We have listed out some of the common questions asked by clients about buying property in Thailand. If you have a question which is not listed here and would like us to answer it please feel free to contact us anytime.
Buying property on your own, in a foreign jurisdiction can be often risky for many different reasons. Significantly in Thailand, local knowledge and negotiation skills of an experienced local real estate agent can be extremely useful when buying property. An experienced estate agent, posses the knowledge of market values of properties, legal requirements, understands cultural differences in negotiations of the process of buying property will be a very cost effective tool when you are buying property. They will help you make a fully informed decision by taking you out to see many potential properties before you a make a final decision to buy. Most of their services involved in assisting you to buy property will not cost you anything as a buyer. The real estate agent's commission which is normally a 3% on the selling price of the property is paid by the seller. Sellers often add this figure in to their selling prices to help them sell the properties through real estate agents. So there will be no significant price reduction because you do not use a real estate agent to assist you in buying. In fact a reputed real estate agent like us would assist you to negotiate with the owner in an effective way for you to get the lowest possible price for the property. Furthermore a real estate broker can also guide you through the legal procedures to ensure safe and secure transactions. So in many different ways it is wise to seek assistance of an experienced real estate agent such as Benchmark Property Pattaya to assist your property purchase here in Thailand.
In Thailand the most convenient way of buying a property for a foreign buyer is to buy a condominium. The only restrictions on purchasing a condominium, are that the percentage of units sold to foreigners cannot exceed forty nine percent (49%) of the total number of units in the condominium building and that the funds used to buy the condominium have been transferred from abroad and correctly recorded as such by a Thai Bank on a Tor Tor Sam. The balance of 51% should be in a Thai name or in a Thai registered company name. Foreigners buying condominiums is governed by the jurisdiction of the Condominium Act B.E. 2535 (1992).
The foreign condominium owner will get a title deed (called as " Chanod " or " Chanut " in Thai) which legally proves his ownership of the unit. The certificate also has a statement saying exactly what percentage of rights over the common areas of the building each owner has. This document will state the area of the condo that belongs to the owner privately and his name registered on that document as the only legal owner for the unit.
This is one of the most frequently asked questions about buying property in Thailand. The best way to circumvent the law that prohibits the foreigners to own land is to consult an experienced and reputable Thai lawyer to advice you about the best possible options available. Benchmark Property Pattaya can assist you to introduce you to such a lawyer who can offer his services at a very reasonable cost.
Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.
Although Thai law prohibits foreigners from owning land in Thailand, there are various options you can choose to legally become the owner of the land, and still comply with existing Thai laws:
Once you agree on a selling/purchasing price the common practice is to prepare a sales/purchase agreement that will mention all necessary details of the purchase such as the selling price, amount of deposit paid, time frame to complete the full payments, conditions of transfer fees, etc. Normally an experienced real estate agent or a qualified lawyer can prepare this agreement for you once they have completed the due diligence on ownership documents. It is a common practice to pay a reservation deposit to reserve the property you like and this prevents the seller from selling it to someone else once you have finalized your decision. This deposit normally can vary from Baht 50,000/= to Baht 500,000/= depending on the sales price of the property. After the purchasing agreement is signed by both parties with witnesses the buyer will get time to transfer funds from overseas (up to 30 days or negotiable) to their local bank account.
A Tor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Tor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Tor Tor Sam must specify that the remittance is solely for the purpose of purchasing a property - Code 5.22.
The land title deed or "Chanod" as it is commonly known in Thai is a certificate of ownership for land which is completely in Thai language. A Title Deed is the purest form of evidence that an individual owns a piece of land. Title Deeds are given only for areas of Thailand which are surveyed. For areas which are not surveyed, there are other documents for land possession such as evidence of the possession of the right to utilise the land or other interests in the land. These documents are called "Nor Sor Sam (3) and Nor Sor Sam (3) Kor". Unlike the Title Deeds, these Nor Sor documents are issued to show the possessors' exploitation of the land. Though these documents do not provide ownership rights, as do Title deeds, they can still be registered for transfer of the lands for which they are issued.
Foreigners generally cannot mortgage properties in Thailand, however, most of the financial institutions in Thailand provide loans for real estate purchasing to Thais and Thai companies. It is common for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in installments from 10 to 24 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan which is financed from a financial institution. The financial institution requires you to mortgage the property with it as collateral against the loan. There is another option available for buyers which is not very common but some private property owners offer owner financing with a down payment and installment payments with or without interest for 12 to 36 months depending on negotiations.
Finding the exact appraisal price for land is difficult, since there are generally three different appraisal rates; the government rate, the appraisal company's rate and the rate which is considered to be fair market value of the land. Over the last few years all of these rates have begun to come closer together. If you need any assistance in land appraisals and valuations we will be happy to assist you in every possible way with our staffs experience in the property market. Please feel free to contact us if you need assistance.
Whether you are considering renting, leasing or purchasing property there are several infrastructure and other considerations which must be taken into account:
Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim.
Finding a good lawyer in Pattaya would not be an easy task for a first time visitor or a foreigner without expert advice. When you are looking for a lawyer important things you need to consider are his professional background, experience, local knowledge and most importantly whether his fees are reasonable or not. It is highly recommended that you consult an experience real estate agent such as Benchmark Property Pattaya who can give you unbiased advice on choosing the "right" lawyer. Choosing a lawyer is something you need to get right the first time because if not, it can end up with a lot of unwanted confusion and problems. Benchmark Property Pattaya can recommend you several lawyers who are well qualified and experienced in their profession and also have given their service to many clients who are satisfied with their service. Please feel free to contact us if you need a Thai lawyer to assist you.
There are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the west, however, the most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purpose.
On all purchase/sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 0.01%, a business tax of 0.11% levied against an owner who has been in registered possession of the property less than 5 years, and Income Tax. There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 1.0 - 3.0%) on property is the comparable replacement. There are no set rules on who pays the income tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership