Keith Mack
Cambodia's complex property laws have historically prohibited foreigners from owning land. However, there are several alternative methods for foreigners to acquire land and property, including long-term leases, forming a land-holding company, and purchasing condominiums. The Cambodian government is facing increasing pressure from the private sector to relax these restrictions, potentially reshaping the country's political and economic landscape. This topic has sparked debates about the definition of ownership and the delicate power dynamics between the government and private interests.
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What You'll Learn
Foreigners can own strata-titled condominiums
In Cambodia, only Cambodian citizens or entities can legally own land or landed properties. Foreigners cannot own land in their name, but they can buy land by forming a Cambodian company with at least 51% Cambodian ownership.
However, foreigners can own strata-titled condominiums or strata-titled commercial units with a 100% freehold hard title. This is thanks to the Law on the Management and Use of Co-Owned Buildings (2009), also known as the Strata Law. This law grants full ownership rights to foreigners looking to own property in Cambodia. It is particularly popular in urban areas, providing a straightforward path to property ownership.
It is important to note that older apartment buildings, constructed before the introduction of the Strata Law, are considered landed properties and cannot be legally owned by foreigners. Additionally, not all high-rise apartments built after the law's introduction are strata-title-ready. Therefore, it is essential to verify the strata title status of a condominium project before purchasing.
When purchasing a strata-titled condominium, it is crucial to seek professional assistance from a reputable and registered property agency and a Cambodian lawyer. They can provide guidance and support throughout the process, ensuring a smooth and secure transaction.
Another option for foreigners seeking property ownership in Cambodia is to apply for the Cambodia My Second Home (CM2H) visa. After five years of holding this visa, individuals become eligible to apply for Cambodian citizenship, which grants the same property ownership rights as Khmer citizens.
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Foreigners can enter into long-term lease agreements
In Cambodia, foreigners cannot own land, as per Article 44 of the Cambodian Constitution. However, they can enter into long-term lease agreements, which guarantee their rights over the property. These leases are typically for 50–99 years and can be renewed. They can be used for residential, commercial, or agricultural purposes.
Long-term leases in Cambodia are similar to general leases but have some key differences. For instance, they have a minimum term of 15 years, must be registered, and the rental amount can be increased or decreased upon request. The lease can be terminated if either party deems the rental inappropriate due to changing circumstances. Upon termination, the lessee is not required to return the property in its original form, but the lessor can acquire ownership of any improvements without providing compensation.
Foreigners can also form a Land Holding Company (LHC) in Cambodia, where a Cambodian national owns 51% and the foreigner owns 49%considered a Cambodian entity and can own land. The LHC can then enter into a perpetual lease with the foreign party, ensuring their rights over the land for up to 50 years. This lease can be used as a mortgageable asset to access financing.
Registration of a long-term lease provides additional security to the lessee, as it functions as an encumbrance on the title. The lease must be certified by the local Sangkat and registered with the relevant Cadastral officials and Land Office. The process can take between 6 and 12 months.
While long-term leases offer some protection, there are other options for foreigners seeking to own land in Cambodia. These include purchasing condominiums with a "strata title," which grants full ownership rights to the unit, or using a nominee structure, where a Cambodian national legally owns the land.
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Foreigners can set up a land-holding company
According to Article 44 of the Cambodian Constitution and the 2001 Land Law, foreigners are prohibited from owning land in Cambodia. This applies to both foreign individuals and foreign-owned companies. However, foreigners can set up a land-holding company (LHC) in Cambodia through a joint venture business type. The majority stake of 51% in the LHC must be held by a Cambodian national partner or a foreigner with Cambodian citizenship. The minority stake of up to 49% can be held by the foreign partner(s).
By setting up an LHC, the minority shareholder (the foreigner) can gain 100% of the rights to make decisions within the company. Foreign shareholders can also veto any decisions to sell the land or landed properties owned by the business without their full consent. An LHC is legally able to purchase, rent, and sell landed properties in Cambodia.
