How to Buy Real Estate in Thailand

Buying Thailand Real Estate: A Guide for Foreign Investors

how to buy real estate in thailandBuying property and land in Thailand can be a confusing and daunting experience for foreign investors.

But it doesn’t have to be!

As long as you do your homework you can make sure that buying your dream home in Thailand never becomes a nightmare. We have prepared this comprehensive guide to Thailand real estate to answer all of the questions that are most commonly asked by our foreign clients.
We’re confident that below you will find the answers to your questions and that this will help to give you the confidence to go ahead and pursue your dream of owning a home, land or other property in Thailand.
When you are then please feel free to browse our property listings.

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This is a big article but we’ve made it all simple and clear for you and it reads through logically.
But if you want to jump right in to the bit that interests you most that’s cool with us and you can quickly navigate straight to the section you need below:

 

Should I get a Lawyer for my Thailand Real Estate Purchase?

Absolutely. Nothing is more important than this. The very best thing that you can do is get a good lawyer with experience in helping foreign investors purchase property. What may seem like an unnecessary expense in the short term is actually putting expertise on your side that can save you a fortune and a lot of trouble later on.

We recommend that you consult a legal firm that specialises in property and specifically in foreign real estate transactions. Bangkok or Pattaya are places where local lawyers can be expected to have a lot of real estate experience, as well as fluency in English and other foreign languages.

Recommendations are very good
It is fantastic if you know someone whose opinion you value who has had experience with a Thai real estate purchase and can recommend a good lawyer.  Alternatively if you are dealing with a good real estate agency then they should be able to recommend good legal representation to you. We do.

Or as another alternative you can search the web for feedback on a particular law firm or ask them directly for reviews or references. If they can’t provide these then it is reasonable to wonder why.

Should I use a Property Agent?

It helps! The disclaimer here is that we act as property agents so we’re unlikely to advise against using one. Are we? But here are three reasons why you should consider using an agent.

  1. Choice
    Good property agents know the local market conditions and can offer you a large selection of what is available as well as useful information about the local area that you might not find elsewhere.
  2. Expertise
    Property agents have lots of experience in the processes involved in transacting a sale and their help and advice can greatly simplify the process for you.
  3. Cost
    Using a property agent doesn’t normally cost you any more than not using an agent. The majority of quality properties for sale in Thailand are available at a fixed price. The agent’s fee is paid by the seller as a set percentage of this price, but the price doesn’t change if you go to the seller directly so it doesn’t cost the buyer any more to enlist the help of a property agent.

The Thai Language Barrier?

You probably can’t speak Thai, let alone read or write it. If you can then congratulations – that’s a great achievement – you can move straight on to the next section.

But if you don’t understand the Thai language then don’t worry. Your lawyer and property agent will be able to help you through any spoken Thai issues you might have when you view a property and they will be also able to help to translate any questions and answers that you have for the owner.

They can also help with the translation of any official papers and contracts realting to the purchase. And it is a very good idea indeed to obtain certified translations from your lawyer or elsewhere of any papers contracts that you are asked to sign.
After all you would’nt agree to signing your name at the bottom of a form anywhere without reading it first would you?
It is perfectly normal to request translations and if this proves to be an issue then it is quite reasonale to ask yourself why.

What types of Thai Land and Property can Foreigners Own?

  1. Foreigners can own Thai apartments and condominiums in their own name. Certain conditions apply – but they are simple to understand – see below.
  2. Foreigners cannot own land, houses or any other types of Thai property and real estate in their own name.
    But fear not – all is not lost – in Thailand there is always a way.

Foreign Ownership of Condominiums

Foreign nationals can purchase and own apartments entirely in their own name. This is the case as long as Thai nationals own 51% of the overall floor space, by area, of the whole condominium.
The units of any development that are available for full foreign ownership are often the most in demand and usually sell first in places that are popular with foreigners. If you’re thinking of buying an apartment or condo then one of your first questions should be whether they still have units available for full foreign ownership.

