You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

May 29, 2015

Completing Your Construction Project in Thailand

Bangkok Post, Corporate Counsellor Column

Before you embark on designing and building your dream home—or business—in Thailand, pause for a moment.  As exciting and full of potential as your project may be, the process of completing a construction project involves many rules and regulations, as well as reliance on contractors. Therefore, before committing yourself, you should know what you are getting yourself into and plan accordingly.

First, consider the nature of your construction project. Thailand has environmental and land-use restrictions that may impact possible locations for your project. Land-use and environmental restrictions are governed by the Town and City Planning Act B.E. 2518 (1975), by amendments to this act, and by ministerial regulations arising out of it.

The restrictions under the Town and City Planning Act differ from town to town and city to city. Their purpose is to formulate, execute, and enforce comprehensive city plans that promote sanitation, convenience, orderliness, attractiveness, utilization of property, public safety, economic development, social and cultural development and preservation, and so on. Land-use regulations in Thailand usually come in the form of Euclidean zoning plans that limit the uses of land in particular zones. The possible zones in Thailand include:

  • low-population residential zones;
  • medium-population residential zones;
  • commercial and high-population residential zones;
  • industrial and warehouse zones;
  • special industrial zones;
  • rural and agricultural areas;
  • recreational and environmental preservation areas;
  • national park areas;
  • educational institution areas;
  • Thai culture promotion areas;
  • religious institution areas;
  • government office and public utilities areas; and
  • communication and transportation areas.

On top of land-use regulations, there are often overlapping, location-specific environmental regulations. These regulations usually include height restrictions for buildings and restrictions on the percentage of land that can be developed.

Second, consider the design of your project. Thailand has standards for the design of building projects. These standards are outlined in the Building Control Act B.E. 2522 (1979), in amendments to this act, and in ministerial regulations issued under it. They can include standards relating to restrictions on the size, shape, and height of buildings; regulations regarding the number and design of bathrooms and toilets; and regulations prescribing the aesthetic features of buildings. Restrictions can vary based on Province, so it is important to contact the Land Department Office local to where you want to build to obtain detailed information on the restrictions.

Third, consider the construction of your project. Thailand’s construction, renovation, and alteration standards can be found in the Building Control Act B.E. 2522 (1979), in amendments to this act, and in ministerial regulations issued under it. Construction standards include quality and durability regulations regarding construction materials; regulations governing electrical, water, and gas systems; fire safety standards; requirements regarding the distance between buildings and the road or public land; safety standards in regard to construction; and so on.

Fourth, compile a reference list of permits, reports, and inspections that will be necessary for the completion of your project. A permit is required for most construction projects in Thailand. There are different types of permits, reporting requirements, and inspection requirements for construction projects, depending on their location and scope. For example, different permits and procedures are required for construction, alteration, demolition, removal, and change-of-use. Permits for construction projects can be obtained at the Land Department Office.

In order to be issued a building permit, you must already have—among other things—relevant infrastructure permits (such as water and electricity permits), relevant land development permits, and completed architectural plans. The exact list of permits, reporting requirements, and inspection requirements that will be relevant to the completion of your project will depend on the specifics of your project.

Fifth, remember that trust is good but control is better. Consider carefully who to engage in the design and construction of your project, and under which terms. Contract work is governed in Thailand by the Title pertaining to Hire of Work in the Civil and Commercial Code (Sections 587 to 607), but you will want to create a written contract between you and your contractors to ensure that expectations are clear. This will help you avoid problems down the road. A good contract should include, for example:

  • the goals and parameters of the contracted-for job, including a copy of the construction plans;
  • the price mechanism for determining the cost of the job;
  • the terms and method of payments;
  • the completion date;
  • liquidated damages for delays or breach;
  • who will provide materials and equipment;
  • quality specifications;
  • at what time the title to materials and equipment provided by the contractor passes to you;
  • insurance requirements for the project;
  • post-construction liability; and
  • mechanisms for dispute resolution.

These considerations should not stop you from pursuing your construction project in Thailand, but they should be born in mind. Otherwise, you may be opening yourself up to heavy fines, a prison sentence, the demolition of your construction project, and lawsuits.

RELATED INSIGHTS​ 

February 22, 2023
The Contract Committee of Thailand’s Consumer Protection Board has issued a new notification relating to home renovation business operations. The Notification of the Contract Committee Re: Services for Providing Renovations of Buildings for Residential Purpose as a Controlled Business in Relation to Details Regarding Payment Receipts B.E. 2566 (2023) (the “Notification”) was published in the Government Gazette on February 13, 2023, and will come into effect after 90 days (i.e., on May 14, 2023). Once the new Notification is effective, a contractor who provides residential building renovation services will be required to provide a receipt for the payment received from the customer which contains specific details, terms, and conditions as required under the Notification. Key Definitions Under the Notification, a “service for providing renovations of buildings for residential purposes” is defined as a business in which a business operator is engaged by a customer to make additions, modifications, alterations, repairs, or improvements to a building (including any house or any structure) which can be used for residential purposes, either in whole or in part. “Residential purposes” means for residing in the building (in whole, or in any part), whereby the building will not be sold, leased out, hire-purchased, or subject to other arrangements relating to the building with compensation or other benefits involved. Key Required Content The Notification requires that the payment receipt be provided by the business operator to the customer immediately upon receiving payment in whole or in part. The receipt must be clearly legible in Thai language, with a minimum font size, and include the following material terms and conditions: Details about the business operator, customer, and service, including contact information, milestones and payments, the daily penalty rate, and other related information. If the business operator is unable to complete the work within the agreed period,
January 4, 2023
Thailand has announced a reduction of the government fees for registering sale and mortgage of certain types of immovable property or condominium units in 2023. The reductions were detailed in two notifications issued by the Ministry of Interior dated December 26, 2022, and published in the Government Gazette on January 3, 2023. These two notifications, which will remain in effect through December 31, 2023, are part of the government’s efforts to strengthen the real estate business sector and encourage property ownership. They set government fees for registration of sale and mortgage of immovable property or condominium units as follows: Sale of immovable property or condominium unit: 1% of the officially assessed value (reduced from 2%) Mortgage of immovable property or condominium unit: 0.01% of the mortgage amount (reduced from 1%) The above reduced rates apply only to the sale and mortgage to Thai individuals of detached houses, semidetached houses, row houses, commercial buildings, and the land surrounding these buildings, as well as of condominium units. The property sale price, officially assessed value, and mortgage amount each must not exceed THB 3 million (approximately USD 90,000). To qualify for the reduced mortgage registration rate, the sale and mortgage must be registered at the same time. For more details on the reduced fees, or on any aspect of property law in Thailand, please contact Chaiwat Keratisuthisathorn at [email protected].
December 29, 2022
On December 20, 2022, Thailand’s cabinet approved draft legislation providing further Land and Building Tax reductions of 15% in 2023, on top of current reductions in tax rates, on some types of taxable property. When enacted, the legislation will provide further tax reductions only for the property types in the table below. Moreover, in early December, Thailand’s Ministry of Interior promulgated an announcement extending the deadline for tax assessment notification and tax payment (including by scheduled installments) by another two months from the previous statutory deadline of December 20, 2022. The key deadline extensions are shown in the table below. The Land and Building Tax is a property tax collected annually, with rates varying based on the purpose of use—agricultural, commercial, industrial, or residential. Owners or possessors of land or buildings are liable for Land and Building Tax, which is computed based on the officially appraised value of the property. For more information on Thailand’s Land and Building Tax, please contact Auaychai Sukawong at [email protected] or Chaiwat Keratisuthisathorn at [email protected].
December 8, 2022
Experts on Vietnamese real estate law from Tilleke & Gibbins provided the chapter on Vietnam for Practical Law’s Commercial Real Estate Global Guide 2022, a high-level comparative overview of commercial real estate laws and regulations in 31 jurisdictions worldwide. The main topics include the following, among others: Real estate investment structures, including REITs Sale of real estate Liability Due diligence Warranties Real estate tax, including VAT and stamp duty/transfer tax; Climate change targets Restrictions on foreign ownership Real estate finance Commercial leases Planning law The chapter also highlights recent trends in the condominium, office, and retail sectors of the Vietnam real estate market. To read the Vietnam chapter, please visit the Practical Law website or click on the link below.