Buying Land and Property in Thailand - FAQ

Can a foreign national buy land in Thailand?

The answer straight out is No. Furthermore, they cannot own more than 49% of the shares in a Thai company that owns freehold land. Recent press reports concerned certain parties who tried to find loopholes in this system: loopholes that it is expected will be closed in the future.

Can a foreign national own a building in Thailand?

Yes! A foreign national is allowed to own a building distinct from the land which, coupled together with a renewable registered 30 year lease, is regarded by many as being as good as owning the freehold land itself.

Why should I leasehold land?

If you want to buy a house - buy the house outright, in your own name, then lease the land. This way you do not need to open a Thai company. Please make sure that the lease agreement allows for freehold transfer, if and when the law permits. Leaseholds can be registered at the local land office, to give absolute protection. At present, 30 years is the maximum length for a legally permitted domestic lease and 50 years is the maximum for commercial leaseholds. Renewals are at the discretion of the land owner or his/her heirs. What this method allows is a period of thirty years to await a law change on foreign ownership or, your decision to open a Thai limited company, and take the option of the freehold. It may also be possible to further extend your lease for another 30 years, but this is not guaranteed in Thai law. Registered Leaseholds are safe, uncomplicated and easy to setup.

How can I secure freehold land ownership in Thailand?

You need to set up a Thai company, of which you can own no more than 49%. For those of you who are not comfortable with Leasehold, the Freehold method of ownership means that the Thai company that you control owns the property. The Land Code of Thailand along with the Foreign Business Act (FBA) prohibits foreign control (voting and management) of a Thai majority owned company that owns land in Thailand. Therefore, it is of paramount importance that a proper legal structure is adopted to retain effective control over a Thai majority owned company whilst at the same time avoiding anti-agency and anti-nominee provisions.

What are the safeguards of owning freehold land, and what are the responsibilities?

As an additional safeguard, you may set up a company to control the freehold land which you, as an individual, then lease. Further, you may also have the company register a mortgage over the land in your favor.

If you choose to purchase your property Freehold you should consult with professionals who will adopt the proper legal structure to protect your interests and who are able to explain the same to you in detail, in your own language or at least in a language that you understand well.

There are legal responsibilities and tax implications with respect to the owning and running of a Thai company.

If choosing the Freehold method of ownership and control you should appraise yourself of these costs, responsibilities and implications by consulting a professional lawyer.

What is the best way of paying for land and property in Thailand?

If you are purchasing property in Thailand and you want to pay in Thai Baht, ensure that your funds are transferred into Thailand in foreign currency and converted to Thai Baht here.

The reason for this is that the receiving bank will issue a Thor Tor 3 Certificate confirming the transaction.

The relevance of the Thor Tor 3 Certificate is that it is one of the documents you will need in the future if you wish to repatriate funds without incurring tax penalties.

Also, please be aware that banks will only issue Thor Tor 3 Certificates for individual inward transfers exceeding 10,000 US$.

Repatriation of investment funds and repayment of overseas borrowing in foreign currency can be remitted freely upon submission of supporting evidence.

One of these documents would be the Thor Tor 3 mentioned above, or in respect of a foreign currency loan, the loan contract. Remittance of funds without proper documentation could be regarded as income and become liable for tax.

Most real estate agents and property developers on Koh Samui prefer to simplify the process by allowing you to purchase your property in foreign currency. Your money is usually transferred directly into one of their offshore accounts. They will setup the freehold or leasehold for you directly on remittance of this money.

When the time comes that you wish to sell your property you simply sell it on in foreign currency.

Which property taxes will I be required to pay in Thailand?

There are two different types of Tax levied on property in Thailand. They are called:

? Land Tax and
? Structures Usage Tax.

Land Tax is a very small tax levied on land ownership equivalent to just a few Baht per Rai per year. This amount is so small that the land office rarely bothers to collect it and if they do, they may wait a few years before the amount is worth the effort of collecting. In any commercial sense this tax can be largely discounted.

Structures Usage tax is applicable at the rate of 12.5% on the actual (or assessed) gross rental value of the property. Lessees are not subject to this tax but may be required by the Developer to pay an "annual ground rent" instead.

Which are the official land title deeds in Thailand?

True land title deeds are officially called Nor Sor 4 Jor or more commonly "Chanote" and are issued by the Surat Thani Provincial Land Office. Land held under Chanotes are accurately surveyed and GPS plotted in relation to a national survey grid and marked by unique "numbered" marker posts set in the ground.

