Buying Property in Thailand as a Foreigner
Buying Property in Thailand as a Foreigner
This simple, easy to digest, but comprehensive guide will equip with you all you need to know when it comes to buying property in Thailand as a foreigner.
Buying Property in Thailand as a Foreigner – Contents:
A Brief Introduction To Owning Property In Thailand
If this is your first time embarking on the hunt to buying a property in Thailand then you’ve come to the right place. The waters often seem murky when it comes to buying property in Thailand as a foreigner but this guide will clear the way for you to make a confident, informed decision.
There are indeed several restrictions in place for foreigners buying property in Thailand. However, there is a lot of misinformation ‘out there’ and it can become overwhelming for someone trying to research the market. Especially when it seems that not everyone is on the same page when it really comes down to the what’s what, on how to buy and own property in Thailand.
But relax, we’re here to help…
Below is a quick overview of how anyone, including Thai people, actually own land, house’s or apartments here.
As with almost every country on earth, legal proof of ownership comes in the form of a title deed. An official government certificate of ownership, issued by a local governmental body, generally known and referred to in English as the ‘land registration office’.
This is the place where ownership is transferred and taxes, if applicable, are calculated and paid. Even though they are referred to as the “Land” Office, they do issue title deeds for all property types.
The most common form of title deed in Thailand is called a ‘chanote’ and having your full name on the ‘chanote’ is the golden ticket in making a property legally yours.
Types Of Property Ownership In Thailand
Two of the most common types of property foreigners or expats buy in Thailand.
Firstly and most commonly are apartments, often referred to in Thailand as ‘condominiums’ or ‘condos’ for short. Second would be houses, also referred to as villa’s, although there is no official distinction between the two.
Generally these are used for residential purposes, either as a holiday homes, full-time dwellings for those living, working or retired here as well as for investment purposes, more on that topic can be found in this article Considerations For Property Investment in Thailand
Buying A Condo In Thailand
In 1979 the Thai government amended ownership of land laws to allow foreigners to legally own condominiums on a freehold basis, the one caveat being, is that the amount of the building share must not exceed 49% in foreign ownership.
Put simply, if a condominium has 100 units, each of equal size, then 49 could be legally owned by non-thais. In reality, it is governed by total area and developers allocate certain unit sizes and plans to allow ‘X’ amount of units to be fully owned in ‘foreign name’.
How To Buy A House In Thailand
There are two main methods of owning a house in Thailand;
Option One – Forming a limited Thai company (Co. Ltd.)
This is one of the most common ways foreigners buy and own property in Thailand. As a foreigner you can be a 49% share holding and managing director of a company. In turn, the company can buy and hold property ranging from land, houses, condominiums and of course commercial businesses.
By law you control the business as the major shareholder. The business can not sell any of its assets, i.e most importantly to you, the house, land or condo, without your express legal consent.
There are some notable costs associated with this. You will either need to form a company or and more likely you’ll buy an existing company that owns the property. This will incur lawyer fees for preparing and registering the paperwork for the transfer of directorship.
Is this a safe way to buy a house in Thailand?
There are many debates online about whether this is a safe way to own a house, condo or even land. Thailand is requiring stricter checks on newly formed companies to enures the nominated thai shareholders actually have an interest in the company and not just ‘faceless’ nominees.
However, to date, this method has been used for well over the last twenty years and there are literally tens of thousands of all property types owned by foreigners in limited Thai company names. Houses in both the new build and resale markets are still being bought and sold everyday using this form of ownership.
Option Two – Leasehold
Buying the leasehold of the land which the house sits is now becoming an ever popular choice of ownership. As a foreigner you can lease land for upto thirty years, either from a thai company or a sole Thai citizen, in most cases this is usually via a spouse.
Leases are currently limited to thirty years but there is talk of sixty or even ninety-nine year leases being introduced in the coming years.
However as it stands, thirty years is the maximum lease hold you can currently have.
This is also another highly debated means as buying property in Thailand as a foreigner. Again there are literally thousands of houses owned via this method in Thailand.
Knowing The Jargon When Searching For Property For Sale In Thailand
When buying property as a foreigner in Thailand, you’ll come across certain terms and phrases attached to property listings that are quite unique to the Thai property market.
Below are some of the most common phrases used by agents, developers and private sellers on adverts and property listing’s in Thailand.
‘In foreign name’ or ‘Foreign name’ – This essentially means the title deed ‘Chanote’ is already registered and issued in a foreign name. This makes the transfer process much easier, more on that below!
‘Foreign quota available’ – This means that the building as a whole still has enough units available that can be owned in foreign name, this is more common with new build and off plan projects where you as a buyer would be the first ever name on the ‘chanote’ when it is issued.