The Funds Must Come From Overseas
One of the key conditions related to the purchase by foreigners of Thai condominiums is that the funds for the full value of the property purchase must be brought in to Thailand from overseas in foreign currency. The bank that receives this cash transfer then converts it to Thai baht and issues a proof of the transaction that must be given to the relevant land office in order for the sale to be approved.
Only foreigners who are permanent residents of Thailand are exempt from this rule.

However if all of the 49% of foreign owned units in a development that you like have already been sold then you can still look to buy under one of the methods that are outlined for Thai land and property below.

How Can Foreigners “Own” Thai Land and Property?

There are a few common ways that are used by foreigners to purchase Thai Land and Property.

The Risky Method: Put Everything in the name of a Thai Person

We don’t usually advise this. The risks are obvious. Your “ownership” of the property is entirely at the whim of the Thai person in whose name you buy it.

Often when people acquire property by this method the named owner is their spouse. The thing is that life is long and things can change over time. And the buyer’s spouse is the legal owner of the property – no debate. Be very aware of the inherent risks if you choose to buy property using this method.

Some people add a little extra protection by using a Thai person’s name to purchase the land or house and then subsequently obtaining a long lease in their own name on the property. The drawbacks of this system are that it is slightly more complicated and a realistic rental fee must be charged and tax paid on the “rental” revenue. But it undeniably adds another layer of assurance.

Another Risky Method: Buy through a Thai Limited Company Controlled by the Foreign Investor

It is possible for foreign investors to establish a Thai company that will purchase and possess the land or house that they seek to buy.
By law they must remain a minority (maximum 49%) shareholder in this company but in reality it is possible to exercise sole control over the company. This is performed through a variety of directorship appointment clauses and different types of shares and voting rights.

The Thai government is however very clear on the fact that such foreign control of a Thai company is illegal and the law imposes strict penalties on people found to be acting as nominee shareholders on behalf of a foreign national.

So since it isn’t legal we aren’t going to advise you to take this approach although it is worth mentioning that despite the law it is still a very commonly used method of “purchase”.

A Safer Method: Buy the Property under a Long Lease

This method has the great advantage of being legal. As a foreigner you can take out a 30 year lease on a property with the right to renew the lease twice. This can give you a total of 90 years control of the property which leaves plenty of time for you to enjoy the use of it.

However you need to be aware that the lease period that is recognised and recorded with the Government Land Office is just for the first 30 years. The two lease renewals, whilst perfectly legal, are an agreement between the buyer and seller and after thirty years and sixty years these lease renewals must be re-registered at the land office.

It is also possible and a good idea to insert a clause in the lease so that it passes on to your next of kin in the event of your death.

Foreign Purchase and Ownership of a Thai Business or Company

If you are planning to buy a Thai business or a piece of land or property held by a Thai company which is also being transferred as part of the sale then you need to know a little about the rules that apply to foreigners and Thai business holdings.

Thailand defines a number of different types of business identity. Foreigners are allowed to own shares or parts of some of them. The most common type of business that is used by foreigners is the Thai Limited Company and we describe how these ownership rules apply below.

Thai Limited Company

Foreign ownership of Thai Limited Companies is allowed but is restricted to a maximum of 49% of the shares.
A Thai limited company must have a minimum of three shareholders and at least one director. The company director/s can be Thai or foreign nationals.

Many foreigners exert control over “their” Thai company through a combination of methods including holding sole directorship and controlling shareholders voting rights. As we mentioned previously most of these methods of taking full control of a company are illegal and to comply with the law shareholdings and control must be limited to 49% of the company. As their name suggests Thai Limited Companies have limited liability that is restricted to the value of their share capital so this form of business ownership is desirable in terms of reducing financial risk to the shareholders.

Work Permits
Once certain conditions are complied with then a foreigner employed by a Thai limited Company can obtain a work permit and work legally in Thailand. These conditions are listed below.

