Thailand is one of the most affordable and attractive places for a comfortable holiday in 2022, including through the program «Phuket Sandbox» where, after a 7-day stay in Phuket, vaccinated tourists can travel around the Kingdom. Thanks to this, foreigners who wanted to buy real estate in Thailand but did not have time to do so before the quarantine, now have this opportunity.
What rights and obligations do foreign homebuyers have in Thailand? What is the process of buying housing in Thailand and what are the features? We will tell you about all this in detail in this article.
Content:
- Features of buying Thai housing
- Can a foreigner become a homeowner in Thailand?
- Forms of ownership in Thailand
- What can you buy?
- Real estate and residence permits in Thailand
- Responsibilities of foreign homeowners in Thailand
- Step-by-step purchase of real estate in Thailand
- No. 1 Property selection and reservation
- No. 2 Legal aspects
- No. 3 Sales contract
- No. 4 Money transfer
- No. 5 Property title
- How does the registration procedure work?
- We will help you purchase real estate in Thailand
Features of buying Thai housing
The popularity of the Kingdom of Thailand is not limited to the tourism sector. This direction is also popular with real estate investors. Houses in Thailand are purchased for personal use, permanent or seasonal residence, and as investments for rent. Real estate in Thailand has become more attractive after the decline in prices caused by the pandemic and the Kingdom's guaranteed income programs.
If you are planning to move, you should check out the rental options before buying a property in Thailand. Houses, apartments, and condominiums are available all over the country. There are many modern condominiums with all the amenities such as swimming pools, fitness rooms, and recreation centers.
Monthly rent for all types of buildings is often considerably lower than in major European cities.
Even in the most popular Thai regions and cities, the average rent costs less than half that of similar housing in the USA or Paris. Fees and amenities are either included in the rental price or not – you should consult the lessor beforehand.
Can a foreigner become a homeowner in Thailand?
A non-resident can purchase any type of real estate in Thailand but with restrictions on the registration of property rights. Foreigners cannot own land in the Kingdom so when buying a villa or detached house, the land is leased on a long-term basis.
Forms of ownership in Thailand
There are 2 main forms of property ownership in Thailand that are common globally as well:
Freehold property is acquired in a freehold zone that becomes the buyer’s property. This housing can be used as a passive source of income, inherited or given. As proof of ownership, the buyer receives an official document called chanote.
A leasehold is a long-term lease with a double extension. The contract is concluded for 30 years and can be extended up to 90 years. Although the actual ownership of the property is time-bound, it can be donated, inherited or sold. The contract is registered and certified by the Thailand Land Department.
What can you buy?
In freehold zones, a non-resident can purchase an apartment in a condominium – a residential complex, the common area of which jointly belongs to the owners of the apartments.
An important condition: a condominium developer can sell only 49% of the housing to a foreigner. The remaining share is registered in the leasehold.
Detached houses, villas, and townhouses can be bought both in a leasehold and a freehold but the surrounding area is only available in a leasehold.
Exception: a non-resident can purchase a land plot only if a legal entity makes a transaction, 51% of which must belong to a citizen of the Kingdom of Thailand.
Real estate and residence permits in Thailand
It is not possible to issue a residence permit in Thailand based on purchasing a property. However, there is an opportunity to get a long-term visa under the Thailand Elite program for investments for $16,000. Thai developers often meet halfway and offer buyers to apply for a visa when buying a property.
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Responsibilities of foreign homeowners in Thailand
A non-resident with property must properly pay the utility bills and taxes. When buying real estate, it is also necessary to pay one-time registration fees at the Land Department – on average 2-3% of the property value.
Tax residents of other countries (living in their home country for more than 183 days in a year) also have tax liabilities in their state, i.e. they are obliged to notify the tax authority that they have opened an account in Thailand or for other financial transactions.
Step-by-step purchase of real estate in Thailand
To better understand the process of buying Thai housing, we suggest you get acquainted with its key aspects.
No. 1 Property selection and reservation
An important stage of the sale transaction is the reservation of the housing and the signing of a contract with the seller. The document contains detailed information about the parties to the transaction and important housing data, as well as details of both parties and the payment schedule.
As a deposit, the buyer pays the seller 1% of the cost and the housing unit is withdrawn from the marketplace.
Important! If the transaction is terminated through the buyer's fault, the deposit remains with the former owner and if on the contrary, the money will be refunded.
What do you need for reservation?
- A copy of the buyer's passport;
- Email address;
- Phone number;
- Postal address.
No. 2 Legal aspects
To observe the legal purity of the transaction, it is necessary to check the housing condition. A lawyer can help in this matter and monitor compliance with mandatory legal norms.
What services do lawyers offer?
- Checking the land plot: are there debt bonds, who is the real owner?
- Checking the seller's company;
- Checking the contract correctness, making changes, and agreeing with the current owner;
- Registering a transaction with the Land Department.
These aspects are relevant for the secondary market. In the market of new buildings, there is only verification and modification of the contract.
No. 3 Sales contract
After making a deposit, the seller provides the buyer with a sales contract for verification and possible adjustments. This document contains all information about the acquired property, terms of purchase, and registration method. It also contains the financial costs of the documents and housing maintenance, as well as a fine for violating the conditions.
The contract includes copies of documents from both sides of the transaction including documents for housing.
No. 4 Money transfer
There are 2 main ways to pay for a transaction in Thailand:
1. In the primary market – transfer funds to the details of the developer specified in the contract. Payment can be made from an account anywhere in the world. The main thing is that the account should be issued to the buyer. Payment from the account of a legal entity is possible where the buyer is the founder;
2. In the secondary market – opening an account in one of the banks of Thailand and transferring money to it from an account in your native or any other country. When the housing is registered with the Land Department, the buyer gives the seller a check for the amount.
Condition: when buying freehold real estate, the money must be transferred from a foreign account. If you are buying a house for rent, you can pay for the transaction in any convenient way.
If the condominium is not put up for sale to a foreigner, the buyer can create a Thai company which he/she controls, to purchase the property. Many people have created a company with nominal Thai shareholders. You not only own the majority of the shares but also the trustees for all nominal votes. For approximately ฿50,000 ($1,500), you create a company and all the documents you need. The company headed by you as a director buys a condominium and owns the property.
The downside is that you have to pay about ฿15,000 a year to file corporate taxes and support your company. The advantage is that you can transfer the company and the condominium to another foreigner so you avoid taxes on the transfer of property. In other words, someone is buying your company with a condominium as the sole asset.
No. 5 Property title
Real estate transactions in Thailand are subject to mandatory registration with the Land Department. Usually, foreign buyers visit accompanied by Thai representatives as the local staff do not speak English well and all property documents are issued in Thai.
How does the registration procedure work?
If the housing is purchased on the primary market, the developer's representative with a power of attorney from the foreign buyer registers the transaction.
Legal assistance is provided on the secondary market.
When the transaction is made in the Land Department, the buyer receives a package of documents that may differ from the property registration method. Take the example of an apartment in a freehold zone:
- The standard Thai sales contract with owner details, detailed real estate information, and all stamps and signatures of authorized officials;
- Chanote;
- A house book.
We will help you purchase real estate in Thailand
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