Buyer’s Guide to Thailand

Purchasing property in Thailand can be an exciting investment, whether you’re seeking a holiday home, a place to retire, or an income-generating property. However, understanding the legalities, the property market, and the steps involved is crucial to ensuring a successful purchase. This guide covers everything you need to know before buying property in Thailand.

1. Types of Property Available

In Thailand, buyers can find various types of properties, including:

• คอนโด: Condominiums are one of the most popular types of properties for both foreign and local buyers. They are ideal for individuals or couples looking for a modern, low-maintenance living space in urban areas like Bangkok, Chiang Mai, and Phuket.
• บ้าน: Houses are available in both urban and suburban locations and are suitable for families or individuals seeking more space and privacy.
• ที่ดิน: Land can be purchased in Thailand, but there are restrictions for foreigners. It’s important to understand how land ownership works, especially if you plan to build a house on the land.
• ทาวน์เฮาส์: Multi-story homes in developments, typically found in suburban areas. They offer an affordable alternative to single-family homes.
• Moo Baans (Gated Communities): These are residential developments often found in suburban areas, offering a more secure and peaceful environment with shared amenities like parks and swimming pools.

2. Foreigners Buying Property in Thailand

Foreigners are allowed to buy property in Thailand, but there are restrictions:

• คอนโด: Foreigners can own up to 49% of the total area of a condominium building. However, the remaining 51% must be owned by Thai nationals or legal entities.
• ที่ดิน: Foreigners are prohibited from owning land directly in Thailand. However, they can lease land for up to 30 years, with the possibility of renewing the lease. Foreigners can also purchase land through a Thai company or by having a Thai spouse own the property, but this comes with legal considerations and potential risks.
• บ้าน: Foreigners can buy houses but must follow the rules regarding land ownership. If the house is located on land, they can only lease the land and own the structure.

3. The Property Buying Process

The property buying process in Thailand is relatively simple, but it’s essential to follow these steps:

• Step 1: Identify Your Budget and Property Type Determine how much you are willing to spend and what type of property you want to buy. Consider factors like location, amenities, and whether you want a new or resale property.
• Step 2: Find a Property You can search for properties through online platforms, real estate agents, or local property listings. Agents can be especially helpful for foreign buyers as they are familiar with the legal requirements and the local market.
• Step 3: Conduct a Property Inspection Once you’ve shortlisted a property, visit it in person to inspect the condition. Ensure that everything is in good condition and inquire about the property’s history, such as any legal issues or disputes.
• Step 4: Sign a Sale and Purchase Agreement Once you’ve decided on the property, you’ll need to sign a sale and purchase agreement with the seller. The agreement will outline the price, payment terms, and conditions for the transaction.
• Step 5: Transfer Ownership The transfer of property ownership takes place at the Land Department. Both the buyer and the seller need to be present to sign the necessary documents. At this point, the payment for the property is made.

4. Costs Involved in Buying Property in Thailand

When purchasing property in Thailand, buyers should be aware of several costs, including:

• Property Price: The most significant cost, the price of the property itself.
• Transfer Fees: The buyer typically pays the transfer fee, which is 2% of the appraised value or sale price of the property (whichever is higher).
• Stamp Duty: If the seller is a company, the buyer may need to pay 0.5% of the sale price.
• Legal Fees: If you choose to hire a lawyer for the transaction, you’ll need to factor in legal fees. Legal costs are usually around 1-2% of the sale price.
• Registration Fees: There are various small registration fees, which can vary depending on the transaction.
• Ongoing Costs: Once you own the property, you’ll be responsible for ongoing costs like property taxes, maintenance fees (for condos), utilities, and insurance.

5. Financing Your Property Purchase

Foreign buyers typically cannot get a mortgage from a Thai bank unless they have permanent resident status. Therefore, many foreigners choose to finance their property purchase through:

• Cash: Many foreigners pay for property in full with cash, avoiding the need for a mortgage.
• Loans from Overseas Banks: Some buyers choose to secure financing from their home country’s bank, though this can be a lengthy process.
• Developer Financing: Some developers offer financing options for new properties, particularly in condominiums.

6. Legal Considerations

• Property Due Diligence: Always conduct due diligence before making a purchase. This includes verifying the property’s legal status, checking for any encumbrances or disputes, and ensuring that the land title is clear.
• Ownership Structure: If purchasing through a Thai company or via a Thai spouse, ensure that everything is legally sound and that you understand the risks involved.
• Lawyer Services: It’s highly recommended to hire a lawyer who specializes in real estate transactions in Thailand. They can help with document verification, title checks, and legal advice.

7. Taxes and Fees After Purchase

After purchasing property, there are ongoing taxes and fees to be aware of:

• Property Tax: Thailand has a new property tax system for 2021 that applies to owners of land and buildings. Taxes are generally low but depend on the value of the property and its usage.
• Transfer Tax: Transfer tax is typically 3.3% of the sale price or appraised value, whichever is higher. This may be paid by the seller or split between the buyer and seller.
• Rental Income Tax: If you rent out your property, you must pay taxes on rental income. You can deduct allowable expenses, and the rental income is taxed at rates based on your earnings.

8. Tips for Foreign Buyers

• Research the Market: Make sure to understand the market conditions in the area you’re interested in. Local real estate trends can vary significantly from one region to another.
• Work with Professionals: Engage a reputable real estate agent, lawyer, and possibly a financial advisor to ensure that the process is smooth and that your investment is protected.
• Consider Resale Value: Even if you’re buying for personal use, consider the future resale value of the property. Properties near key infrastructure, transport hubs, and tourist destinations often have better resale potential.

Final Thoughts

Buying property in Thailand can be a great investment opportunity with the right knowledge and preparation. Whether you’re purchasing a condo in the heart of Bangkok or a villa in Phuket, it’s important to follow the proper procedures, engage the right professionals, and understand the legal aspects of property ownership.

If you need assistance finding a property or navigating the buying process, feel free to reach out to us!