  • The company must have an issued share capital of at least 2 Million Baht.
  • The company must be VAT registered.
  • The company must employee at least four Thai employees each earning a minimum of 9,000 baht per month.
  • The employee must have a non-immigrant visa and comply with certain restrictions regarding type of job role and display evidence of experience.

So if you plan to buy all or part of a Thai Limited Company make sure that you carefully plan your shareholdings and/or application for a work permit so that you comply with Thai law.

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What are the Different Types of Thai Land Title?

Thailand has a confusing number of different types of land title. The government are making efforts to simplify the classification system but in the meantime let’s take you through the various types. For the sake of simplicity we’ll divide them into three sub-groups; Good, reasonable and poor.

The Best Types of Thailand Land Title

Chanote (โฉนด)

The best and most secure of Thai land title deeds. The boundary markers of this land are measured by GPS and it provides a certificate of ownership of the land.

Nor Sor Sam Gor (น.ส. 3 ก)

The boundaries of land with this title deed are still fairly clear, being defined with reference to aerial surveys.

A Reasonable Type of Thai Land Title

Nor Sor Sam (น.ส. 3)

The land boundaries for Nor Sor Sam are defined relative to those of neighbouring plots and errors are common. But it is still an assured title of land possession.

Poor Thai Land Titles

Por Bor Tor/Sor Kor (ภ.บ.ท. 5 / ส.ค.)

These are effectively squatters land title that are given to people who have lived and farmed a piece of land for a number of years. Whilst a lot of land with these title deeds is commercially developed such development is all, strictly speaking, illegal. It is allowable for the land title holder build a personal home on this type of land.
It is also not uncommon for the ownership of land with Por Bor Tor or Sor Kor title to be disputed.

Note: The Thai government is gradually phasing out these confusing forms of land title so it is sometimes possible to apply to have one of these less secure forms of land title upgraded to Chanote. In practice this can take years and may never happen. If someone tells you that ‘their’ land will be upgraded then it is a good idea to wait until it has been and you have seen all the paperwork before going any further.
However, when these types of land are eventually upgraded their values can increase greatly. So, if you are aware of the inherent risk and you are looking for potentially large gains from property speculation then it may be worth considering the gamble of buying property with a poor tittle deed in the hope of large gains in the future. Remember the risks though!

Summary: It is probably best to only consider land with Chanote, Nor Sor Sam Gor or, at a pinch, Nor Sor Sam land title.

What are Thai Land Measures and their Western Equivalents?

In Thailand Land is measured in Rai, Ngan and Wah (in descending order of size).

There are 100 Wah in a Ngan and 4 Ngan in a Rai – so there’s 400 Wah in a Rai.

These correspond to the metric and imperial land areas that you’re likely more used to in the following way;

Thai-Land-Measures-Table

 

What are the Taxes on the Purchase and Sale of Thai Land and Property?

The buying and selling of properties in Thailand is subject to a number of different taxes and charges. Consult the table below for a quick summary and read our notes about each of the various taxes to get a better picture of which of these taxes may apply to your property purchase or sale. Of course it is important to have an idea of the amount of tax that you’ll need to pay and factor that into your budgeting and thinking.

It is also an important part of any property transaction to agree whether the buyer or seller will assume liability for the transfer fee tax where applicable.

Commercial Value and Government Value
The Thai Government uses two measures of property value when calculating tax. These two definitions can appear confusing but are actually quite straightforward.

The Commercial Value of a property is the price it is being sold at. The Transfer Fee and any Withholding Tax payable on the property transfer will use this value as a basis of calculation.

The Government Value of a property is the value that is assigned to it by the local land office. In practise this can often be much lower than the commercial value. The Stamp Duty and the Specific Business Tax payable on a property are calculated using this figure as a base.

