The Property Banks Buyers Guide to Thailand
The information below is intended as
a general guide to the property buying procedure in Thailand. We
will gladly guide you through the procedure and help you avoid any
pitfalls.
Titles
As a foreigner, if you plan to buy land or a villa then you will be
required to set up a Thai limited liability company which will cost
around £1,000 and will also have ongoing fees of approximately £50
per month. Alternatively you will need to purchase through a
leasehold agreement.. Although a freehold title could be regarded to
be a distinct advantage, in reality, a leasehold title bears no
specific disadvantage to the purchaser. Both forms of purchase are
safe and effective means of property ownership by foreigners in
Thailand.
Buying Condos
Non-Thai nationals can generally purchase units in new developments
throughout Thailand without significant restrictions, while avoiding
the occasional inconvenience of nationality restrictions. The one
proviso is that the foreign ownership ratio must not exceed 49%
(some units in central Bangkok may not be subject to this
restriction). Condo purchase is popular for investment as well as
residence and retirement purposes.
Condos can be bought as either leasehold or freehold properties,
depending on the development in which you buy. Units can be leased
to foreigners for periods of up to 30 years and may have options to
renew. You will need a lease of at least 3 years to register your
property with the Land Department, an advisable step in the case of
buildings that have exceeded their foreign ownership ratios.
Using an Agent
A good agent is essential when you buy a property in Thailand.
thepropertbank.com.com
is always carefully examine your particular investment
requirements and provide you with a selection of options from our
database. In addition, we will recommend all related professional
services you will require to make a safe and reliable purchase.
Appointing a Lawyer
It is wise to appoint a lawyer who is fluent in your language so
that you understand properly all the legalities and proceedings. Our
International Property Collaboration
Network agents will be able to recommend a good lawyer who can carry
out the necessary checks on the property or land in Thailand and
complete the legal requirements of the sale.
Lawyers will:
* Check the current owners have the correct title to the property
* Check for any charges and liabilities still owed on the property
* Check your contract and advise you on the obligations for both
parties
* Help you through the payment/funds transfer
* Ensure that the property is registered appropriately and in your
name
The Initial Purchase Agreement
The initial purchase agreement will detail price, terms and
conditions, settlement date etc. and in most cases a 10% deposit
will be required to secure the property. This deposit is refundable
should the sale not go through, as long as it is not your fault.
Reservation Fee
When buying a new condominium, an initial reservation deposit of
about USD 1,500 is required and this amount is deducted at a later
stage from the total price. Once an agreement is signed, usually 10
to 15 days after the reservation, the buyer is required to pay 10%
of the total price. Depending on the terms of the contract, the
balance then could be due in installments or as a lump sum at the
time the title is transferred.
Fees
As a general rule, for residential sales you can expect the total
fees and taxes to work out to be approximately 2 to 3% of the
property market value.
Stamp Duty of 0.5% and transfer fees of 2% have, for now, been
waived for the short term as the government entices buyers to the
market.
A business tax of 3.3 % (levied against a vendor who has been in
registered possession of the property less than 5 years) is also
charged, along with income tax (similar to capital gains tax) at a
variable rate.
Finance
Mortgages in Thailand are still relatively difficult to arrange.
However, recently a new branch of the Bangkok Bank has opened in
Singapore, which has created borrowing possibilities for foreigners
living in Thailand, offering finance of as much as 70% over a
maximum of 20 years.
You can choose between three currencies: Euros, Singapore Dollars
and US Dollars, and the currency will affect the rate of interest
which is payable on the loan. This is a very new service and you are
urged to do your homework before opting for a Thai mortgage.
HSBC has a presence in Thailand and can also offer loans of between
1,500,000 and 35,000,000 Thai Baht. Typically they will lend up to
80% of the purchase price and interest rates can be fixed for up to
three years.
To buy a condo or another property with a loan, many purchasers
obtain a mortgage in their home country and then transfer the money
to a Thai bank account, while using a lawyer to oversee the
logistics of the process.
Property Taxes
Land Tax
This is an annual tax levied on land ownership. The amount is often
so small that in practice the body charged to collect it rarely
bothers to do so. When they do collect it, it is usually after
several years when the amount has accumulated.
Structures Usage Tax
This only applies to commercially used properties. The rate is 12.5%
on the actual or assessed gross rental value of the property.
However, this notional value is well below the commercial market
rental value.
If the property is purchased through a company, you need to consider
that corporate tax is higher than personal tax, and the cost of
setting up the company must be considered as part of the initial
investment.
Capital Gains Tax
Capital Gains Tax is very low in Thailand, in the region of 1 and
3%, depending on your level of income.