We feel it is a good time to buy property
in Thailand. Banks are lending & property prices are now dropping
due to the insecurity of the present economic situation, except oil..
Thailand SET index has also been dropping as foreign investment is
tending to shift to other countries. The situation with The Baht, and
the USA and Japan's firm belief in defending the Yen, won't change
much from what it is. If anything perhaps few Baht swing only. LAND
AREAS: 1 rai = 4 ngarn = 400 wah2 = 1600 m2; 1 talang wah = wah2
= 4 m2; 1 acre = 2.53 rai & 1 ha = 6.25 rai
To date foreigners may
- a unit in a registered Condominium
building (as distinct from its land)
registered leasehold of up to 30 years for all types of titled land
- a company can purchase land and buildings 49% foreign shareholding but
must carry out business as well.
- more than 40% of a condominium unless done in Company form.
- 49% max of land/ buildings in a company
- 1 Rai of land if they invest 40m baht in Thailand.
- Usufract Interest or (sidhikepkin) allows a foreigner to have
temporary ownership to certain things in Thailand. Its really limited to
30 years but can be renewed just like a lease.
However, a 30-year lease can be a good idea
with right to renewal to a freehold purchase, or a Thai company (7
PARTNERS) can be established with Thai majority shareholders. Foreigners
own 49% shares in the company buying land but we can assist you to make sure your
company is safeguarded. Remember if you need advice check first before
you commit yourself.
THE BEST OPTION FOR FOREIGNERS BUYING PROPERTY IN THAILAND AS AT 2019 IS AN USUFRUCT OR SUPERFICIES
USEUFRUCT INTEREST OR (Sidhi-kep-kin)
gives you temporary ownership rights to structures on or arising from the
land. In practice, a usufruct is limited to a 30 year maximum period;
like leases, the agreement can be successively renewed. In contrast to a
lease, a usufructury interest can be sold or transferred, although it
expires upon the death of the holder of the usufruct and therefore
cannot be inherited. This is better than a lease which by law can only
be for a period of 30 years. The usufruct is a right granted by an owner of land in favour of a usufructuary and the usufructuary has the right to possess, use and enjoy the benefits of the property. In other words, a usufructuary normally has the right to exploit forests, mines and quarries but also where a foreigner wishes to buy land and house. The rules concerning usufructs are similar to leases but we feel a lot better for foreigners as they can still transfer but in a situation of a young single person aged 21yrs he has a long duration period and he can change the status.With a lease although many will say 30 x 30 this is not legal and the status can change anytime in the future if one has used this option or been told this
ANOTHER WAY IS THIS:
Is the right granted by law AND BY an owner of land in favour of another whereby the superficiary is granted the right to own upon the land, buildings, other structures or plantations. It is similar to a lease, and the rules concerning leases apply to superficies. Often, what many people believe is a lease is in fact a superficies.A foriegner as a tenant can own the house he built on upon a land; not terminated by the buildings collapsing or destroyed, even by force majeure;they are transmissible to the heirs in say the UK. Superficies are granted for a period of 30 years and can be renewed per period of 30 years at a time and is registered at the land office and recorded on the Land Title. The right of superficies can be terminated only “If the superficiary fails to comply with any essential condition specified in the act creating the superficies or, when rent is to be paid, he fails to pay it for two consecutive years”;
IF MARRIED TO A THAI :
The foriegner can get a right of HABITATION to live in the house and occupy the same land until she or he passes away.This is a good idea for any foreigner but make sure your spouse has a will drawn up leaving the property to the foreigner. The foreigner must sign a declaration that the property is a gift & will not expect it back. Can also draw up a lease or USUFRUCT but it is important to protect oneself if for example the Thai spouse passes on before the foreigner.
WHY NOT A LEASE :
A lease is a contract which allows a person to use the property in question for a deemed period of time -normally 30 years and to pay some rental fee which is agreed upon. Those who have 60 years?? well its really 30 years only!!! One can use a lease to be nearly the same in content as superficies but under the law for superficies you have the distinct advantage that the clauses have been passed into law and are law like allowing your heirs to inherit that said property. A lease does not have this.