When scouting around expect to find many land documents in the form of Nor Sor 3 or Nor Sor 3 Gor which are in the strictest interpretation of the law, certificates of land utilization. They are to all practical purposes equivalent to land title deeds because they allow the land to be sold, leased or mortgaged in the same way as land held under a Chanote Title.

The difference lies in the fact a Nor Sor 3 certificate is less accurately surveyed than the Chanote. Nor Sor 3 boundaries are recorded in relation to its neighboring plots and therefore there may be survey errors in length and land area. The newer Nor Sor 3 Gor is in general a much more accurately surveyed title as each plot is cross referenced to a master survey of the area and a corresponding aerial photograph.

Which ?land papers? should I avoid when buying land in Thailand?

There are a host of "land papers" which we advise all serious investors not to give any credence to. They are in essence a form of claims to possessory rights which have been filed with the district land office and upon which a small tax fee has been paid. The land held under these papers cannot be dealt with by way of sale, lease or mortgage. Legal acts cannot be carried out to the property and most importantly, you cannot apply for and obtain approval to build on the land.

In conclusion we recommend that any foreigner wanting to buy land should consider only those held under a Chanote or Nor Sor 3 Gor. Remember, whenever in doubt, please consult a professional. We are happy to assist you in recommending a lawyer.

Here is a complete guide for buying, selling or renting in Thailand

For many homeownership is amongst the largest single investments you will most likely make during your life and it's in your best interest to be educated about the process involved. Many of you will no doubt have bought and sold many times in your home country but the rules are often somewhat different in Thailand. Buying a property regardless of value can often be a daunting task, but if you approach it in the right manner it can be a hassle-free process. We have listed below a number of points to be considered that we hope will help you proceed in confidence. In all instances, Real Estate Companies are here to assist you every step of the way, so if there's something you are not sure about - always feel free to ask.

Firstly let us consider the basic steps involved in buying your property;

1. Things to consider yourself

What type of property you are looking for (Condo, bungalow etc)
Which area you would like to live? If you don't have a lot of local knowledge yourself, contact Real Estate Companies who will advise on the pros and cons of certain areas.
Advise Real Estate Companies on your basic requirements (no. bedrooms / swimming pool etc)
What's your budget? With vastly differing prices for properties it's best to establish an upper limit of what you're prepared to spend. In all cases, Real Estate Companies will always look to find the best deals possible with our resources available.
 

2. Searching & buying

Real Estate Companies will assist you with the search for your new home, usually providing you with a short-list of properties that meet your criteria for you to visit along with there knowledgeable staff.
Upon finding a suitable property, advise your intention to place an offer / purchase.
Upon offer being accepted, submit a deposit, usually 10%
A Property Purchase Agreement is then signed
Balance of property value transferred (see further notes regarding transferring funds).
Contact the utility companies, water, electric, telephone.
Final inspection (check inventory)
Move in & crack open a cold one!
Okay, so this is the basic outline of the buying process, but we should consider some of the things that can go wrong along the way. As we said before, buying a property can be a daunting task for those who have not bought in Thailand before and should be approached in the right manner. Let's run through some of these points in a little more detail...

Neighbourhood
Once you locate a home that appears to fit the bill, arrange a second viewing, perhaps on a different day/time to get another perspective. Heavy traffic blaring into your peace and quiet at rush hour can be a nightmare. Conversely, if you have been used to city living, will you be able to appreciate just how quiet it can get in places? Some areas have not yet been developed to the extent where street lighting is none existent, so if you are living alone will you be able to handle the darkness?

As anywhere else in the world, crime exists in Thailand. Although it is not as prominent amongst the 'foreign' community from what we are led to understand from local TV and newspapers, so would you prefer to have your home on a secure village with 24 hour security? Take your time to look around the village or area and see who you will be living next door to: If there are groups of guys hanging around drinking rocket fuel-like whiskey, then it may be wise to look elsewhere! Real Estate Companies will gladly give you the benefit of our experience and knowledge of the areas in and around Thailand.

Price

Without the aid and assistance of a local real estate agent, buyers can often pay far more than fair market value. It is not uncommon to hear horror stories where huge amounts of money were wasted because the market was unknown. Market areas differ - what you sold your last home for does not necessarily equate to equal pricing structures in your new neighbourhood, especially in Thailand. Real Estate Companies will offer comparative prices so that you have peace of mind that you are not paying over market value.

