Property Laws in Thailand

Buying a property in Thailand needn’t be complicated, but the process and the legal setup are different to the way property is bought and sold in Europe.

 

The main difference is that under Thai law foreigners cannot own land in Thailand. For foreigners, there is no such thing as owning freehold property and there is no easy way to claim Thai nationality. The consumer demand for a Thailand property has meant that two ways to legitimately own property in Thailand have become the de facto way to buy:

  1.  Create a company to buy property – the lawyer can set up a local Thai based company and use this company to buy the property. When you sell the property you sell the company which owns the property. Setting up the company costs around £1000.
  2. Create a leasehold agreement  – the lawyer will set up a leasehold agreement for 90 years.  Initially, the maximum you can set up the agreement for is 30 years, but this is automatically extendable up to 90 years.

Normally, people buying in Thailand are cash buyers because it is impossible to obtain a mortgage in Thailand unless you are a Thai citizen or are married to a Thai national. If you need finance you will need to organise the finance in your home country and bring the money to Thailand. Some property developments offer schemes where you can defer payments for a fee, but ultimately you will need to bring finance into Thailand. Typically a deferred payment scheme requires half the cost of the property upfront and then the balance cleared over the next 5 years.

The fees and property taxes for buying property in Thailand are normally lighter than you would expect in Europe. In Thailand, the fees and property taxes are around 3% of the property purchase price. Stamp duty is just 0.5% and the rest is the transfer fee and solicitors’ fees. If you have elected to create a company to buy the property then there is also a business tax to pay which is currently around 3.3% of the purchase price.  Often tax levels change when the government is looking to improve growth in the international property market.
Most foreigners buy a villa or apartment which is part of a much larger development. They are appealing because they offer shared facilities, such as security, pools, cleaners, gardeners and gyms. Often there is an external company overseeing the running and maintenance of the whole development. It means you know your property is being maintained and is secure which is important if your main residence is a 12-hour flight away and /or you are renting your holiday house out. Properties in well-managed developments can demand a premium asking price. Contractually it is essential you completely understand your agreement with the management company and the current and likely future fees.
Like all property purchases, you should take out buildings and contents insurance and carefully read the small print. If you are sub-letting and/or planning to leave the property vacant for more than a few weeks at a time you will need specialist insurance cover.

 

 

 

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