Buying Property in Thailand
If you are a foreigner wanting to buy property in Thailand, whether a villa or condo but not certain as to how this is done. Here, you will find the basic breakdown of what needs to be done and how to buy property or any real estate in Thailand.
1. Select a Property Agent in Thailand
Since you will be looking for property in a foreign country you need expert local assistance. The real estate agent knows how to communicate in Thai and they're familiar with the geographical area. The agent will save you valuable time in selecting and showing you the property in your price range that meets your needs.
Purchasing directly from the developer isn't going to save you money as compared to buying property in Thailand from a property agent. A quality property for sale in Thailand is generally offered at a fixed price by the Seller. The best benefit of using a property agent is that they will act as a liaison between you and the Seller. They will obtain a fair price for you and act on your behalf to represent your best interests throughout the entire process.
2. Legal Planning with your Property Lawyer in Thailand
Remember that you are spending part of your life savings to acquire this property and you must carefully plan your steps in the process. You are buying property in Thailand as a foreigner and you need to know the correct legal process for you to acquire the property. Before you sign any deposit agreement or contract, you should sit down with a Thai property lawyer to discuss the legal process. Our firm can guide you through the legal process. Please contact us for more information.
3. Do a Title Search
A comprehensive examination of a title deed recorded at the Land Office should be done. You need to verify that the Seller has a clear and legal title deed of the land before you enter into a contractual agreement.
The title search will trace the land to its first possession. It will reveal any registered interests on the land such as mortgage or liens. This title search will also verify the rights reserved to access to your property; the residential zoning, environmental and planning codes applicable in the area It is a good idea to make sure that you can build a structure on the land.
4. Make a Deposit
When you feel satisfied with the property, you will be asked to make a deposit to show your good faith to continue the process.
In return, the Seller will reserve the property for you and start the process by drafting the contracts for purchase. Unless you specifically write a "get-out" clause in the deposit agreement, for example "subject to clear title" or "subject to agreement on the contract terms," the money deposited is non-refundable.
5. Review of the Thai Property Contract
The Seller will have the property contract prepared for you. Since the Seller will write the contract, it is highly recommended that you have a property lawyer to do a property contract review and the terms and conditions. You will want protection for your interests should there be a delay in the property being built. A proper remedy should be stated in the contract.
The Purchase and Sales Agreement (PSA) will contain a clause for penalty if you are late with your payment. This should be fair and reasonable to both parties should the Seller default.
Your payment schedule and its ration should be reasonable and practical. Normally, a first payment is 25 percent. Thereafter payments are made on a progressive basis: 25 percent when the roof is on, 25 percent when the door and windows are secure; and 25 percent when the fixtures and fittings are completed for instance.
Common Questions about Buying Property in Thailand
Can foreigners buy a condominium unit in Thailand?
In Thailand, foreigners may only own a condominium in his/her own name. Foreigners can take ownership of a condo by either purchasing a condo unit with a freehold title or entering into a long lease agreement, commonly known as "Leasehold". Foreigners may acquire freehold ownership of a condo unit within the set foreign ownership quota of a condominium. By law, foreigners can own up to 49% of the total saleable area of a condominium project. The remaining 51% can be acquired under leasehold ownership. Leasehold gives the right of use and possession of the unit for a set period of time and is fully transferable. The maximum lease period is 30 years with additional 30 years renewal. In most cases, developers of condominiums will offer a total of 90 years ownership (30yrs + 30yrs + 30yrs).
There are very few requirements for buying a condo in Thailand as a foreigner. However, a foreigner must remit foreign currency into Thailand in order to purchase a condo.
What are the taxes associated with and additional running costs to owning a condominium?
There is a property tax associated with owning a condo depending on the property price. All co-owners will also have to contribute to the general upkeep and running of the condominium, this required payment is known as a CAM Fee (Common Area Maintenance Fee). Your fee will be calculated per month based on the total square meter of your condominium unit.
Example: CAM Fee 50 baht per sqm, per month, condo unit size 100 sqm, total yearly fee = 50 baht X 100 sqm = 5,000 baht per month X 12 months = 60,000 baht per year.
Condos also have a special reserve fund for major repairs and upgrades of the building, this is known as a "Sinking Fund Fee".
Can foreigners buy land in Thailand?
If the foreigner wishes to acquire land and build a house, he/she should obtain a long term lease on the land (for a period not exceeding 30 years each term). Read more about "Leases in Thailand".
The foreigner should apply for the construction permit to build the house in their own name. This way the foreigner owns the house and has a secured long term lease on the land. The lease can be written with the option to reassign to another person (if you sell), ability to sublease and with a purchase option (should the law change in the future to allow freehold ownership by the foreigner). Therefore, a lease is the most common legal method for the foreigner to acquire property in Thailand.
Am I allowed to build and own any structure on land?
Legally, any building is considered as being a part of land over which such building is constructed. However, a building may be considered as a separation part when it is a tenant of land who builds a building under a leasing agreement. Therefore, a foreigner may own any building on his rented land in Thailand.
If your spouse is Thai, and you are planning to build a house on his/her land, you are recommended to sign a lease agreement with your spouse indicating that you are a tenant. This way, you shall have a joint ownership over such structure together with your spouse but not the land.
How to Buy Property through a Thai Company?
Some property buyers may prefer a holding structure, with more ownership rights than a leasehold title. In this case, it is possible to set-up a Thai company for property acquisitions, this method sits in the "grey-area" of the Thai legal system. The Thai government and the Land Offices overseeing property transfers across the country, do not encourage this practice.
For a company to be classified as a "Thai Entity", at least 51% of the shareholding needs to be held by Thai nationals. The main concern of the authorities is the unauthorized use of "Nominee Thai Shareholders", that are essentially "fake investors" used to facilitate property purchase.
However, provided foreign buyers comply with the law (Using "real" shareholders/ Thai partners), this option offers a good degree of indirect ownership and control.
This ownership structure is commonly used by investors to purchase landed property such as villas with their spouse or foreign developers looking to acquire developable land plots.
Should foreigners buy a condo or a landed property?
Ultimately it comes down to the buyer’s personal lifestyle preferences or investment objectives. Landed property oftentimes offers amazing value on a price per square meter basis; there is also the extra advantage of greater control over the land and the building. Comparatively condominiums due to their communal nature, can severely restrict refurbishments, renovations, general privacy and control. On the other hand, condominiums offer the most straightforward and liquid property type, offering foreign buyers a hassle-free purchase with a simple "exit strategy". The ease and flexibility offered by condominiums make it an appealing choice for many foreign buyers.
Why Hire Siam Legal?
In particular, our team of Thai property lawyers offers various services that are designed to protect the rights and interests of foreigners wishing to acquire properties in Thailand. Our firm offers a wide array of property-related services to best suit our foreign and Thai clients’ property needs, to include:Title Search
- Conducting a search on the title and relevant documents of the land;
- Ascertaining that the title document is in order;
- Ensuring that a seller is the current owner of the land;
- Confirm the lack of mortgage, and the lack of further encumbrances;
- Check actions against the seller in both court and the Central Bankruptcy Court;
- Verifying whether there is any restriction on the development of the land.
- Conduct a physical inspection of the land or property
- Inspection of building permits
- Research on the Seller or Developer's Credential
- Verifying the sales agreement;
- Providing comments on clauses of the sales agreement;
- Negotiate modifications as needed to protect your interest.
- Preparing the application and supporting documents;
- Registering, on your behalf, at the Land Office
You can visit our head office in Bangkok at the Two Pacific Place, 18th Floor, Unit 1806; or if you have any property questions or issues that need to be addressed, call us using the phone numbers below.