Buying outside of your Budget

Careful budgeting is a basic necessity. First time purchasers be warned that it is very easy to buy beyond your means. It is better to buy the home you need and can comfortably afford than experience being forced to sell and buy down. On the opposite end of the scale is purchasing a home that offers less function and feature than what you really need. Inevitably, you will end up purchasing the right home and have to bear the cost of reselling and moving again.

Condo/Apartment Living
 

Condos in Thailand suit a variety of ages, whereas typically in the USA they are seen as 'retirement' homes. Generally speaking condos offer a great alternative to owning a home, where security and upkeep/maintenance of the gardens may be a concern for those who don't live here all year round. A condo can simply be locked up for the year and be ready for when you come back next time on holiday. For those of you who are retired from the workplace and are beginning to contemplate a smaller residence, a condo can be ideal - no more high maintenance yard work or too many rooms to clean.

Determine your needs realistically:

What are the maintenance charges and are they annually or monthly
Are the local amenities close by (Laundry service, newsagent etc)?
Is the Clubhouse open to family members, especially children, on holiday?
Do the building rules forbid small pets?
Are you in the same age bracket as the current residents?
Is it a family-oriented building, or singles only?
What are the noise restrictions?
Can hanging baskets and lawn chairs decorate your balcony?
Can you BBQ on your balcony?
Is there adequate parking? Is covered parking available?
Is the personal and building security systems to your liking?
Are the communal hallways maintained & cleaned to a suitable standard?
These are just a few of the questions that you may want to ask whilst you are considering buying a condo. Other questions to ask can be related to the actual ownership of the condo, i.e. can it be in your own name or is it owned in a Thai Ltd company name? Either way these points would usually be answered by our staff.

Maintenance

The thought of your own swimming pool, the manicured lawns, or the beautiful Tropical garden in full bloom is an idyllic one at that. It's lovely to look at, but do you want to spend the time required to keep everything in top working order? Do you have the funds required to hire a full-time gardener / handyman? In some cases, you may be better suited for townhouse or condo living where yard maintenance is part of the contract, and the village offers a communal swimming pool and exercise facilities.

Establishing Ownership & Title Searches

Protect your investment by asking for advice - avoid potential difficulties by having a title search performed as early as possible, establishing who owns the property, right of ways, builder's liens, leases, an undisclosed co-owner etc. Real Estate Companies can conduct these searches on your behalf to give you peace of mind. Alternatively you can employ the services of a lawyer here in Pattaya and request that they include this in their remit.

Property Surveys

You should where necessary choose to carry out a survey of the property and make observations on the following;

Is the neighbour's boundary fence where is should be?
Is the home too close to the property line?
Is there room for the addition you are planning?
Are any regulations violated?
Structural Defects
If the property you are looking at is one of the older ones, perhaps you should consider an independent home inspection. Careful examination by a professional will remove all doubts! Is that tiny crack in the foundation a repair nightmare or merely settlement? Are the walls infected with termites? Does your budget have room for a fortune in reconstruction costs? For a few thousand Baht you can obtain an extensive inspection report that will point you to any structural defects in the building. Ascertain the cost of repairs prior to entering into a binding contract.

Vendor Errors

It is not uncommon to find that repairs have not been made, or other contractual obligations may delay settlement. Plan a walk-through of the property, contract in hand, and check off each item before paying the balance or final settlement.

Unexpected Costs

You should be aware of all costs associated with buying your property and yet to some it is not unusual to reach settlement stage only to find that 'hidden' expenses have occurred. It is important that you understand the buying process here in Thailand and can ensure that you are prepared financially for the payment of transfer fees, property tax, company formation etc. Real Estate Companies will of course be pleased to assist with all of the above and will ensure that you are fully informed.

Transferring Funds & Tor Tor 3

This is an important point to note and one which is often overlooked by the buyers here in Thailand. Having paid the initial 10% deposit for the property invariably you will need to transfer the remaining balance from your home country into Thailand. When doing so, you should take care to transfer the monies in your own currency i.e. from the UK send the balance of the payment in GBP Sterling. Also, make it known to the bank that the purpose of transferring such an amount is for buying property. By transferring in your own currency you will often gain a better exchange but more importantly it will make it easier for the bank to grant what is known here as a Tor Tor Sam, or Tor Tor 3. This is a bank certificate that is required whenever a transaction in excess of 20,000 USD takes place. The bank will often not release the funds or allow the transfer of the property to take place without this single piece of paper!