‘Thai name’ – This means the ‘chanote’ is held in a Thai name. Usually units in ‘Thai name’ carry a lower price, possibly by around 5-7 or even 10%. The reason comes down to supply and demand. So if a price looks extra good, be sure to clarify if the current owner is Thai or foreign.
‘Company Name’ – This means the unit is held in a Thai company name and will also be listed at a lower price than ‘foreign name’, due to the extra costs involved as we outlined above. Buying a condo in company name is the same as buying a house in so far as you buy a large share in a Limited Thai company that in turn owns the condominium.
‘Letter of Debt’ – To ensure there are no outstanding fees owed on the condo such as maintenance, telephone line rental, electric, water etc.. against the property and the owner
‘50/50 transfer’ – There will always be a certain amount of tax to pay when transferring the title deeds upon completing your property purchase. Most of the time sellers and buyers split the tax and transfer fees equally and is pretty much the normal way things get done. More on taxation below when we cover the transfer process.
‘Seller pays transfer’ or ‘buyer pays transfer’ – Sellers may offer to pay the tax in full from their sales price as an added incentive to making their offer more attractive or conversely have a ‘net’ figure in mind that the want for their property and the buyer must pay whatever tax applied in full.
Paying For Your Property In Thailand As A foreigner
When buying property in Thailand as a foreigner you will need to prove that the funds you are using to complete the purchase have come from outside of Thailand. Or in the case of foreigners that have been working in Thailand, prove the money has been legally earned and all taxes are fully paid to date.
If you are sending money into Thailand from your home country or from anywhere overseas, it is vital that you request what is known as a ‘Tor Thor Sam’ (TT.3) form, from your Thai bank.
Property Transfer In Thailand
As the buyer you will need your Thai bank to provide you with a bankers draft for the agreed amount of the property sale price made out to the seller. It is very important to check, re-check and double check again, that the name on the bankers draft is exactly as it appears on the seller’s passport.
If not they will not be able to deposit it into their account and consequently the sale will not go through until you get your bank to re-issue a new bankers draft.
On the transfer day. Both the buyer and seller must go to the transfer office. Once the various forms have been filled out and checked and given the ‘OK’ from the staff, they will go ahead and put your name onto the title deeds and as the buyer you will handover the banker’s draft to the seller.
Congratulations! You now own your first property in Thailand.
Thailand Property Tax
There’s good news and there’s good news.
Tax rates on Thai property are very low even at the top end rates are nowhere near the types of rates we see in western countries where capital gains tax can push sales taxes into the 20% range!
Secondly, valuations issued by Land Office’s in Thailand are in almost all cases lower than the current market prices. This sometimes worries first time buyers as they panic they may be paying too much for the property but rest assured this is normal and in fact means that taxes are often much lower as a result.
A tip for buyers – You can actually get a rough but close approximation of the tax that’ll need to be paid. Have either your agent or, and more advisable ask the sellers agent to contact the ‘Land Office’ where you’ll be doing the transfer to request a taxation quote.
Note – The land office will not give an exact figure until the actual transfer day, but it’ll be close enough to help you budget for it or be able to negotiate with the seller based on it.
The land registration office will calculate any taxes to be paid. Worked out by combining several factors but most notably are the following;
Length of time the current owner – the seller, has owned the condo. Over five years the rate is extremely 3.3% below five years 2%.
Total size of the unit.
Location and age of the building.
These figure and rates are prone to change. For example Thailand once reduced taxes to almost zero as a means to stimulate the property market and it certainly worked. Always check with your real estate agent or local lawyer to confirm current rates.
If you are buying a house you are essentially taking ownership of a Ltd. Thai company. The land and house will already be registered at the land office and as a new buyer taking ownership comes in the form of transferring directorship of the company into your name.
This usually takes place the lawyer’s office who is handling the sale. As the buyer it is recommend you have your own lawyer in place and that they be there on the day with you to double check the paperwork and sure everything is in order.
To Wrap Things Up
I hope this has helped with getting your head around buying property in Thailand as a foreigner. I’ve tried to break down the process of buying and owning property in Thailand in simple terms with the aim of keeping it as straightforward as possible.
No doubt there will be buyers that have unique questions specific to their needs. If that’s you then please comment below or get in touch via the Real Estate Thailand Contact Page
Additionally please feel free to get in touch with any ideas or suggestions on topics you’d like to see posted about in more detail.
The above guide is not meant to constitute legal advice. Real Estate Thailand always recommend consulting a local lawyer. All information was as accurate as possible at the time of publishing.