Buying Property in Thailand is a big commitment and it’s important to make sure you’ve done your research. Here are nine pitfalls that you should avoid when purchasing real estate in Thailand.
Foreigners can purchase condominium units with relative ease but direct land ownership is restricted. One option is to buy shares in a company that owns the property but this can be complicated and comes with significant risks.
Land
As a general rule foreigners cannot buy land in their own name in Thailand. However, it is possible to acquire land on which a structure (building or detached house) resides by purchasing shares in a Thai limited company, provided that the ratio of foreign ownership does not exceed 49%. This method is a bit risky, and it would be best to seek the advice of a real estate agent and/or lawyer before proceeding.
Alternatively, it is possible to purchase land on which a building resides in the form of a long term leasehold with the option to renew for subsequent 30-year periods. This is the most common and least expensive option for foreign buyers.
The size of a plot of land in Thailand is measured using rai, ngan and square meter units. These units can be confusing for those who are not familiar with them, as they do not always correspond to a standard international measurement system.
In the past, minor changes in the law have allowed foreigners to explore the market for land that is leased or sold by nonresidents. However, this option is not currently available, due to the Covid-19 pandemic and recent tightening of mortgage lending regulations by the Bank of Thailand. This has led to a slowdown in the residential real estate market.
Condominiums
A condominium in Thailand is a popular choice for foreign buyers due to its affordable price and convenience. Condominiums are generally well-maintained and come with facilities such as a swimming pool, gym, parking space, 24-hour security, reception, and more. It is also important to note that buying a condo does not automatically grant you ownership of the land on which it sits. This is because land in Thailand is owned by the state and only a limited percentage can be purchased by foreigners (currently 49% surface area).
When buying a condo, it is important to find a qualified lawyer that can handle all aspects of the sale, including contract review, payment schedules, settlement, and registration of the new title at the local Land Office. An attorney will charge a flat fee for these services instead of a commission, which makes them a more cost-effective option than a real estate agent.
In order to purchase a condominium, a foreigner must send money into Thailand from abroad and have it transferred into the unit purchase price in Thai currency by a licensed financial institution inside the country. The foreigner must also show a clear paper trail for the funds, which includes an official bank statement (Foreign Exchange Transaction Form, or FET) and an original copy of the passport of the person sending the funds.
Apartments
Apartments in Thailand are a popular living option for foreign expats due to their convenient location and affordability. These properties typically offer a range of amenities that may include communal pools, gyms, 24-hour security, and reception areas. Apartments can be leased with a variety of terms, including short-term leases and longer leases of up to 30 years. Lease agreements offer tenants enforceable rights and protections against unjustified evictions. Landlords must provide proper notice for lease termination and must return any security deposits minus deductions for damages beyond normal wear and tear.
Expats that are interested in purchasing condominiums can do so, provided that the condo development complies with rules set out in the Condominium Act. However, there is a legal limit to the percentage of space that can be owned by foreigners within a given condo building. If you would like to purchase a condominium without these restrictions, you may consider leasing a property through the right of superficies.
Although it is not mandatory in Thailand, it is advisable to conduct a property survey prior to buying a new home. A professional surveyor can help you identify and resolve potential problems before completing your purchase. You can find a reputable surveyor through the Royal Institution of Chartered Surveyors website.
Villas
The villa property market in Thailand is a popular choice for those looking to invest or buy a luxury getaway. The country’s stunning scenery and relaxed lifestyle make it a perfect place to settle down or just spend your vacation. Nevertheless, it is essential to perform due diligence when deciding on the location of your villa. Each neighborhood is different in terms of norms, occupancy rates, prices and outlook. You should also be prepared for extra costs for maintenance.
As with other types of properties in Thailand, it is advisable that you hire a professional real estate agent and legal support to assist with your purchase. Since Thailand’s property market is less regulated than foreigners might be used to, it’s important to have a local on hand to help you navigate the buying process and ensure that you are not taking on too much debt.
Although it is possible for foreigners to own a villa in Thailand, it must be purchased separately from the land it sits on. Typically, the transfer of ownership is conducted at the land office through the right of usufruct. This arrangement allows for the property and land to have separate owners, and is a safe way for foreigners to own a home in Thailand. For more information about the villa purchasing process, contact the team at Juslaws & Consult.