Guide To Renting.

If you decide to rent rather than buy a property, then you should first consider some important factors before you even begin to look. It seems like common sense to determine what type of property you want to live in, the area you wish to live and how much you can afford but yet many people simply don't know what they want! It is also a worth noting that the majority of landlords here are looking for long term rental of their properties and will often give a better deal to someone wishing to rent say for 12 months rather than 3 months. Some Landlords will not even consider letting their properties for periods less than 6 months so it pays to ask the question on each property. To give you a head start please ask yourself the following questions.

1. Your budget - how much can you comfortably afford to spend?

You will need to work out how much you can comfortably afford, so please take time to jot down your predicted monthly expenditure (and income if applicable) taking into account the following;

Security Deposit (usually 2 months rent)
Monthly rental charge *
Utility charges (including connection of water, electricity, telephone, cable TV)
Furnishings
Kitchen utensils, e.g. cutlery, crockery, cooking pans and etc
Linen, e.g. bed sheets & towels

* Rental charges are usually paid in advance. The security deposit is returnable to you at the end of the rental period, usually following an inspection of the property by the vendor. Any sums to cover breakages or damage will be deducted from this amount.

** The majority of rental properties come fully furnished as you would expect, but none the less you should always factor these into your sums. There are an abundance of shops selling appliances, home furnishings and prices are usually cheaper than those of your home country.

2. Property Type - What is best for you?

There are many different types of rental housing to consider, including bungalows, two storey houses (detached), townhouses, condominiums (studios, 1 to 3 bedrooms), long stay hotels or serviced apartments and commercial shop-houses.

3. Location - Where do you want/need to be?

In real estate parlance, location determines price and price determines location. This remains true. Your budget will influence where you choose to live. After you have calculated what you can comfortably afford to spend, come and take a look at what rental properties we currently have available. From these, try and identify which are in the areas you would most like to stay.

Finding a location that suits your needs is probably just as important. In a place like Thailand a lot of people are influenced by the entertainment venues, restaurants and bars. It's often the case that after a few months when the novelty has worn off some people may wish that they had chosen somewhere a little more sedate. Perhaps you are relocating here for work requirements, in which case you may wish to consider somewhere a little quieter away from the noise or somewhere with good road transport links. Here are just some examples of the determining factors;

Where will your place of work be? Do you need to be close-by?
Do you know people here already? Do you need to be close to them?
Are you a big water-sports enthusiast, would you prefer to be close to beach?
Are you a night-owl? Would you like to be close to entertainment venues?
Is shopping a big factor in your life
Are you a golfer? Do you need to be close to a golf course?
Are you coming here to teach English? Do you need to be close to Schools?
Are you here for a quiet life? Would you prefer a quiet area?
Determine what is important for you. It may be that there are several areas that may serve your purpose in which case you should take a look at properties there before making a decision. In all cases Paragon Properties will gladly give you the benefit of our experience and advise you on all areas

Guide To Selling.

Having decided to sell your property, you should let us know about it so that we can begin the process. You can call us, e-mail us or simply find one of our Real Estate Companies for an initial chat. Here is a brief outline of what will happen when you decide to sell your property with us.

Getting things started

Real Estate Companies will explain to you the process of selling from start to completion explaining the legal requirements along the way. We will explain to you the process involved with contracts and transference of ownership title and what is needed from you the seller. Real Estate Companies will provide you with comparative property pricing data that will allow you to price your home to sell. Whilst doing so, we will offer suggestions on presentation of your property, recommendations as to carrying out minor repairs - all with the aim of making selling easier. Real Estate Companies staff will arrange to visit your home and carry out a professional listing of your property, detailing sizes, key features including colour photographs of both internal and external aspects.

The Marketing or 'Selling' Part

Your property will be entered into our 'property for sale' database, which is fully searchable by potential buyers via the internet. It will display the key features of your property including the colour photographs. In addition, the property will be displayed in Real Estate offices and will be made available to all potential buyers that call in. Real Estate Companies will maintain the highest possible standards when advertising and marketing your property. They will arrange viewings for all prospective buyers so that they can appreciate your property first hand. Any feedback that they give to us, positive or negative, They will pass onto you - allowing us to re-evaluate any aspects of the sale where necessary.

