Real Estate Buying Process Thailand

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 Welcome

In recent years, property investment in a different country has become more commonplace. Whether these properties are used for living or business even as a holiday home, buying property in another country than your home country is often a complicated process. Buying or owning property in Thailand is particularly complex due to the legislation pertaining to foreign ownership of land in Thailand.

Thailand is one of the most beautiful holiday destinations in the world and many foreigners consider owning their own little piece of paradise after they have enjoyed a vacation there. However, there are several constraints to owning land in Thailand when you are not a resident and before you begin the process you should consider your options carefully. We will go through the process step by step and detail the potential pitfalls in this document.

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You want to buy property in Thailand

If you have your heart set on owning property in Thailand, then there are a couple of key aspects that you need to consider. These are the major regulations pertaining to foreign property ownership in Thailand:

  • Foreigners can never own land in Thailand.
  • Foreigners can only own property (buildings or structures) in Thailand.
  • Ownership can never be more than 49% regardless of how you do it.

If you have your heart set on owning property in Thailand, then there are a couple of key aspects that you need to consider. These are the major regulations pertaining to foreign property ownership in Thailand:

These are the major considerations for property ownership in Thailand for foreigners. Firstly, legislation in Thailand stipulates that land ownership is exclusively for Thai citizens. The law is aimed at keeping the land for local ownership and to prevent exorbitant pricing of property due to foreign bidding. As a foreigner, you may own the property on the land if you comply with certain legal stipulations which we will detail shortly.

Secondly, as a foreigner, you are only able to own the property on the land such as the structure or in the case of condominiums, the buildings. Ownership is once again subject to specific laws and we will discuss them further on in this document.

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1. Type of ownership

Once you have identified the property that you want to purchase, you must decide on one of two options of ownership as each has their own legal process and requirements. The options are:

  • Leasehold of 30 years.
  • Through a Limited company in Thailand.

Each of these options has specific legal requirements and need to be considered carefully. Regardless of which option you choose, we suggest that you get specific legal advice from a reputable local legal firm to ensure that you do not get defrauded or get stuck in legal processes for an extended time.

Leasehold

The leasehold option is a simple a 30-year lease of the property on the land from the owner that may be renewed up to 3 times. The renewal should be negotiated ahead of time to ensure that descendants may not change the conditions of the lease or terminate the agreement.

Limited Company

If you use a limited company, you can only own 49% of the share in the company with the remaining shares owned by a local company or citizen. In the agreement, the 51% shares owned locally and specifically the management rights of these shares must be signed over to you. However, you must keep in mind that this process is closely monitored by the Thai government and your business dealings must be compliant to the relative Thai laws or you will suffer the consequences.

NOTE: In each of the above you must ensure that all details are 100% accurate on all documents and agreements, especially details regarding ownership and title deeds.

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2. Type of property

Considering the above-mentioned legalities, most investors choose to purchase a condominium rather than the complicated land/property ownership process which involves legally marrying a Thai woman. However, this too has rules to comply with.

Foreigners can only own up to 49% of the property such as condominiums, which means simply that if there are 100 units built on the land then foreigners may only own 49 units and the balance must be owned by Thai citizens and this must be confirmed with documentation.

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3. Finding the right property

Finding the right property does take some time and impatient investors might be tempted to search unassisted but this could be costly. We suggest that you get yourself a professional property manager or agent to locate potential properties for you.

There are several options for foreigners when it comes to property which are

  • Apartments
  • Condos
  • Villas

Each of the above has their own pros and cons and should be carefully considered based on aspects such as:

  • Public transport and main road access
  • Utilities such as hospitals and retail complexes
  • Average pricing of similar properties in other areas

If you do your own shopping for properties then you need to remember that although only about 20% of the market is represented by agents, that using an agent will reduce the possibility of any problems occurring.

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4. Buying and Deposits

Once you have selected your property, you must negotiate the deposits and this legal process must be dealt with by a professional local lawyer, preferably one that has had dealing with the agent or is familiar with the area.

Always ensure that any funds that change hands are accompanied by a detailed legal agreement that is signed by both parties and stipulates the exact conditions of the deposits as well as the contract terms.

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5. Contracts

The generally accepted deposit is normally 10% of the purchase price and once the standard purchase contract is signed then you get your deposit back from the current owner to add into the total price. However, you will lose your deposit if you decide on a different property after signing the purchase contract.

