Buying a Property in Thailand

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Buying a Property in Thailand

Disclaimer: What follows is a summary of the procedures involved in owning a new home in Thailand. Apart from condominiums, buyers should be aware that owning property is not a straightforward process in Thailand. The laws regarding ownership of land in Thailand are complex and are frequently open to misinterpretation even by experts. It is extremely advisable to speak with an independent lawyer before going ahead with any type of contract.

This page gives information on the types of property available for foreigners to buy, the types of land title available, and an overview of the buying process and getting a mortgage. 

Types of Property

The most common purchase, especially in the Bangkok area, is a condominium. There is always a huge selection in a wide range of price ranges. Although there are restrictions on land ownership by foreigners, it is possible for a person who is not a Thai citizen to lease land.

Condominiums (condos)

Foreigners can purchase a condo outright in their own name as long as the condo is one of the foreign quota of allocated condos. The foreign quota of condos can total no more than 49 percent of the total number of condos in the building. Not all blocks of apartments are condominiums; the building has to be registered with the land department as a "condominium". This should be checked carefully before signing any agreement.

Funds must be transferred from overseas in a foreign currency to a Thai bank account or an escrow account held by the attorney handling the purchase. All of the major Thai banks have international services to accommodate easy transfers. The minimum amount of transfer is usually US$20,000 and the transfer document must state that the funds will be used towards the purchase of a condominium.

The purchaser will then qualify for the Foreign Exchange Transaction form that verifies the funds were transferred from outside Thailand. It also confirms the purpose of the transaction and makes future transactions easier should repatriation of funds become necessary. These forms should be carefully saved as they will be required by the Land Department at the time of transfer of ownership.

• For further information: Click here

Land lease

It's possible for a foreigner to purchase a land lease (also called leasehold). The maximum time limit for the land lease is 30 years and the lease must be written in Thai and recorded by and kept at the local Land Office. The process is straightforward and is recognised by Thai law and it offers the buyer legal protection. Any extension to the lease is a private arrangement and the buyer has no formal legal rights after 30 years.

Land or any accommodation leased for more than three years must be registered with the Department of Lands. This will legitimise the lease and a land tax must be paid. Land Department Offices are located throughout Thailand and a list of their locations (in Thai) can be found on their website: Click here

If there is agreement between both parties, the seller can transfer rights to the buyer allowing the buyer the right to resell, but not own the property or land (equivalent to a freehold ownership).

The purchase contract will state:

• The length of time of the lease
• The buyer's right to resell the property
• Any stamp or registration fees (usually 1 percent of the appraised value)

Buying land

An individual foreign investor can purchase a maximum 1 Rai of land which is 1,600 square metres (2.57 Rai = 1 acre or 0.4 hectares). There are certain conditions to be met, such as bringing a minimum of THB 40 million into Thailand for investment purposes in certain activities and being granted permission from the Ministry of Interior. In reality this method of purchase is rarely used.

Another option is to purchase land or leasehold through a limited company. The company must be formed in Thailand and should be more than 60 percent Thai owned. The Thai shareholders must have Thai ID cards and sign a shareholder document stating that they are co-owners of the company with profit-sharing and voting rights. The company must be a legitimate operating company paying all the necessary taxes and complying with all Thai laws.

It is advisable to choose the shareholders carefully and to consider the formation of the company seriously. Some methods of forming companies that were popular in the past were illegal for the purpose they were being used for; the advice of a legal expert is essential as laws can change. In 2006, the Thai government began to check many limited companies to ensure they were set up correctly and not just a front for owning land.

Second Home Programme

This is the newest purchase strategy and is backed by the Thai government. The Second Home Programme is the most legally secure option and the most expensive. The membership fee is THB 500,000  plus 4 percent of the purchase price for administrative fees. Membership is transferable for 10 percent of the prevailing rate.