The key downside of this approach is the high registration fees for the initial company setup, annual business administration costs, and a higher tax burden when holding, renting, or selling property assets held by the LHC. Additionally, foreigners must remember that they cannot own the land, only the building and business.
Another option for foreigners is to enter into long-term lease agreements for land, houses, or commercial properties. These leases are typically for periods of 50 to 99 years and can be renewed. They provide benefits similar to ownership, including the ability to inherit or transfer the lease.
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Foreigners can use a nominee to skirt the law
According to Article 44 of the Cambodian Constitution and the 2001 Land Law, foreigners are prohibited from owning land in Cambodia. This applies to both foreign individuals and foreign-owned companies. Foreigners can, however, own strata-titled condominiums or strata-titled commercial units with a 100% freehold hard title.
To get around the law, foreigners can use a nominee structure, which involves nominating a Cambodian national to be the legal owner, or nominee, of the land. The nominee agrees to hold the land in their name for the benefit of the foreigner and not to sell the land without the foreigner's consent. To further strengthen the arrangement, the foreigner can act as the loan provider and mortgage the property, registering the mortgage at the relevant Land Office. This prevents the sale of the land or its use as collateral without the foreigner's approval.
While using a personal nominee such as a friend or relative is an option, it is risky as they could sell the land without your consent. A safer option is to use a professional nominee from a trusted service provider such as a long-established and fully registered real estate agency or law office. These nominees are backed by the reputation of their company and are therefore unlikely to act against your interests.
Another option for foreigners seeking to own land in Cambodia is to form a Land Holding Company (LHC) with 51% Cambodian ownership. This allows foreigners to indirectly own land and a wider range of properties. While this option requires more initial setup and ongoing management, it offers significant flexibility in the types of properties that can be acquired.
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Foreigners can buy land via a trust
According to Article 44 of the Cambodian Constitution and the 2001 Land Law, foreigners are prohibited from owning land in Cambodia. This applies to both foreign individuals and foreign-owned companies. However, foreigners can buy land in Cambodia via a trust.
The Trust Law of Cambodia, established in 2019, allows foreigners to buy and control single or multiple plots of land. Trusts can also help foreign investors safeguard assets from creditors, lawsuits, and other third-party risks, as well as facilitate tax reduction. Additionally, trusts can aid in matters of succession, allowing the safe and effective passing of properties and other assets to children and next of kin upon death.
However, the main downside of trust holdings is the cost of setting up and maintaining the trust, which may not be feasible for smaller-scale investors. It is also recommended that, in addition to the trust agreement, the property being purchased is also mortgaged using the foreigner's name as the loan provider. This helps to strengthen nominee holdings and prevent the sale of the land without the foreigner's consent.
Another option for foreigners looking to acquire land in Cambodia is to set up a land-holding company with at least 51% Cambodian ownership. This option provides significant flexibility in terms of the types of properties that can be acquired and is suitable for foreign investors making substantial investments or developing commercial properties.
It is important to carefully consider the different options available and seek legal advice before making any decisions regarding property ownership in Cambodia.
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Frequently asked questions
According to Article 44 of the Cambodian Constitution, only Cambodian citizens can own land.
Foreigners can own strata-titled condominiums or commercial units above the ground floor with a freehold hard title. Older apartment buildings are classed as landed properties and cannot be legally owned by foreigners.
Foreigners can enter into lease agreements for land, typically for 50-99 years, with the possibility of renewal.
Foreigners can set up a land-holding company in Cambodia, which is then able to purchase, rent, and sell landed properties. Alternatively, they can use a nominee, putting the title in the name of a Cambodian national, although this is considered unconstitutional.
There are growing tensions between the country's private sector and its rentier political elite. The private sector has requested that foreigners be allowed to purchase and own land, but the government has not yet acquiesced.