The Actual Sale Part

Having found a buyer we will request from them a 10% deposit, or at the very least a "holding" deposit. If during the sale you have agreed to include certain items with the property (i.e. any fixtures & fittings) we will co-ordinate with you and assist by drawing up any 'inventory agreements'. Similarly, if during the sale you have agreed to carry out any work / minor repairs / final cleaning etc, then Real Estate Companies will arrange suitable contractors on your instruction to attend. A Purchase contract will be drawn for both buyer and seller and money exchanged via bank transfer.

Selling Tips

Generally speaking, moving home for most people can be a stressful time, particularly when you are faced with the task of selling your property. Even if it is not your first time you find yourself in that situation, things can still go wrong. There are however a number of easy steps that you could take to boost the chances of successfully selling your property. We have listed some of the most frequently raised points by those wishing to sell and hope that you find these useful.

1. Price: What value I should sell my property for?

Price is usually the first thing that people would think about when it comes to selling and is largely dependant upon the prevailing state of the market wherever you may be. It is extremely important to get this element right. Failure to do so could result in simply not attracting any potential customers. Real Estate Companies advise clients of the current market trends and will offer comparisons with similar properties in similar locations that have been sold in the previous days and weeks. This will ensure that the property is not over-priced and conversely, under-priced - both of which could deter potential buyers. Please note that whilst we will make suggestions it is always up to you, the client, who will make the decisions.

The key factors that will influence your property's value are as follows;

Type of property

Location
View (an unspoiled sea view for example will command a higher price)
Size (both internal and external for houses), Living area etc
Condition, age and any improvements you have made
Furnished / unfurnished
Real Estate Companies would also consider factors such as building maintenance, services & utilities when carrying out a valuation. It is important to have the property properly inspected for any signs of problems that may affect the market value. In such cases, Real Estate Companies can assist by arranging builders work, journeyman repairs etc. prior to advertising your property.

2. Getting Your Property Ready To Sell

If you are considering renovating or re-decorating your property before you sell, just consider that you want your property to appeal to as many people as possible. This means not indulging in your own personal taste or brand of interior design what you consider to be the pinnacle of high fashion - but instead look at the bigger picture. For example, the majority of potential buyers are likely to go for simple light colours, not to many different colours schemes.

When marketing your property consider the following points;

Tidy up & clean

Consider packing away all of your 'clutter', or personal affects from around the house and try to maintain a 'minimalist' space. This will allow the viewer to imagine themselves in your property.
Simple paint colours, not too many: Magnolia is a classic and is a safe bet.
Good quality fixtures & fittings make a big difference.
Bathroom: a really big plus point in any property, make sure that it is clean and have any silicone sealant, defective/ leaky hoses renewed or replaced. There are specialist cleaning solutions that will get the place spotless.
Appliances: If it's broke, then do something about it and get it fixed!
Appliances: If it's not broke, great, but at least give them a quick clean
Introduce a vase of flowers or some plants within the space to add a touch of the outdoors and some color.
Plug-in air fresheners are relatively effective at maintaining a pleasant aroma within the space. This is essential if you are a smoker, have a smelly dog, or if you're a lover of chicken curry.
If you have lived in your property for a long time it is always a good idea to get a second person (perhaps a friend, neighbor or colleague) to come and look - giving the perspective of a potential buyer so that they can point out all the things that they don't like, or the things that would put them off buying your property. They have to be honest, otherwise this exercise won't work! If at any stage you need any assistance or advice with regard to updating or cleaning your property, please feel free to contact your Real Estate Company. We would be pleased to arrange an initial visit to make an assessment followed by a full professional service that is guaranteed to make your property stand above the rest!

Disclosure is perhaps as important than the above. You should disclose any defects that you know of such as structural problems, leaking roof etc at the time of selling your property. Not only will we be able to offer advice on the best way to proceed, we will ensure that by being up-front there will be no recriminations following the sale. You should also formally agree to what is included in the sale and record this on an inventory (copy example available from your Real Estate Company). Things such as fixtures & fittings, curtains, lighting, electrical appliances, cooking equipment etc should be listed to prevent any confusion at a later date.

LAND TITLING & RELATED.

Apart from Condominium ownership and erecting buildings on land not owned (both covered below), land titling can be quite complicated. There are various levels of land titling - from a simple right of possession through to a full title as we know it in the Western world. This full land title deed is called a "Chanot" and is backed up by being recorded by the government, using GPS to record both the area and its boundaries. The Chanot paper itself is normally of a few pages and shows a surveyed plan of the land, various registration numbers, previous owners and mortgage history. Beware of photocopies and make sure that official chops, notations and the Garuda (the official Government authority crest) are all clear and readable. This is an extremely valuable document - just like title deeds in Europe and losing it will give all sorts of problems.