The buyer creates a company through the Thailand Longstay Company (TLM). A loan agreement is drawn up between the buyer and TLM thus securing the buyer's money. The agreement states the funds (equal to the purchase price) are used for the share capital of the company. The property is transferred to the company and secured by the 30-year leasehold. The property can be subleased, transferred or sold at the buyer's discretion.

Other benefits of this programme include health insurance, visa help from Immigration and discount cards.

For further details contact the Thailand Longstay Company.

• At: 24^th/F, T P & T Building, 1 Vibhavadi Rangsit Rd, Chatuchak, Bangkok 10900
  Tel: 02 936 1744
  e-mail
  Website

Types of Land Title

Possession of land is determined by the land title. In Thailand, there are eight different types of titles, but only three that will allow for purchase, transfer and sale of property. The most comprehensive land title – Chanote – shows a true certificate of ownership and is normally accurately surveyed.

It is highly recommended that an independent legal representative makes sure that the land title is correct and free of any claims before purchasing or leasing any property. It can also be sensible to have a surveyor check that the land area on the title is correct.

• Chanote - is the premium title issued by the Land Department. The survey is GPS-verified and matched with aerial photographs. A Certificate of ownership is issued and it is favourable for bank loans
• Nor Sor Saam Gor – gives a clearer title and a better survey than the Nor Sor Saam. A certificate of ownership is issued and the land can be used by that person
• Nor Sor Saam – allows for rights to use the land and a certificate of ownership is issued. It is surveyed, although not as accurately as the Nor Sor Saam Gor and can often be the subject of boundary disputes

The Samuiforsale website has detailed information on land titles and many other issues to do with purchasing a property in Thailand: Click here

Purchasing Property in Thailand

Foreigners may purchase property in Thailand in their Thai spouse's name. Only the Thai spouse's name will be listed on the Title Deed, but a Memorandum states the foreigner's marriage to the Thai owner. Because the property is purchased jointly, both have legal rights and it cannot be sold without both parties' signatures.

It is possible for a foreigner to own the property (right of superficies) upon a piece of land owned by a Thai national.

There are other options available to foreigners wishing to buy property in Thailand. Advice from professionals in property and law is highly recommended for anyone buying property in Thailand.

Locating a property

Finding the right location is essential when purchasing a home. Factors such as price, distance from work, schools, environment and city versus suburbs, all play a part in the decision-making process. In Bangkok, location is all important, as to travel even short distances by road can take a long time. Properties near to a BTS, Metro station or expressway generally enjoy a premium.

There are a number of ways to find a property. There are homes for sale online, in the local newspapers and signs may be posted in the neighbourhoods. Many home buyers decide to make their purchasing as simple as possible and opt to hire a real estate agent.

Agents are very helpful when the buyer wants representation. When choosing an agent, it's important that communication and mutual respect is established from the beginning. Decide and stick to a pre-determined budget. The agent's commission is approximately three percent plus VAT, although usually the seller pays the commission.

The buying process

The buying process may vary depending on the type of property to be purchased and the way in which it is purchased.

• For official information from the Department of Lands website: Click here

It is best to also check with experts in real estate for any recent changes to the law.

It is highly recommended that an independent lawyer is hired to draw up any documents required and advise on the exact documentation and paperwork needed for buying or selling properties in Thailand. Part of the transfer is done at the local Land Office where it may not be possible to find an English speaking officer. The documents at the Land Office will be in Thai.

The negotiation

If a real estate agent is involved, most of the negotiating will be handled by the agent. It is important to know what one wants before going into negotiations, such as:

• Price
• Terms and conditions: length of loan repayment and interest rate
• Exactly what items in the house are included in the price
• Possible renewal if leasehold

It is highly advisable that a complete title search is done by a law firm. A land survey should also accompany this title search. A person can own a house in Thailand and not necessarily own the land, so a thorough search is necessary. Loans from banks and unauthorised money lenders using the land title deeds as security are common in Thailand. A simple check should ensure there are no serious problems.

Prior to making a final commitment, it is recommended to have an engineer inspect the property for any major defects to the structure and the electrical and plumbing installations. 

