Home Property in Thailand
How to buy a house in Thailand?
Here you will find the detailed information about real estate purchasing in Thailand:
- the right way to choose the property and to effect the deal;
- property taxes and duties that should be paid;
- everything about home loans in Thailand;
- home property management and renting;
- rental, commercial properties and related investment properties.
Real estate for sale
Most recent offers from house owners in Thailand and from real estate agencies. Advertisements with the fixed price and auctions are listed here.
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According to law of Thailand, foreigners are not entitled to own land. They can purchase either a villa or a flat in a condominium. Land tenure requires leasehold registration in the name of a legal entity.
Acquisition of different types of property
There are two ways to purchase land in Thailand: leasehold and freehold.
Leasehold is long-term land tenure with a period of 30 years, subject to extension for another two terms, which makes a total of 90 years. Premium housing can be leased for 120 years, while business projects provide for 150 year leasehold.
Freehold is purchase of land in the name of a legal entity.
Having purchased a villa, foreigner becomes a full owner of the building per se. The attached land may be leased for 90 years or titled in the name of a Thai company. In the latter case, property owner claims 49 % of the company’s preference shares.
Having purchased an apartment in a condominium, foreigner becomes a full owner with the right to enjoy the adjacent territories and facilities, such as garden, pool, parking lot, etc. It should be noted that according to the legal act of 1974, a foreigner cannot own more than 49 % of an apartment building. The larger half can be owned either by companies registered in Thailand or Thai nationals.
Property selection can be done by looking through media resources, visiting thematic exhibitions, browsing the Internet, or hiring the services of a real estate agency.
Real estate agencies can be found in Thailand as well as in Russia. This may be a branch of a Thai company or a standalone Russian company, selling real estate through their foreign colleagues. Real estate licenses are not issued in Thailand. So in order to check company legitimacy, one has to look through the registration documents. Agencies usually organize familiarization tours for potential clients in 1–5 days. In such a tour, buyer inspects available options of real estate with an agent. Consulting services and inspections are free; however, potential buyers should take care of plane tickets and hotel accommodation themselves.
The deal can also be done remotely, under the legal control of the agency. This will only involve email correspondence and express delivery services.
Real estate deal preparation
Foreigners are required to have the international passport only. In case of property registration in the name of a legal entity, all the necessary documents are prepared on the spot.
Having selected a piece of real property, buyer has to get a special FET (Foreigner Exchange Transaction) form at a Thai bank. This document confirms the transfer of investment. According to law of Thailand, foreigners are allowed to purchase real estate only by making the necessary investment from abroad. The certificate is issued only after noncash currency has been transferred to a Thai bank account, or after cash funds have entered the country.
Accounts are opened under different terms, which vary depending on a bank. Kasikorn Bank, for example, can open an account based on foreigner’s international passport or a tourist visa. Cash money needs to be exchanged for bahts, in order to get a FET-form. This document is also issued upon the direct deposit of funds from abroad or the exchange of traveler’s cheques.
Reservation sheet is signed by the buyer, in order to reserve real estate. It is the very first document in the transaction and should include all property information as well as bank details of the parties. Having signed the reservation sheet (which needs to be done within 3 days after property selection), buyer has to make a deposit of 1 % of property value.
In case of deal cancellation, the deposit is not returned to the buyer, except for when it was cancelled by the seller. Seller’s lawyer should draft a sale and purchase agreement within 30 days after the deposit payment was made.
Clean title check is performed by a legal firm either before or after signing of the reservation sheet and should be covered by the buyer. The inspectors request all seller’s documents related to purchased property. Thai real estate has a unique feature: not every apartment in the building may be officially considered as a part of it. Thus, it is necessary to check, whether the purchased apartment is registered as a condominium, in the lands department.
Sale and purchase agreement can be signed even without buyer’s direct participation. This can be done by email or by means of express delivery services. Among other things, the agreement should include all tax payment terms and conditions.
After buyer has paid full transaction amount to seller, the deal is closed. Under contract terms, payments may be spread over the period of property construction. However, the agreement will be registered in the lands department only after property value has been paid in full. After the registration, new owner receives a title deed, also called “chanote”. This document features the national coat of arms of Thailand on the front and contains the information about previous sales of property on the back. Chanote is issued in Thai for resident citizens and foreigners alike.
Real estate acquisition on the primary market is taxed by the lands department at 6.5–6.7 % of transaction amount. The assessed value of property is about the same as its contract value. This fee is paid to a real estate development company along with the final payment under the agreement. It is real estate developer’s responsibility to submit this payment to the lands department. However, real estate developers tend to cover half of all the additional expenses related to property purchase.
Real estate acquisition on the secondary market is taxed by 2.5–5 % of the assessed value. This fee is split in half between the parties, who are often private individuals. If seller has owned property for over 5 years, the tax amounts to 5 %, while if this period is less than 5 years, the tax makes twice as much – 10 %.
Purchasing a house with a land parcel is taxed at several hundred Euros, depending on house value. Foreigners are not allowed to purchase land, so it is either leased or purchased in the name of a legal entity registered in Thailand. When purchasing a house with attached land, owned by a Thai company, on the secondary market, title to property is transferred by changing the company’s owner or CEO. In this case, there is no need to register purchased property at the lands department.
Example of real estate cost including the associated expenses and duties:
Construction project in progress on the primary market in Pattaya. Two-room standard apartment with an area of 40 sq. m. Project territory features a shop, café, laundry, swimming pool, gym, children’s playground, and waterfalls. The apartment is furnished, featuring a built-in kitchen, air conditioner and sanitary conveniences.
- apartment price – €50 000;
- amortization fund – €500;
- utility meters purchase and installation – €150–300;
- transfer of title – €3000–3500.
That makes a total of 53 650–54 300 Euros. Purchasing housing through a Thai company, it will have to be registered for another 350–400 Euros; bookkeeping, audit, and report delivery amounts to 250–350 Euros a year.
Mortgage loan terms depend on a specific transaction. The loan is given for a maximum of 10 years. Construction companies offer installment payment plans from 1 to 5 years.