Your lawyer will be able to find out the government value of the property as part of your due diligence process and then you’ll be able to figure out the total tax relating to the purchase.

summary of thai property tax rates and calculation

Transfer Fee

The Transfer Fee on a property sale is currently calculated as 2% of the Commercial value of the property.

Lease Registration Fee

A Lease Registration Fee is (obviously!) only payable on the establishment of a leasehold on land or property.
It is calculated at 1% of the value of the lease.

Specific Business Tax

The sale of property and real estate in Thailand is subject to Specific Business Tax.
It is currently charged at a rate of 3% of the Government value of the property.
However, an extra municipality tax of 0.3% is charged in addition to the Specific Business Tax so the total tax levied is 3.3%.

Stamp Duty

Stamp duty is payable on both property sales and leashold transfers.
It is charged at a rate of 0.5% of the government value of the land or at 0.1% in the case of a lease.

Withholding Tax

Company: If the property in question is being sold by a company then withholding tax is deducted at a rate of 1% of the higher of the Commercial Value and the Government Value.

Individual: If the property is being sold by an individual then withholding tax is deducted at a rate of between 5% and 35% on a rising scale depending on the amount of revenue received. The amount of the revenue that is subject to withholding tax is reduced on a scale based on the number of years that the property has been occupied.

How Can I Perform Due Diligence on a Thailand Property Purchase?

It is your responsibility as the buyer of any property, land or business to take reasonable steps to make sure that you conduct a full appraisal of the property before completing the transaction. This process is termed Due Diligence. Basically you need to make sure that everything is as it seems to be and that there isn’t anything that you don’t know that would adversely affect you wanting to buy it.

Here is where your lawyer will really earn their money. They will be able to verify the legal aspects of the property or business and report back to you.
You can also enlist the assistance of your real estate agent who you can expect to offer their local expertise to help you identify any due diligence checks that are specific to the local area. Be sure to ask them.

Below we offer a by no means exhaustive list of due diligence checks that you might want to perform to ensure that all is as it should be.

  • Check land title deed and ownership at the local land office.
  • Ensure there are no ongoing legal disputes regarding the ownership of the land.
  • Find out the “Government value” of the property from the local land office. Then all the taxes associated with the transfer of the property can be calculated.
  • Check that any structures on the property have been built with adequate planning permission. If you plan to build more on the property then ensure that permission has been or can be granted for your requirements.
  • Check any local and national laws relating to the property or business that you are purchasing. In particular check whether any recent legislation has any bearing on the purchase.
  • If you’re buying a business visit it when you’re not expected. You’ve heard the stories of bars and restaurants that are suddenly full of the owner’s friends when the buyer visits. It’s much better to take a look at the place under everyday conditions.
  • Obtain and carefully check any audited accounts and find out all you can about the current conditions in the industry of the business.
  • Ask around the local area about the property, local knowledge is a valuable tool.
  • Noisy neighbours? Check the area surrounding the property at different times for any unsociable noises, smells and the like from nearby.
  • Flood and fire risk. Parts of Thailand are very flat and prone to flooding, check that the property is not at risk.
  • Water and electricity. Ensure that the property has a good and sustainable water supply and that it has an adequate electricity connection for your usage needs.

 

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How Can I Get a Long Term Visa for Thailand?

There’s no point buying a home in Thailand if you can’t live in it is there?

Part of your planning should involve making sure that you are able to get a Thailand visa that lets you stay for as long as you need to, when you need to.

The table below summarises  the various types of Thai visa that are available and below that we give you some more detail about each type so that you can identify and then obtain the one most appropriate to your needs.

summary of thai visa categories

Tourist Visa

Thailand limits the amount of time that you can stay in the country on a tourist visa to a maximum of six months. If you plan to buy a property as a holiday home, or only to stay for a few months at a time this might be sufficient for you. You can get this long-stay tourist visa from your nearest embassy or consulate. It costs 5,000 baht and consists of a multiple entry visa allowing stays of 60 days at a time. So you will need to leave Thailand every sixty days  and then return to begin the second and then third sixty day parts of the visa.