BUYING FROM BROKERS, AGENTS, DEVELOPERS :
There are no laws governing the real estate procedures so if you buy or put down a booking fee be aware you do this knowing the deal may not go as planned. Getting your money back is a drawn out process that will go on and on. Real Estate is not a closed business nor does one need to register so you the buyer must beware when you purchase in Thailand caveat emptor prevails.. Some buyers have seen pictures on the net then sent a booking or deposit fee to the Realty company --- then seen the property hasn't even been built. Do you think any of them get their money back--the answer is NO. Do your homework first. Some developers offer a buy back, or the guaranteed prices rise when selling or a guaranteed rental figure per month for your property but again take all this with a grain of salt. Who can guarantee rentals in Thailand; who can guarantee you will double your money when selling so when you see this BEWARE --- noone can and certainly not a realty company whose one aim is to make profits so be warned? In such cases you may like to get your lawyer to check on the Property Developer???. You will notice in thailand there are many developments that are incomplete -- a trend in Thai development. Many of these are underfinanced and they run on the assumption that many is better than a few. This year alone steel prices have risen 5 fold; concrete also has increased but the developers lack the foresight to consolidate their building work so instead of building one unit to finish the build 20 unfinished. The developers sales reps are now hard pressed to sell these properties so it is impotant to view what you see and even have copy of the chanote (Title) checked by your lawyer before any monies change hands. We had a case where a well respected Housing development sold a unit to an foreigner before checking the title. Lucky for him we managed to change but the when we checked the title the developer was building 15 units on 1 title --- and saying the titles will be issued in 1 year. In cases like this its easy to say NO THANKS. A very good Lawyers meassage: if an owner says the power transformer will be in next month; or the phone line is going in 1 week after settlement; or the road is being repaved over in 2 weeks --- DON'T BELIEVE A WORD.
CONDO MORTGAGES TO FOREIGNERS:
Yes if you have a factory situation and Thai Company Bangkok Bank will lend a foreigner funds to buy a Condo. Other than that the answer is NO in Thailand. There are foreign brokers who will allos using overseas Finance Companies as backers to lend money based on ones assets in a Western Country. ie your assets back home.
BANGKOK: -- Foreigners will find it easier to buy
condominiums in Thailand under a new service offered by Bangkok Bank.
The bank's Singapore branch has begun offering offshore financing for
foreigners seeking to purchase condominiums in Thailand. Loans of up to
70% of a condominium's value were available to foreigners both in
Thailand and other countries who want to buy this type of property.
Applicants can e-mail their details or send them by DHL to the bank's
Singapore branch, he said.
The applicant's earning ability determines how much he or she can
borrow. For example a person seeking a loan to buy a condominium worth
20 million baht should be earning around 300,000 baht a month, Mr
While foreign nationals are allowed to purchase condominiums in
Thailand, financing has often been problematic, with local financial
institutions reluctant to offer loans due to uncertainties regarding
The Bangkok Bank service is just what Phuket needs, according to Stephen
O'Brien, managing director of the real estate agency Knight Frank Phuket
''Well over half of the inquiries we receive ask for lending or
mortgagee finance and up until now there wasn't anything available,
except a number of private firms offshore offering lines of credit or
personal loan financing,'' he said.
''I am sure buyers will feel much more relaxed dealing
with such a credible name as the Bangkok Bank, than an Isle of
Man-registered company offering unattractive financing terms.''
Bearing in mind that the bank's terms apply to freehold condominium
title, Mr O'Brien said he expected the takeup rate would be significant.
Under Thai Law, foreigners can own freehold title up to 49% of a
condominium project. Generally speaking, when a condo project is
launched, sales are always brisk, because foreigners want to hold their
units as freehold. If the unit is in the remaining 51% allocation,
foreign buyers can either lease or set up a Thai firm and hold freehold
through that company, a rather cumbersome structure.
Mr O'Brien is confident that this is the start of more widely available
mortgage financing for foreigners in Thailand.
''I suspect that other Thai banks will shortly start offering similar
terms and conditions. All of this of course will result in a competitive
environment bettering the consumer, whereby the banks will try to outdo
one another with more favourable terms, similar to Australia and the
He said Thai property market had a good future because investors viewed
the rental yields of 5-6% as attractive.
''Singaporeans are interested in Thai property because it is three times
cheaper than what is available in their own country,'' he said.
--Bangkok Post 2005-06-22
CAN YOU BORROW MONEY
A foreigner cannot hold any mortgage in
Thailand unless he/she has a company WITH FINANCIAL STATEMENTS so must
be in business for one year minimum and have yearly audit and profit
mode. Therefore a foreigner must use his
wife to apply for the load in which case the house will be in her name.
You can borrow around 60-80% from a Thai Bank depending on which one you
use. There is a 1% service fee charge and interest is 4-7% depending on
the bank & 1-12% for businesses but this rate does change. You must
apply yourself. We cannot assist you
with any mortgages so please ask your Bank. If you have a Thai
wife then she can assist you. It takes approx 1 month to be approved or longer.
