Why invest in property in Thailand?
Everyone has a different purpose of purchasing a property, so its’s very important to ask yourself in what type of property you wish to invest in. Some are planning to buy for Investment and generate rental income and capital appreciation, others would like to buy for their own residence or Retirement home or office.
The main factors on your decision would be:
- Location of Property
- Accessibility to public transportation (BTS/MRT)
- Unit Size
- Proximity to Amenities
Can a Foreigner own a Condominium in Thailand?
Yes, a Foreigner in Thailand can 100 % own a condominium in his/ her own name. The total percentage of foreign ownership in the building, cannot be more than 49%. The remaining 51% should be Thai owners.
Can a Foreigner own land in Thailand?
In Thailand, a Foreigner can NOT own land in his own name, but you may own 49% in a Thai Limited company, in which you’ll be the sole director. Meaning that the foreign director is the only person who can commit or bind the company in any contractual dealing. In this way a foreign minority shareholder controls the company and its assets.
What is the Difference between Apartment and Condominium?
The difference between a Condominium and an Apartment is that Condominium units are individually owned and the entire apartment building is owned by just one owner.
Some people prefer to choose an Apartment over a Condominium, because apartments are overall more spacious and suits families better then condos. When you renting an Apartment in Bangkok and have your own furniture, most of the time the Landlord can take out their own furniture or move it to another unit, which is not possible when renting a Condominium.
Also when you are working for a multinational company or Embassy, your company most of the time pays your rent and will ask for a company contract with your landlord, which most condominium owners do not accept due to the extra income tax they have to pay.
Another advantage is that most owners of Apartment Buildings do accept pets, which is not allowed in Condominiums.
One disadvantage of apartments is that the cost for utilities are higher than when you are renting a condo. When you rent a condo in Bangkok you pay the Electricity costs directly to the MEA, but in an Apartment building you pay directly to your new Landlord.
How many months deposit is required?
The normal deposit required when renting a Residential Property (Apartment/ Condo/ House) is 2 months, but when you rent a Commercial property they mostly require 3 months, although there are exceptions where they even ask for 6 months deposit.
What Measurements we use in Thailand?
1 Rai = 4 Ngan or 1600 Sqm
1Ngan = 100 Wah or 400Sqm
1 Wah = 4 Sqm
1 Acer = 2.5 Rai
1 Hectare = 6.25 Rai
Can a Foreigner get a loan from Local Bank to buy Property?
There was a time in Thailand that it was very easy for Foreigners to get a loan from the local Thai bank, but this time has changed. Nowadays the most local banks do not give loans to Foreigners, however there are a few Banks who still provide loans under certain Conditions, like UOB Bank.
What Type of Ownership Structures are there?
In Thailand there are 2 types of Ownership Structures in a Condominium:
- Freehold Condominiums
- Leasehold Condominiums
Freehold ownership offer absolute (100%) ownership of the property and is the best form of ownership for Foreigners. Foreigners can maximum own 49% of the total floor area in a condominium building, the other 51% have to be owned by Thai Nationals, therefore it is very important to check the foreign quota in a building before purchasing.
Leasehold ownership is another option for Foreigners to own a property for maximum 30 years. Foreigners can register the leasehold rights (Lease of Condominium or freehold land) with the district Land Office. After 30 years the lease term can be (most likely) be renewed again.
What Taxes and Fees are involved for buyer and seller when selling a property?
Transfer Fee 1% of Appraisal Value from Land Office.
Stamp Duty 0.5% (of the registered Value. Only Payable if exempt from Business Tax), Mostly shared 50/50 with Seller
Transfer Fee 1% (of Appraisal Value from Land Office)
Income Withholding Tax 1%(If the Seller is a company, tax is fixed at 1% of the appraised value of the property)
Stamp Duty 0.5% (of the registered Value. Only Payable if exempt from Business Tax), Mostly shared 50/50 with Buyer
Personal Tax 2.5%- 5%(if the seller is personal shall be calculated at progressive rate based on the Government assessed value with deduction based on the years of ownership)
Specific Business Tax 3.3%(of Appraisal Value)
***The Scenario above is the Normal situation, but each case is different and depends on the negotiation between the Buyer and Seller***
How does the buying process work?
1) When you find the condominium you wish to purchase, a reservation agreement will be made up between Buyer and Seller to secure the Booking of the condominium. The buyer will give a copy of his National Passport and make a down payment deposit. (The Amount of Deposit is for each project different, mostly 10%)
*For Foreign Buyers who have purchased properties in the past, it is important that the buyers name in Thai is exactly the same as the name used for previous purchases.
*The Seller will show the title deed to the buyer in order to proof that he/she is the legitimate owner of the condominium unit together with a copy of her ID card.
* The buyer should also request to see a copy of the Tabien Baan and to check whether the seller registered the condominium unit as its personal registered address. If that is the case the seller will have to move its registered address out of the condominium unit.
2) Sale & Purchase agreement.
The second step is that a Sale and Purchase agreement will be made up. Herein is written the sale and purchase price, the amount of the deposit which have been paid (Between 5-20%) and costs of transfer including taxes, between buyer and seller.
* Usually transfer fees and Stamp duty are shared (50/50) between the seller and the buyer but depending of the outcome of the negotiations the seller or the buyer may be liable for 100% of all costs and taxes.
3) Transfer of the Funds.
To purchase the condominium, the foreign buyer will have to prove that the total purchase amount, declared at the land department, is to be paid out of foreign currency transferred to Thailand by the foreign buyer.
How can I prove that the money comes from Abroad?
