Buying a Condo in Thailand
Foreigners who wish to own a condominium unit in Thailand must take note of the legal requirements before buying a condominium in Thailand. There are several considerations which need to be complied with as provided for under Thai laws.
Section 19 of the New Condominium Act 2008 allows foreigners and juristic persons regarded by law as foreign may hold ownership of a condominium unit if they fall under the following:
- Foreigners permitted to have residence in the Kingdom under immigration laws;
- Foreigners permitted to enter into the Kingdom under the investment promotion law;
- Juristic persons registered under Thai law;
- Juristic persons which obtained promotion certificate under the investment promotion law; and
- Foreigners or juristic persons regarded by law as aliens who have brought in foreign currency into the Kingdom or withdraw money from Thai baht account of the person who have residence outside the Kingdom or have withdraw money from a foreign currency account.
The Act also states that each condominium shall have foreigners (individuals) or corporate has a holding ownership in the units collectively not exceeding forty-nine percent (49%) of the total number of units of such particular condominium at the time of its registration.
For ease in acquiring ownership of a condominium unit in Thailand, the following steps are recommendedSTEP 1: Finding Real Estate in Thailand
Real Estate in Thailand has taken off in the past decade with more foreigners' wishing to retire in Thailand. In the conduct of your search, you may want to take down the type, price, location and the purpose of acquiring such property. You must always consider the following:
- Always make use of registered lawyers in Thailand;
- Always make use of reputable estate agents when taking advice on real estate in Thailand;
- See the glossary of Real Estate Terms and the Real Estate FAQs when you start your search for Real Estate in Thailand.
- Be it in Bangkok, Pattaya, Hua Hin or anywhere in Thailand, be aware that many of the problems that do arise from the purchase of a condo in Thailand can be avoided early on in the property search;
- You may also want to read up on Real Estate pitfalls in Thailand when going out on your search.
- Ask the right questions to avoid costly litigation.
The real estate market of Thailand remains highly diversified, with a wide variety of properties in many considerable areas.STEP 2: Consulting a Lawyer in Thailand
Buying any Real Estate in Thailand be it a house or a condo requires the services of a reputable law firm. Once you have decided which real estate you are going to purchase, always consult a lawyer before signing any documents. The following would be checked amongst other property services:
- A title search over the property. This is done to determine and lawfully confirm that the property belongs to the Seller and has authority of disposal over the property.
- Note the type of Title Deeds in Thailand
- Review the contracts before signing. A Sale and Purchase Agreement is a binding and legal contract between two parties that obligates a transaction between the Buyer and the Seller.
- The considerations to bear in mind when you are buying a condo off plan:
- New projects tend to be more expensive compared to completed or older projects;
- You would need legal advice as to buying in pre construction projects.
- Individual units in an off-plan projects are differently priced based on unit floor, direction/orientation of unit and layout; and
- Timing of price increases of individual units in off-plan projects.
At this time, negotiation with the Seller and the Developer can likewise be made. Negotiation normally involves the price of the property, distribution of taxes and fees between the parties, payment terms as well as the date of transfer of the title deed. The Buyer is expected to pay a deposit depending on the type of property being purchased.
The Sale and Purchase Agreement finalizes the terms and conditions of the sale, and it is the culmination of the negotiation between the buyer and the seller.
When the agreement has already been agreed and signed by the parties, there will be a need to transfer the money from overseas into Thailand in order to obtain a freehold ownership of the condominium unit. It is important to note the following:
- The amount is of foreign currency;
- The money must come from overseas;
- The purpose of transfer must be clearly specified, such as purchase of a condominium unit; and
- Secure a certificate of foreign exchange transaction from the recipient bank.
Each year many people come here to enjoy their holidays in the comfort of a second home or their most treasured property investment in Thailand.
Obtaining a mortgage to finance your purchase of property in Thailand is possible. There are currently two banking institutions which provide mortgage bonds to foreigners. They are Bangkok Bank and United Overseas Bank (UOB). These mortgage bonds are concluded 'off-shore' at their Singapore branch.
The home loans they provide to foreigners are based in foreign currencies. Your home loan/mortgage bond would be provided in either Japanese Yen, Euro or US Dollar. The interest rates also vary with each currency.
You can read more about the Mortgage Bond for Foreigners in Thailand.
Transfer of The Title Deed
The registration of the transfer of property ownership from the owner or developer to the power will take place at the Land Office with jurisdiction over the place where the property is situated. The process of transferring ownership takes place normally occurs upon completion of the development of the property, signing of the Sales and Purchase Agreement and upon payment of the selling price. The remaining balance of the purchase price is normally paid on the day of transfer at the Land Office. Usually, buyers give the power of attorney to their lawyers or agents to complete this procedure. During this transaction at the Land Office, the following fees shall be paid:
- Transfer fees at the rate of 2% of the appraised value of the property;
- Stamp duty at 0.5% of the assessed value or the actual selling price;
- Specific Business Tax of 3.3% calculated on the basis of the government appraised value of the actual selling price; and
- Income tax.
Payment of the abovementioned fees will be negotiated between the Seller and the Buyer and likewise stipulated in the Sale and Purchase Agreement.
In acquiring ownership of condominium units, it is a must for investors to be selective and carefully assess the project’s qualities and investment potential.
If you have any property questions or issues that need to be addressed, please contact us.