Retirement Visa – Non Immigrant O-A

If you or your spouse is over 50 you are entitled to apply for a retirement visa that allows you to stay in Thailand on a renewable one year visa. The financial conditions that apply involve having to keep 800,000 baht in a Thai bank for at least three months prior to the visa application. An alternative to this financial obligation is to get proof from your embassy of non-Thai income of at least 65,000 Baht per month.

Business Visa – Non Immigrant B

Obtaining a business visa is what you need to do if you plan to obtain a work permit that allows you to work in Thailand. The process is involved and beyond the scope of this article. Suffice to say that it is complicated and you should really only go for this type of visa if you plan to work full time.

Marriage/Dependency Visa – Non Immigrant O

If you have a Thai spouse and/or child you can obtain this visa that allows you to stay in Thailand permanently, one year at a time. You need to prove that you have had 400,000 Baht in a Thai bank account for a period of three months proper to the visa application or to show Thai income of at least 50,000 Baht per month.

Thailand Elite Visa

The Thai Government has a “bad guys out, good guys in” policy with regard to their visa and immigration laws. As you might imagine “good guys” is broadly synonymous with “rich guys” and so you can buy a Thailand Elite visa which allows you to come and go as you please and gives you a 20 year visa. Fantastic, but what’s the catch? Well it costs 2,000,000 Baht. This obviously puts it out of range of all but the very wealthy.
However there is a second category of Thailand elite membership which allows the buyers of certain properties entry to the scheme. This is a significant benefit to ownership and it is worth checking whether the property that you are interested in allows entry to the scheme as an inducement to buy. The 20 year visa only lasts whilst you own the property to which it is linked and it can be transferred once to another foreign buyer so this adds to the potential resale appeal and value of the property.

Thailand Permanent Residency

Obtaining permanent residency to Thailand is a complicated and involved process and strict control is kept over the number of applications that are granted every year. Each foreign country is allowed a maximum of 100 permanent residencies each year so if you come from a country that has a large number of expatriates living in Thailand then your chances of applying will be greatly reduced.
In order to qualify you need to have held a non-immigrant Thai visa for a continuous period of over five years so the best bet is to obtain one of those and then after five years you can, if you like, look into applying for permanent residency in Thailand.

It is worth mentioning that even if you have permanent residency in Thailand this doesn’t change the laws about Thai land ownership.
In fact the only property related benefit that is given by holding permanent residency to Thailand is that if you buy an apartment under foreign ownership you aren’t required to bring in the funds from overseas, they can be transferred from a Thai bank account.

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References/Further Reading

Below are the sources we used in writing this guide as well as some other useful links relating to Thailand real estate. They offer some useful further reading should you require it.

en.wikipedia.org/wiki/Law_of_Thailand
www.siam-legal.com/realestate/thailand-property-how-to.php
www.ajarn.com/blogs/neil-mcdonough/how-a-foreigner-can-buy-real-estate-in-thailand/
property.thaivisa.com/can-foreigners-property-thailand/
www.justlanded.com/english/Thailand/Thailand-Guide/Property/Legal-restrictions
www.thailandguru.com/thailand-property-ownership-laws-house-land-condominium.html
www.expatfocus.com/thailand-property-culture-shock
www.thailandelite.com
www.bangkokattorney.com
www.acuterealty.com/calculator.asp
www.rd.go.th
www.thaivisa.com/residence-permit-thailand
www.samuiforsale.com/knowledge/practical-legal-for-condos.html
www.koh-chang-guide.com/real-estate

Disclaimer

We’ve done our utmost to make sure all of the information presented in this article is clear and accurate. But for legal purposes we’re obliged to point out that we can’t be held responsible for any errors or omissions in this guide. Neither is any liability assumed for damages resulting from the use of the information contained herein.

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Dave

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