Fortunately, most land and property that is traded on the Eastern Seaboard has a Chanot title. However, there will still be cases where a lesser title is only available - such as Nor Sor Saam and Nor Sor Saam Gor - usually in undeveloped areas in the countryside. This may still be acceptable and it is often possible to upgrade to Chanot over time. However, we are getting into a very specialized area and it is essential to seek Real Estate Companies' legal advice in these cases. Although land prices may well be lower for these lesser titles, it may well be prudent to discount any property without Chanot title.

Buying land for subdivision is also a specialized area and involves many local and central government departments, building codes and suchlike. There are waiting periods before titles may be issued. Again, an area for experts. We are currently hearing some disturbing stories about the authorities clamping down on land subdivisions. Any scent of foreign ownership in the overall development might well mean that the issuance of eventual titles to individual owners is a problem. One precaution that an end-purchaser might take is to have some sort of break clause covering any problem in the issuance of the individual end titles. Condominiums are looked at below under 'Ownership by foreigners'. Erecting buildings on land not owned does happen and this is invariably where a foreigner has taken a long lease (usually 30 years).

Ownership by Foreigners

Basically, Thai law does not allow a foreigner to own land in Thailand, although they can own the buildings thereon. There are two notable exceptions to this strict law. Firstly, where a foreign company has Board of Investment ("B.O.I.") approval and the land is part of the project (usually manufacturing). Even then, the ownership is very much tied in with the overall B.O.I. terms. Secondly, a new law (Land Code Section 96, 2002) allows an Alien to buy up to one Rai for his or her residential purposes in metropolitan areas such as Bangkok providing they also invest at least 40 million Baht for five years in government bonds, recognized property, mutual funds or B.O.I. projects. Permission for this must be obtained from the Interior Ministry and the ownership is monitored by the Lands Department.

Apart from these two rare exceptions, both partnerships and companies also fall under the strict land ownership by foreigners' prohibition - should the foreigners control too large a share. The Alien Business Law, which regulates the investment in land by foreigners, states that "land trading" is prohibited to foreigners. A foreign-controlled company is defined under Thai land law, and states that any Thai registered companies or partnerships with more than 49% of the company's total capital, or more than half the shareholders being non-Thai, are considered foreign. It is often difficult for even a company with a 51% Thai/49% foreign ownership to purchase land - particularly if you are using an inexperienced lawyer. Real Estate Companies have professional experienced lawyers on hand to ensure acquisitions are made legally and expediently whenever foreign ownership is in question.

Condominiums

The relatively new condominium law that was created some years ago allowed for up to 40% foreign ownership on new condo developments. This was then raised to 49% of the units and extends now to most existing condo blocks. Then an unlimited foreign ownership share concession started to apply to developments in Bangkok, providing the developments were more than 40 units and being on no more than five Rai. This relaxation was stopped in 2004, meaning that a Thai (or a Thai company) cannot now sell a condo unit to a foreigner if the total foreign ownership level is over 49%. Selling foreigner to foreigner appears to be OK, regardless of foreign ownership level. Foreigner to Thai is no problem, whatever the level. Care must be taken with bringing in the funds for the acquisition - following Thai banking procedure to the letter. This means creating a Foreign Currency Account in order to qualify for a "Tor Dor 3" certificate - issued by your Thai bank to verify that the originating funding came from outside Thailand in a currency other than Thai Baht.
This certificate is needed by the Lands Department.

This is by far the safest way to own property in Thailand as an individual. On making a condo selection, it is important to check such as the condo sits on freehold land, the level of foreign ownership pertaining and current outgoings. Good ongoing management is also important - needless to say, you will also need to find out exactly what your ongoing service charges will be and what they cover. Major expenditure such as an external repaint and lift replacement in the future may come as a rude shock if they are an extra.

Practical Solutions to Land Ownership

Leasing the land - Currently, Thai law allows a maximum term of 30 years for a lease of land. It is usually possible to extend this lease each 30 years. Currently, at the end of each term, both the lessor and lessee ('seller" and "buyer") must register the renewal with the Land Department and pay government fees, and other expenses, such as stamp duty. This gives effective "ownership" of the land and has become a popular choice. The downsides include the Lessor not wishing to renew, any future law changes and the fact that you have invested capital into a very personal investment, not easily tradable.