A home inspection is essential for peace of mind when buying property. This simple process will save money and allow for better negotiations. If problems exist, the inspector should bring those issues to light. Any problems can then be presented and negotiated with the seller.

The purchase contract

When all parties involved reach an agreement a purchase contract is drawn up and all parties must sign the documents. A deposit is normally required at this stage. There is no legal requirement for documents to be notarised in Thailand, but all copies of documents have to be signed as being true copies of the original. All parties listed on the deed must sign the purchase agreement.

The agreement can be prepared by the agent or the seller and purchaser. It is important to include everything that is included with the property (for example furnishings, refrigerator).

Closing the buying process

After a final check of the property the seller and buyer meet to sign the appropriate documents. The meeting usually takes place either at the real estate office or, if a lawyer was hired, at the lawyer's office. Unless power of attorney is given it will also be necessary to visit the local Land Department office.

The documents required at the time of purchase will depend on the type of property and the method of purchase. If a limited company is involved the amount of paperwork required is large and it is essential that a lawyer is involved. Documents needed will include some or all of the following, check with a lawyer for exact details:

• Passport or ID card
• House Registration Document if applicable (Tabien Baan)
• Marriage or divorce certificate if applicable
• Power of Attorney form if applicable
• Foreign Exchange Transfer form from the bank (Condo only)

If the buyer requires a mortgage then the bank will need to be involved as the land title will normally be held in the bank's name.

Completion

After all of the terms and conditions have been agreed upon by all parties involved, all documents should be notarised although there is no legal requirement for this. It is typical in Thailand for all of the documents to be written in Thai; however translations can be made.

After the deposit has been deducted from the purchase price, the remaining balance plus all additional fees and taxes must be paid by the lending institution or the purchaser. A receipt will be issued for the purchase price and the purchaser will get a document confirming the purchase as well as the keys to the property.

Getting a Mortgage Loan

For those who are married to a Thai citizen, getting a loan is fairly straightforward. The loan will be in the Thai person's name and there are a number of banks who will give a mortgage loan. The following is usually required as well as additional paperwork in specific cases:

• Marriage registration
• The purchaser(s) must be able to provide proof of a steady income with employment or a business in Thailand. Proof of income earned overseas is taken into account but the main source of funds needs to be earned in Thailand
• If the main income provider is a foreigner they must have held a work permit for a minimum of one year

If a loan is granted, the loan may often only cover half of the sales price; if additional funds are needed, up to 70 percent can be processed if a strong income can be proven. Interest rates will depend on the bank's Minimum Lending Rate or MLR.

Those not married to a Thai citizen will find it very difficult to get finance in Thailand to purchase property. However, a number of banks will lend to foreigners buying condominiums, as the title is secure.

Seller assuming the mortgage

It's possible for the seller to finance the purchase in part or entirely, depending on what is negotiated. This is a private arrangement between buyer and seller that sometimes occurred because foreigners historically had great difficulty in obtaining a mortgage.

The owner sells the house to the buyer, but only receives a certain percentage of the amount. The rest will be paid on a monthly basis plus interest. The exact terms are all open to negotiation. Until the money has been completely paid the land title will still be in the original owner's name.

If both parties agree on this course of action, the purchaser must be absolutely certain that the seller is indeed the owner and has legal authority to sell the home or lease the land. A title search will list the legal owner(s) of the property. Make sure that all documents and agreements are notarised.

Further Information

• For Property Agents in Bangkok see The AngloFILE Property & Real Estate
• Mortgage Calculator
• AngloINFO INFOrmation Page Selling a Property in Thailand

Prepared by Graeme Laird
President and CEO Andrew Park Company Limited
Property Agents and Consultants – Bangkok and Phuket
BB Building, Level 19, Suite 1913, 54 Asoke Road, Sukhumvit 21, Wattana, Bangkok 10110, Thailand
Bangkok Tel: 02 260 8002 Phuket Tel: 07 635 4016 to 8 Fax: 02 260 8007/ e-mail/ Website