The purchase contract is a standard purchase agreement as used by most of the world and you should have your legal advisor read through it before you transfer the deposits and sign.

The purchase contract must be signed by both parties at the Land Department Office. These details are on the Land Department website that has an English translation. Currently, it is crucial to ensure through your lawyer that all details on the contracts are 100% correct.

The details that need to be on the purchase contract are:

  • Passport or ID card
  • House Registration Document (Tabien Baan) (contains details of who lives on the property, not the owner)
  • Marriage or divorce certificate
  • Power of Attorney form (if applicable)
  • Title Deed for property

The above is just some of the details that must be confirmed before signing the contract. The house registration document contains details of the person or entity that leases or owns a property with their details registered at the land office or owns land or condo via a company.

Regardless of how you decide to purchase property in Thailand, there are certain important documents and details that must be confirmed before you exchange any funds with anyone in respects of any property. These are as follows:

  • Specific Title Deed of property or land in question to confirm the full details of the current owner and details of the exact property allowed on the land as determined by the Thai Land Department.
  • Property Tax in regards to the land and property are the responsibility of the owner and you should confirm that all taxes and fees are up to date. This information is obtainable from the Land Department as well.
  • With reputable local legal advice, you will have the best possible assistance in finding and securing property in Thailand. The local lawyers are well versed with the process of buying property and will be able to guide you through the process of securing a worth-while property.

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6. Tax

Normally the property tax is between 3-8% annually on the property and this does depend on factors such as length of ownership and whether your name is on the house registration documents. You will also have to pay income tax when you sell the property in the future as there is no capital gains tax in Thailand. This is normally in the region of 1-3% of sale price and the length of ownership also has an influence on the cost.

The taxes associated with property ownership in Thailand are low in comparison to the rest of the world and if you are looking for investment property, low tax rates could factor in heavily. As the seller is responsible for the tax payments on the land and property as well as the taxes associated with the sale of the property, you as the buyer only need to confirm that these fees are up to date through the Land Department and the Title Deed.

Buying a property in Thailand as a foreigner might have certain restrictions associated with it, however, it does not have any exorbitant fees or taxes as required by Thailand laws.

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7. Mortgages

Foreigners only recently gained the ability to get a mortgage without having to be married to a Thai woman. Although the regulation has changed it is still a very complicated process for foreigners to take out a mortgage on the property. We suggest you to talk to your local broker or notary to find an adequate local financial institution for your mortgage.

Currently there but a few banking institutions offering mortgages to foreigners in Thailand and there are still several restrictions that should be considered before accepting the terms. Again, your local lawyer should confirm that the terms and conditions, especially the fine print, are not going to put you in an unfavorable position regards your property or the usage of it.

Interests rates are normally in the region of 7% and the mortgage terms are 30 years if the borrower is younger than 60 years of age. With the complicated process related to getting a mortgage, many investors opt for raising the funding in their home country and then transferring it to the Thailand account. This could save you as the investor up to 80%in annual interest, especially with the local banks.

The best way to do that is once you get the funds in your home country, you confirm the banking details of the legal firm that is assisting you with your purchase, they would have the wire transfer details and you can transfer the funds to the lawyer and the lawyer would be able to transfer the necessary funds to the owner of the property.

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8. Title Deeds

There are 3 different types of title deeds that a foreigner can possess in Thailand. These are:

  • Freehold or Nor Sor 4 – Full rights are given to the owner regarding the use and development of the property if it complies with the law.
  • Nor Sor 3 Gor -Full title deed is in process and owner is waiting for it.
  • Nor Sor 3 -This pertains to unmeasured land by the land department.

The best title deed for foreigners is the Freehold deed or the Nor Sor 4 as it gives the owner full right to the property. The title deed of the property you intend to purchase is the most important document when it comes to this process, it will provide you with all the details regarding:

  • Owner of the land and property.
  • Permitted usage of the land and property.
  • Government tax and fee status of land/property in question.

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9. Legal advice

If you have other foreign properties in your portfolio you might already understand the value of proper local legal advice. For first time buyers, it’s an absolute must and you should take your time to select your legal partner when you are buying property in Thailand. The buying process, if all the documentation is on order and funds are transferred, takes approximately 60-90 days, if the property is already built, in the event of pre-build purchases then it will depend on the time it takes for your property to be built.