Buildings apart from condominiums do not
have any form of title document, but their sale or long lease can be
registered at the Ampher (district) land office. Proof of ownership,
must be established either from proof of construction or document
showing previous sale-purchase (not to be confused with the House
Registration document, which is only a register of the house's
occupants). When buying a condo or property please remit through
the National Bank and have record that you are using the money to
purchase the property.
PAYMENT & REMITTING FUNDS TO THAILAND:
A deposit of 10- 30% is usually required to
secure a property and total payments should be made within 30-60 days
(see your lawyer first) but normally once the transfer has gone through. If signing a purchase
agreement then up to 30% down & 70% following transfer. Normally the
seller will pay the changeover tax which starts at 2.5%. However if the
seller has owned the house longer than this [period it is discounted.
Some Land Offices will charge up to 8% depending on the area and office.
An agreement can be made between buyer and seller than each pay 50%. You can obtain longer periods but you will probably be required to
pay a higher deposit. Deposits are normally non refundable, except by
default of the vendor, so bear in mind that once the deposit is placed
you are committed.
This situation also prevails for the vendor. He must refund your deposit
and pay a penalty of an equal amount if he defaults on the contract.
Deposit in escrow is still rare in Thailand, but it is becoming an
increasingly recognized way of proceeding. It generally trades off
greater security for the buyer's deposit versus a weakened claim for
damages in the event of vendor default.
Beyond the price, payment and closing schedules, it's important that a
contract includes clauses to cover who will pay the legal fees, transfer
fees and taxes (there is often a business tax and always an income tax
assessment made at time of sale) as well as an understanding of the
value at which the sale will be declared - this is typically (for tax
reasons) at or close to the government minimum assessed value.
A foreigner buying a condo must transfer
funds from a bank account out of Thailand in foreign currency and verify
the transfer on paper. The transfer of funds must be in the same
name as the name that will appear on the final purchase contract ie. the
buyer. Funds must be transferred into a Foreign Currency Account in
Thailand opened in the Buyer's name. Use Bangkok Bank, Thai Farmers Bank
and Siam Commercial Bank and make sure you tell them that the purpose of
his or her opening a Foreign Currency Account is to purchase a condo in
Thailand. This law is somewhat a catch 22 situation as the Foreign Banks
usually will not write such a letter but don't worry. You can remit as
much as you like to Thailand via your bank. Transfers out of this Foreign Currency Account in Thailand
into a Thai Baht Account or some form of Thai Baht draft or check to the
Seller must be made in amounts US$5000 or more in order to qualify for a
"Tor Tor 3" Certificate issued by the Buyer's bank to verify
that the originating funding came from outside Thailand in a currency
other than Thai Baht. On the "Tor Tor 3" Certificate, it
should state explicitly that the Thai Baht funds are used "to
purchase a condominium" in Thailand. Taxes are payable by the buyer
or seller of a condo in Thailand such as the Transfer Fee/Stamp Duty Tax
of 0.5% usually payable by the seller upon the date of the actual sale
or a Special Business Tax of 3.3% which is usually payable by the seller
if the property has been owned for less than 5 years. By the way there
is no limit on how much you can remit into a Thai account from overseas
and no tax. Tax levied at 15% is on interest earnings only.
REMITTING FUNDS: If sending over funds to
purchase a house you must tell the National Bank what you are using this
money for with sums exceeding 2,000,000 baht quantities. If remitting
funds from abroad to purchase property which is the law over sums of 2m
baht It may save you a headache when it comes to a divorce situation of whose funds
were used to purchase the property. If you wish to
know more than ask us.
Are normally 3% -5% but some charge 10%.
Watch out also as some realties charge both the seller and the buyer
& even hike the price up and have deals with the owners. We do not
recommend you obtain a Title search and House Inspection report before
you purchase ANY property in Thailand. Cost 7000 baht Comprehensive
Title search as well as House Inspection fee.
WHY USE OUR SERVICES:
We work for you (Both Thai &
foreign consultants )
No hidden charges-everything is up
Guaranteed conveyancy help &
Company, work permit & land setup for foreigners
Because you have the benefit of
foreign help with our Thai lawyers and expat consultants
house onsite appraisals. Cost is 3000 baht for a house under 2 years
old & 5000 baht for older houses plus travel. This 5 page report
with pics and recommendations is a must if you want to know what your house is really like..