that distinction in marketing materials.

What to buy instead of a nominee structure

For a land-based villa, the only structure worth considering combines a registered 30-year land lease, ownership of the building in your own name, and a right of superficies. The lease secures the land, the superficies protects the building from being extinguished if the lease ends, and ownership of the house is confirmed through a separate sale agreement and construction permit.

Clauses promising automatic renewal for 30+30 years do not hold up in Thai courts against a new land owner. Renewal is a contractual promise from the landlord, not a right attached to the property itself. So the key question when buying is not 'how many years are promised' but who the landlord is, what happens to the lease in 25 years, and how the transfer of obligations is structured.

If your budget sits below 15-18 million baht and you are buying for yield rather than lifestyle, the entire land-based structure stops making sense: buy a condominium under the foreign quota instead. It offers freehold title, far better resale liquidity, and net yields after management costs in areas like Bang Tao and Rawai that market estimates put on par with villas, at roughly a quarter of the price tag.

One exception gets mentioned far more often than it is actually used: Section 96 bis, the 40-million-baht investment for 1 rai. The provision exists, the Ministry of Interior issues approvals, and in practice only a handful of cases have ever gone through. Do not plan a purchase around it.

Due diligence before you sign

At minimum, do not put down a deposit without:

• A copy of the chanote title (Nor Sor 4 Jor) with a recent land office extract covering encumbrances, mortgages, easements, and exact boundaries.

• Confirmation of the plot's zoning status and height restrictions under Phuket's planning rules, the main source of demolition orders on hillside land.

• A construction permit and completion certificate: a villa without them cannot be legally sold or properly insured.

• If the seller offers to sell shares in an existing company, scrutinize the company's balance sheet and history, not just the villa. You inherit its liabilities and its violations.

• The Thai-language lease agreement takes legal precedence. The English version is for your peace of mind, not for court.

Plan an inspection trip of at least five days, including a visit to the land office with your lawyer, not just viewings arranged by a developer. Build the logistics around the right area rather than convenience: the Chalong to Bang Tao road alone can eat up two hours a day during high season.

FAQ

Can a foreigner own a villa in Phuket outright?

The house itself, yes. The land underneath it, no. The structure is registered in the foreigner's name, while the plot is leased for up to 30 years with land office registration, or held under a right of superficies.

What happens if I buy through a Thai nominee company?

If the scheme is uncovered, Section 36 of the Foreign Business Act applies: up to 3 years in prison and fines of 100,000 to 1,000,000 baht for both the foreigner and the Thai nominees. The land must be divested within a deadline set by the Department of Lands.

Does an LTR visa allow me to buy land?

No. The LTR is a 10-year residence status with tax and administrative benefits. Land ownership is governed by the Land Code and has nothing to do with visa type.

Is it true that leases will be extended to 99 years?

The proposal was discussed at cabinet level in 2024 and then shelved. As of early 2026, the maximum registrable lease term for residential land remains 30 years. I would not build a purchase plan around a future reform that may never arrive.

Why is a right of superficies better than a standard lease?

A right of superficies is registered as an interest in the land itself and allows ownership of a structure built on someone else's land. It survives a change of land ownership and can be granted for up to 30 years or for life.

Can I rent out my villa on a short-term basis?

Not without a hotel license. Short-term stays under 30 days without a license violate the Hotel Act, and these are exactly the properties targeted most often in Phuket crackdowns. Monthly or longer rentals are legal.

What should I check if I still decide to buy company shares?

The Thai shareholders' source of funds, genuine business activity, tax filings for every year of operation, audit reports, and the absence of any pending land disputes. If the company exists solely to hold one plot of land, you are buying someone else's risk.

How much does legal lease registration cost?

The registration fee is 1% of total rent payable over the full lease term, plus a 0.1% stamp duty. Legal support for a Phuket villa purchase typically costs between 80,000 and 200,000 baht depending on the complexity of the structure.

Does a leasehold villa pass to my heirs?

Rights under a registered lease transfer to heirs if the agreement explicitly provides for it. Usufruct, by contrast, terminates on the death of the rights holder and cannot be inherited, which is its main drawback.

The practical takeaway: if a seller or broker offers you a 'proven company with Thai shareholders' and insists that everyone does it this way, walk away from the deal rather than negotiate the price. Ask a lawyer with no connection to the seller for a written opinion on the ownership structure before you put down a deposit. That costs two to three weeks and roughly 1% of the property price, against the risk of losing the entire plot.

Source: Bangkok Post

Ready to invest in Thailand? Our experts will help you find the perfect property.