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A Foreigners Guide to Buying a Thailand Property
Thailand has attracted people from all around the world to buy property in this country. Home to a fascinating culture, world-class beaches, lively cities, fantastic food, and lush jungles, it is not hard to find enough reasons why people want to buy a property in this tropical paradise.
In addition to being a popular tourist destination, the country has also served as a popular business hub for centuries due to its strategic location in the heart of Southeast Asia.
With everything that Thailand has to offer, it is no wonder that the real estate market is booming. A vast selection of property is available in various locations across the country. Buyers can choose between a high-rise property in Bangkok or a mid-rise property with ocean view in Phuket.
If you are a foreigner who wants to buy a property in Bangkok, it is vital for you to know all the basics and the facts about buying a property in Thailand. Buying a property can be a daunting task, mainly if you buy one in a foreign country with different laws and regulations. So, to help you out with your buying process, the following is our guide.
Decide if buying a property is the correct choice for you
Before you embark on property ownership in Thailand, you have to decide if buying or renting is the right option for you. Purchasing a property is a big financial decision. If you buy one in an area where the market is going to decline, you could lose a lot of money or end up in "negative equity." So, ask yourself again why you want to buy a property in Thailand.
- Do you want to invest and get a significant ROI?
- Do you want to live in the property or rent it out?
- Can you deal with the maintenance and repairs?
Consider your budget
How much do you want to spend on your property? This is an important question before you choose a property type and the location of the property. Also, remember that buying a property comes with a lot of hidden costs, which would have to be added to your budget. There are a variety of ongoing and one-off hidden expenses that can add at least an extra 15% or more on the cost of the property, especially if you are thinking about rebuilding or redecorating.
Understand foreign ownership regulation
Foreign ownership and Thai ownership regulations are different. One of the essential things, before you buy a property in Thailand, is knowing for sure what you can and cannot own. Foreigners cannot own land in Thailand, but you can own one or more condominium units on a condition that 51% of the development is Thai-owned.
To prevent unreasonable property pricing due to foreign bidding, Thailand has a law that land ownership is exclusive for Thai citizens only. However, there are ways to buy other types of property besides condominiums.
Your options are as follows.
Through a Limited company in Thailand
This is a common option for foreigners. You can set up a Limited Thai Company, but you can only own 49% of the shares since a Thai investor needs to own at least 51% of the business (except if you are a US citizen because the US has an agreement with Thailand for full ownership). The Thai investor can sign over the company to you. Keep in mind that the immigration office will monitor your business carefully to ensure your business dealings are compliant with the applicable Thai laws.
Through a 30-year lease
This is one of the ideal methods for foreigners. You can obtain leasehold rights to villas, houses, and other property types for 30 years. The lease can be renewed twice or three times (up to 60 or 90 years), which is why it is referred to as the 30+30+30 lease. Although the lease is renewable, you should note that it is not an automatic right to renew it and it can sometimes be hard to apply for renewal.
Also, the lease requires a registration fee and stamp duty to be paid, which is determined by a percentage of the rental fee for the lease.
Become a Thai citizen
If you are sure you're going to live in Thailand for a long time or the rest of your life, you can become a permanent Thai resident and have your name on the property registration documents. There is a requirement you need to meet to be able to apply for permanent resident status.
You can choose any of the options above, but make sure that all the details on the documents and agreements are accurate, especially the details on ownership and title deeds. Therefore, research and study as much as you can about Thailand's ownership regulation to decide what's best for you.
Choose the right property type in the right location
There are numerous property types available in Thailand, to choose the right property type for you; there are several factors you will need to consider. Research the type of property that suits you best, make sure to consider the style, the number of rooms, and the kind of amenities you require. Besides the right property type, the right location is also important.
Whether you want to rent the property or live in it, you don't want to buy a place located in an undesirable environment with no amenities around. The right location will make it easier for you to rent or resell it. Consider the primary road access, amenities, and public transport. The more accessible the place is, the higher the demand will be. Also, if you want to rent the property out, decide who your targeted tenants will be.
Study the area's property market
The property market can vary depending on the area of the property. Before you buy a property, you need to analyze similar properties in the area and study the average pricing. You don't want to pay more than you should, but you also need to be aware of the price if it is too low from the average pricing. If the property is cheaper than similar properties in the area, you need to find out what's causing the price of the property to be lower than the average. Is it because the property is of poor quality and has a lot of defects?
Also, you should also track the area's census records and find out why the city is or isn't attractive to people.
Hire a local lawyer and agent
Find a local property lawyer and agent that you can trust, who are knowledgeable about the area you are moving to as an investor and homeowner. They will give you good local advice and recommendations so you can avoid scams and pitfalls. A lawyer will be able to make sure you understand everything fully, explain the contract, tell you about the deposits, read through the sales and purchase agreement, and handle the transfer in your absence.
A reputable agent will make sure you are aware of any developments or developers you need to avoid, make safer recommendations for you to consider, and provide the best resources and information. They can also guide you through every legal procedure and remind you that every transaction needs to be accompanied by a detailed legal agreement signed by both parties.
Inspect the property yourself
Once you find your dream property in the right location, you need to do a thorough inspection. Inspecting the property before you buy it can save you a lot of money and time. Do not rush into signing the contract, but perform a close inspection to make sure that the property is in perfect condition. A property inspection will give you the power to bargain for lower prices, especially if you find leaking plumbing, cheap flooring, or other defects. If you don't know how to do a proper inspection, you can hire a home inspector that you can trust.
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If you enjoyed this post and have time to spare, why not check out these related posts and dive deeper down the rabbit hole that is homeownership.
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- How To Prepare For A Home Renovation