Nominee

All you need is a Thai national who is prepared to be the "legal" owner on your behalf. A matter of trust and not recommended. A well-known English writer living in Bangkok a few years ago bought a small condominium and placed it in the name of his long-term and trusted maid. After an extended holiday in Europe, he returned to find that she had sold the property as she was broke. At least she was not all bad - she held all his personal items (including a safe) for his return. It appears that there was simply too much temptation and, whilst we realize that there are many trustworthy people out here, it really is a case of proceed with extreme caution in this regard.

Nominee with Mortgage

This interesting method was found on an obscure website. Get the maid or other person to sign as owner as above, but you take out a mortgage with yourself as the "lender". There will be a small fee to pay to register the mortgage with the Lands Office, but the property cannot be sold without your consent (i.e. you have not discharged the mortgage). Holding a blank transfer document signed by the Nominee would help with any future Nominee changes.

Company Ownership

This is probably the most popular method of property ownership. This is normally done through a lawyer's office and provides effective control. Being a company, there will be such as ongoing accounting and legal fees payable, but not much. Setting up the company does cost (see Company Formation below), but at a fraction of the purchase price. The company is normally sold as part of any on-sale.
 

Thai Spouses
 

This is a difficult area and great care must be taken on marriage to ensure that any property elements are correctly dealt with. The general rule is that Thai nationals who marry foreigners are not allowed to own land in Thailand, unless the foreign spouse signs a document which declares that the property is separate, and that he or she has no interest in the property in any way. The Thai spouse must also declare that the money to buy the property was his/hers in the first place. So, putting land into your Thai spouse's name is difficult and fraught with difficulties. Legal help should be sought so as to protect all interests - including the rights of offspring of the marriage (such as their inheritance rights).

Mortgages

Outside of Real Estate Companies, the chances of getting a mortgage within Thailand are slim, but not impossible. Expatriate workers with a large local salary are in the best position as they will undoubtedly have substantial collateral along with the relevant Visa and work permit, which is favoured highly amongst the local banks. Most non-Thai property buyers here in the past will usually have enough funds to buy outright.

Wills

An often-ignored aspect of Thai property ownership is to register your Will here. Not doing so means huge problems for your Executors and Beneficiaries, even if you have created a cast-iron Will overseas. If you plan to purchase or have purchased property, please do make a will. Find a lawyer who will make a will on your behalf and on behalf of your partner. This really is a MUST!! There have been numerous 'horror stories' about foreigners who have died here and their families / beneficiaries have been unable to gain their inheritance. Advice on such matters can be sought from a number of sources here in Thailand.

Taxation

Admittedly there is not a great deal of information readily available on this issue and advice should be sought from accountants and tax lawyers. How much Stamp Duty is payable on purchase/sale? What are the ramifications of owning a property through a company structure? (see details below on the formation of a Thai Company).

The general combined government taxes payable on a sale (Transfer Tax, Transfer Fee and Stamp Tax) appear to be some 5.5% of the land value - as set by the Land Office. Who pays this (vendor, buyer or shared) is negotiable. On an ongoing basis, there appears to be two main taxes applicable on property owners in Thailand, Land Tax and Structures Usage Tax. The former is a very small tax levied on land ownership equivalent to just a few Thai Baht per Rai per year. Structures Usage Tax is applicable at the rate of 12.5% on the actual (or assessed) gross rental value of the property. Lessees are not subject to this tax but may be required by the developer to pay an "annual ground rent" instead.

A third tax is Withholding Tax - payable on most income streams earned in the Kingdom. Mainly applying to payers of income (i.e. employers) so as to capture tax at source, rents also fall under this category. This form of Income Tax may also apply to sales of immovable property if the sale is made for a commercial purpose and it is essential that such income must be included as assessable income. Nevertheless, from January 2003, gains from sales of residential buildings shall not be included as income if such gains are spent on purchasing a new home within one year before or after selling the primary residence. Again, it is vital to assess the ramifications of taxation on buying and selling property, whatever method is used to "own" the property or properties in question.