Your lawyer will be the person to negotiate with Thai nationals on your behalf especially if there is a language barrier and you should have the trust that they will have your best interest at heart. Throughout the negotiation process from property selection to deposits to contract signing and title deeds you must ensure that the details given to you are the full and proper details for the property in question.

Points to remember are:

  • Property details – title, ownership, and pricing.
  • Furniture – always confirm that included furniture is listed on an asset register and signed off by all parties.
  • Costs and penalties if applicable.

Depending on the way you are buying your property your lawyer will be requesting a whole host of documentation from you and it is best that you have these close at hand to streamline the process.

Buying as a company

If you are buying through a limited Thai company you should have all the company documents ready for the legal process. These documents must have all the required stamps and certifications of course, especially for the following:

  • Certified memorandum of association
  • Certified certificate of incorporation
  • List of shareholders, in English and in Thai
  • Notaries certificate
  • Copy of director minutes and resolution to purchase the property
  • Letter of advice to confirm specific signature/s
  • Letter confirming debt status
  • Power of Attorney
  • The Title Deed of the property in question
  • Certified copies of the IDs or passports of all authorized directors
  • Certified copies of the authorized directors’ home addresses

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10. Property Market in Thailand

The property market in Thailand is relatively simple, taking in to account that most investment properties are condos and very few foreigners opt for land ownership due to the restrictions. The current rate of growth is around 10% – 15% and the property market has recovered very well after the 2004 tsunami disaster. Depending on your budget, you should consider avoiding the highly popular areas such as Phuket as the relative prices in these areas are higher than most of the other.

Other than that, there are many condo developments to choose from in the market and if you stay within the law your little piece of paradise is right there waiting for you. With the many options available to the investor in respects of area and development it is a buyers’ market but buyers should be careful to consider the legal ramification of the various buying options.

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11. Other considerations

As with any other country, Thailand has its own pros and cons, things like the current political environment should be considered when looking at property in Thailand.

The political conditions are slightly complicated due to a coup in 2004 by the military and with a date for elections still not set the conditions are delicate. However, Thailand is ranked favorably regarding doing business in the region and foreigners can open a bank account in about 20 min despite legal and political conditions.

Although there are some political concerns, property ownership for foreigners is relatively safe as Thailand has a secure computerized title deed system [MF9] [JB10] and the government welcomes the foreign investment. Suffice to say, if you stay within the rules and regulations you won’t have any problem purchasing property in Thailand. And the preferred areas for such investment are obvious as these areas are all the major cities and tourist spots.

These are Bangkok, Chiang Mai (second largest city) and they have many exclusive areas that are prime investment opportunities. Depending on your preference you will find many neighborhoods and districts within these two cities that could make a great home or investment.

As with most property investment, it is important to consider factors like road infrastructure and access to services and amenities. If you are looking at holiday property then you should make sure that you have access to the preferred beaches or tourist areas.

Due to the current market conditions, most condos are sold off plan and when dealing with these agents and property marketers it is always best to deal with agents that have a long history or good reputation in the market. Smaller agents could lead to later problems with documentation etc. but that does not mean that all smaller agents are to be avoided.

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12. Conclusion

Investing in property in Thailand is most certainly one of the more picturesque investment opportunities in the world and although there are significant legal processes to follow, the prospects are very good. With the market in Thailand steadily growing and the relative political conditions being stable albeit delicate there are not many negatives to owning property as a foreigner in Thailand.

Most importantly, due to the strict laws regarding property ownership, we advise that prospective investors take enough time to find a well-known reputable property lawyer to assist in the process and documentation. Utilizing the local knowledge, you are on the right track to finding a great investment property in a great area.

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Thailand Property Market

https://www.justlanded.com/english/Thailand/Thailand-Guide/Property/Introduction

https://www.justlanded.com/english/Thailand/Thailand-Guide/Property/Where-to-look

Legal Restrictions

https://www.justlanded.com/english/Thailand/Thailand-Guide/Property/Legal-restrictions

 Current Environment

https://www.investasian.com/2017/03/03/invest-thailand-property/

 Ways to own property in Thailand – Foreigners

http://gccexchange.com/blog/6-tips-property-investment-thailand-foreigners/

 

Thailand Mortgages

https://transferwise.com/au/blog/buy-property-in-thailand

Research and News

http://thailandproperty.news/

https://www.propertyshowrooms.com/thailand/property/news/live-feed.html

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