Handy Tips and the Know-hows for Purchasing Property in Thailand
Situated at the center of the Southeast Asian region with it’s tourist attracting slogan; Amazing Thailand, the country has been seeing a high increase of tourists visits over the years. According to 2013’s Global Destination Cities Index, Bangkok was listed as the number one tourist destination with roughly 15 million visitors.1 Seeing how attractive a destination Thailand is, it is not difficult to see why many visitors have chosen to make Thailand their second home or foresee a blooming business opportunity.
Property purchases in Thailand by foreigners have spiked in both Bangkok as Condominiums rise up to surround the current expansion of the Mass transit system attempting meet demands as well as in Pattaya, another famous tourist attraction.2 Purchase of Thai real estate in the city area or the Pattaya seaside are seen as an attractive investment with low costs yet bearing high rental yields. For the same amount you spend in your home country, you may be able to purchase a luxury Condo in Thailand’s megacity.
There are many success stories out there as well as the horror stories of property purchases in a country that generally speaks another language from you. Navigating through the Thai Sale-Purchase processes may appear daunting, however, not as difficult as it appears with some research or aid or a qualified Thai local. This article will seek to point you in the right direction.
Things That Can Go Wrong and What to Look Out For
- Unfamiliarity with the local legal system and a local measurement system may make you appear prone to being taken advantage of
- Purchaser has no right to ownership
- Seller does not or cannot validly transfer ownership
- Not knowing your rights and entitlements
- Miscommunication of intents or wants during negotiations affected by the language barrier.
- Lack of care with paper work leading to further complications that may result in loss of right.
- Problems with lease term
- Sellers or Developers defaults
- Off-plan developers fail to complete construction
Ownership of Real Estate by Foreigners
Real estate in Thailand that may be purchased includes land and buildings such as houses, condominiums and villas. As a general rule, the law prohibits if not restrict foreigners from owning any parcel of land. As buildings often form part of the land, it may pose a problem for prospective foreign buyers. This is not to say ownership is not possible. There are always some exceptions to the rule. These are options to acquire ownership of your purchased properties in Thailand;
- Individual foreigners will be allowed ownership as a freehold (to the exclusion of others) of up to 1 rai (approximately 0.40 Acres) in a specified area through the Board of Investment for residential purposes on the condition that they had to have invested at least 40 million baht into the Thai economy through government bonds for instance.3 This may not be the most practical option as one may not have such funds or equity on hand. In addition to that, ministerial approval is still required and the land you obtained is non-transferable. Furthermore, if the parcel of land is not utilized for residential purposes within 2 years from registration of acquisition, it may be disposed of by the Director-General.
- Foreign companies (juristic persons) may also own land in the same manner as foreign individuals. The trend appears to be that the Thai government will allow exemptions if the foreign company substantially contribute to the Thai economy.
- Ministerial permission to inherit property of the deceased obtained by virtue of a Treaty provision4 as a statutory heir thus allowing ownership. Unfortunately, with the current absence of treaties permitting this, you will not be capable of registering title over your inherited property and will be obliged to dispose of it within a specified time.5
2) Ownership of building
- Freehold ownership by foreigners in one building must not exceed 49% of the total ownership.6 The co-owners will jointly hold the land which the building is built upon. Foreigners who wish to purchase units in a Condominium which already reached its foreign ownership allowances can opt for ownership through leasehold.
- As buildings seldom have separate title deeds from land, you may obtain a separate title for structures or buildings by leasing the land and purchasing the building constructed on it. If you obtain permit to build structures on a lease land, you will own that structure.
- Consequentially, a building with a separate title from the land can be dealt with as the owner wishes though the correct execution of required documents.
The paperwork required to effect your transaction will be discussed on the next article.
2 Property Indicators’, Bank of Thailand (http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=102&language=eng)
3 Section 96 bis, Land Code Promulgating Act, B.E. 2497 (1954).
4 Sections 86, 93 Land Code Promulgating Act, B.E. 2497 (1954).
5 Section 94, Land Code Promulgating Act, B.E. 2497 (1954).
6 Section 19/2 bis, Condominium Act, B.E. 2552 (1979) as amended in 2008.
About the Author (Author Profile)
Pat took law at the University of Tasmania in Hobart, Australia. She completed her course and was awarded a Graduate Diploma of Legal Practice and subsequently admitted to the Supreme Court of Tasmania as a qualified Australian legal practitioner. Her language skills coupled with experience from her legal practice and work with Australia’s Commonwealth Director of Public Prosecutions enable her to provide insight on the practical differences between Thai and foreign law. She writes more on Property and Commercial cases in Thailand.