Building Codes, Planning

Moving into the area of construction, you will need professional advice from qualified people such as architects and engineers - so as to understand local planning codes and practices. Like Hong Kong and most other SE Asian countries, the principal engineer or architect "signs off" once a building is completed, taking responsibility that the building is sound and that it complies with the prevailing building codes. In the event of any failure or breach, that person is held liable. In the Western world, such professionals would carry adequate indemnity insurance to cover any claims against them. It might be a good idea to see what type of indemnity your selected "authorized person" carries - or whether he or she is financial enough not to do "a runner" in the case of a building collapse for example. Such an event is treated as a criminal act in the Kingdom and penalties can be very severe where there is loss of life.

Please note that The Thai laws are always subject to change, so please contact us if there are any aspect of these details you are unsure about. This is not a legal document and whilst care has been taken in compiling this information, we would be taken as a guide only.

THAI COMPANY FORMATION

When purchasing property you may find yourself in a situation where you need to form a company yourself (if the seller is not selling the company with the property). This is a relatively easy and inexpensive process, taking usually less than 10 days to complete. There are many businesses here in Pattaya that offer a company formation service and you will be well advised to check out the prices before committing as it can vary considerably. For budgeting purposes you should allow between 25,000 & 30,000 THB.

Company Tax

An often overlooked point pertaining to owning property in a company name is that there will be a tax obligation for the company as there would in any other country. In this regard there is a requirement to make an accounts or balance sheet for the company which needs to be submitted to the tax office on a yearly basis. The cost for balance sheet varies from the many companies that offer business services but tend to average out at around 10,000 THB. The tax payable again varies and is dependant upon a number of factors. For many, the tax amount is less than 5000 THB per year which is always paid in arrears.

Real Estate Companies offer a company formation service in-house (carried out at cost price) taking the hassle away from you having to do this yourself. Simply let us know your requirements at the time of enquiry and let us take care of the rest!

TRANSFER FEES

On many occasions you will find that the seller of the property is also a foreigner and where this is the case they will have already set up a company to buy the property themselves. In this situation, you will find that they will sell the company along with the property. This means that you will then simply have to transfer the company from the sellers name into yours. This is an even simpler process than above and can be completed relatively quickly. This process involves changing the name of Director on the company documents. This can be carried out by a lawyer or business support company of which many exist within Thailand.

THAI LAND MEASUREMENTS

Thai land measurements are fairly simple, even if at first it all looks somewhat confusing - being a combination of imperial and metric measurement systems. On all title deeds here in Thailand all measurements are made using the Thai system and are also written in Thai, therefore it is beneficial for you to gain a little knowledge if you are thinking of buying property or land here. Below you'll find a quick comparison between the two which hopefully will help you gain a better understanding.

INSURANCE
 

If you are considering relocating to Thailand you owe it to yourself to research the subject of Insurance, covering not only personal and health, but enveloping building insurance, house contents etc. This is often overlooked and is especially important if you are considering buying property here.

Home Insurance

When you have moved into your new home, you should take out insurance to protect your investment. So how much coverage should you have on your new home? What does a basic policy cover? What happens if there is a fire? Again, please feel free to consult with us and arrange for a quotation. We'll be pleased to shop around for you and find the best value and level of cover that suits your own needs, tailored to your requirements.

Premiums can vary depending upon the size of your home, features, location, and construction e.g. security system, fences, keyed locks on all windows and doors etc. Be sure to maintain your home i.e. check for loose roof tiles, electrical fittings, plumbing, wiring etc. Also note that some insurance policies in Thailand don't cover against "Acts of God", such as lightning, hail, earthquakes and floods etc. For contents Insurance, coverage can be for replacement value or cash value. Say your TUB 5,000 fridge is destroyed, full replacement ensures a new one. Cash value would only give you the depreciated value, say THB 3,000, but full replacement policies are dearer. You should always keep receipts for major purchases and detailed inventory records wherever possible for insurance purposes. Standard content policies in Thailand don't cover you against burglary and theft of your valuables, e.g. video recorder, computer, jeweler - for those items you will need a burglary and robbery (special risks) policy. If in doubt, please ask us and we'll be pleased to point you in the right direction.

Health Insurance

Also an important and sometimes overlooked issue. Even if you are in good health it makes sense to take out your own health insurance during your stay in Thailand. For those who are working here some employers include this with their staff salary package. There are a number of hospitals here in Thailand and it is also advisable to go along to one of them and undergo a medical and your details registered. Real Estate Companies have staff that are trained and qualified in insurance and the many types of policies available and can arrange for health insurance cover via BUPA Blue Cross - details of which are available on request.