It is necessary that foreigners present a source of funds declaration and documentation to the land Office when registering ownership. When you either Transfer money or bring a foreign Currency into Thailand valued at USD 50,000 (Or equivalent in other currencies), The Bank will issue a Foreign Exchange Transaction Form. (FET FORM)
*If you bring the money in cash into Thailand, you need to declare it to the customs officer and present a receipt from the customs to the Bank in order to issue a confirmation letter.
Please keep in mind that when you transferring funds from a foreign currency into Thailand, That the name of the beneficiary in the Foreign Exchange Transaction Form MUST be the same as name of the Buyer, specified in the Sale and Purchase agreement.
*The Total amount of transferred funds must not be less than the net price (Thai Baht) of the Condominium unit as specified in the Sale & Purchase agreement, so it would be better if you transfer a bit more than the agreed amount.
* Please clearly specify the purpose of the transaction as “to purchase a condominium in Thailand”.
The last information you need to know for transferring the payment to Thailand is:
- Bank Name
- Bank Account Name
- Bank Account Number
- Bank Branch and address
- SWIFT CODE
- Purpose of Funds transfer (Purchase of a condominium in Thailand)
4) Documents for Transaction at Land Department
*The buyer has to provide a copy of his passport (Including the page with visa stamp)
*Copies of the buyer certificate of marriage and of the passport of the spouse. (Marriage certificates in English language do not need to be translated, other languages need to be translated and the translation need to be certified)
* If the seller does not have a lawyer, the buyer Broker/Agent should remain the seller to obtain the letter from the juristic person attesting the foreign ownership ratio (Foreign Quota) and that the common area fee for the units has been fully paid.(No Due Certificate) Without this document the transaction may not proceed. If the seller is late with the payment of its CAM Fees the seller must clear the debt before the sale being able to proceed.
* The seller shall request his/her bank to issue the Foreign Currency Exchange forms that will serve to prove that the sale and purchase price is paid out of foreign currency transferred to Thailand.
* If the unit is mortgaged the seller must contact the bank that hold the mortgage and request the bank to calculate the final amount due to clear the mortgage and send to an officer at the land department on the date of the transaction to clear the mortgage prior to the transfer.
5) Prepare the Payment at the Land Department
* The Buyer and/or the Seller will pre-calculate the amount of taxes to be paid at the land department office on the date of the transfer of ownership.
* The Buyer will prepare cashier cheque equivalent to the amount of the net purchase price.(Taxes and expenses not included)( If the unit is mortgaged and it is necessary to pay the bank the buyer shall prepare a cashier check equivalent to the amount of the debt to be settle to the bank)
* Once received the cashier cheque, the buyer will send the copies of the cheque to the seller and/or his bank to give them the opportunity to verify with the issuing bank that the check are indeed real.
* The Seller and/or the Buyer must prepare in cash the amount necessary to pay the taxes and government fees due on the date of the transfer.
6) Transfer at Land department
*The Buyer, Seller and the Bank (if the unit is mortgaged) or their authorized representative must all attend the Land Department on the agreed date of the transfer. If one party is missing or not represented the transaction cannot go ahead.
* The buyer representative will shows the original cashier cheque to the seller and or the bank representative (to release the mortgage on the unit)
* The seller and the buyer (Or representatives) will sign the sale and purchase form prepared by the land officer and the documents required for the transfer of the unit (Original duplicate of the title deed).
*The Land Officer will change the original duplicate of the title deed and will give it to the buyer (or representative) mentioning the name of the buyer as the new owner of the unit. Both parties (See agreement) will pay the taxes and costs due for the transaction to the Land Officer.
Note: It’s the seller’s duty to prepare the documents for the transfer of the electricity and water meters to the buyer. The buyer will have to refund to the seller the deposit paid by the seller to the electricity authority if this matter was not included in the sale and purchase price.
What type of Chanotes we have in Thailand?
In Thailand there are various types of Land Titles that are used as common evidence of ownership.
Land Title Deed (Nor Sor 4 or Chanote)
This is the strongest and most secure type of Land Title which you can get. This type of title is a certificate for ownership of land, registered at the local Land Office in the province where the property is located. The Title comes with a legal description of the land boundary markers and right of use and dispose aswell.
When you buy a condominium, you will get a “Certificate of Unit Ownership”, which is the same as a Chanote. This Title contains the name of the owner, the position and size of the land, location, area and diagram indicating the dimensions of the unit.
It also includes the proportion of ownership in the common property.
Nor Sor 3 Gor (Confirmed Certificate of Use)
This type of land title ownership is not yet a full land title deed as in the Chanote, but could be upgraded to be a Chanote thereafter. The Land owner with the Nor Sor 3 Gor, may request the land department to have the property surveyed and place the official Markers in order to get the Nor Sor 4. When you have the Nor Sor 3 you can sell, Transfer or mortgage it.
Nor Sor 3 (Certificate of Use)
This land title is similar to Nor Sor 3 Gor, BUT when you have a Nor Sor 3 Certificate the legal strength is less then Chanote or Nor Sor 3 Gor, because the Land Department has not yet completed measurement or recognition of the boundaries thereof. The risk is that the exact land boundaries and size are not specified yet. Prior to the transfer of Land under Nor Sor 3, a notice of intent shall be posted and a 30-days public notice is necessary before Transfer of ownership.
Notification of Land Possession (SorKor 1)
If I would like to sell my Condo, how much commission do I have to pay?
We ask 3% commission for our service. The 3% commission will be paid directly after the condo has been transferred, normally in the form of a cheque or cash.
If you still have questions or concerns after reading the information above, please feel free to contact us, we would be happy to answer all your questions.