There are a few things you need to be aware of before buying a condominium in Thailand. The Thai government has recently modified the rules governing the purchase and selling of condominiums. Earlier, foreigners were allowed to own only up to 40% stake in any condo building. This was recently raised to 49% and, as a result of this, more condo units are now available on the market.
This first step in buying a condo should be appointing an experienced and ethical agent to take you around and show you the condos available for purchase. Once you have found a unit, consider how old the building is. Normally, a building over 20 years old may be too risky to invest in. Old buildings may not be properly maintained. Sometimes, old buildings could be scheduled for demolishing in the near future. Examine the documents carefully to find out the age and health of the building. Ask the present owner of the condo what his future plans for the building are.
Sometimes, buying a slightly older building can be beneficial in certain ways. The owner will have a proven track record of maintaining the building properly. You can easily check this with existing tenants. Examine the building carefully to see how well it has been maintained.
It is advisable that you collect as much information as possible before you commit yourself. Consider how much you will be required to pay for the maintenance contract annually. This is usually calculated in terms of the plinth area you purchase.
Also consider if the condo management has set up a sinking fund. Sinking funds often require a one time payment made upon transferring ownership. It usually ensures that the building will be well maintained in future. Some condos require a sinking fund payment annually. Sometimes the sinking fund is paid 'on demand'. Before purchasing, ensure that you understand the sinking fund payment policy well and how much it will cost you.
Also find out if the management has set up an annual insurance premium, and if so, what the amount of premium is. It is also important to know how long the present management team has been looking after the building.
In most cases, the owner pays the transfer fees in full. It is not uncommon that some owners insist you to share the costs 50/50. Ascertain who pays the transfer fees and calculate how much it will cost you if you are required to pay. You can ask your lawyer to prepare a full schedule of the payment of transfer fees, including any income taxes outstanding on the property.
The present rate of transfer fee is 2% of the purchase price in Bangkok and Pattaya. You have to pay a property business tax of 3.3%, and a stamp duty of 0.5%. These rates are, however, subject to change. So ensure that you check them before committing yourself to pay any transfer fees.
You may bring in purchasing funds from overseas to the country. The Thai government has fixed a minimum amount of $US 10, 000 to be brought from overseas. You may not bring all the money into the country until after you have decided upon the property you wish to buy. It is advisable that you bring in enough to pay a minimum deposit of 20% or 30%.
When buying a condo in Thailand, also understand the difference between buying leasehold and buying freehold. Your lawyer will be able to tell you the difference. If you buy leasehold, you will never own the property. Buying freehold gives you full ownership rights on the condo.
In case you will not permanently reside in Thailand after you have purchased the unit and you plan to rent it out, it is advisable that you appoint an agent to manage the unit for you. It is important that you enter into a clearly written contract with the agent. The contract should spell out the conditions of management, including the agent's commission, his responsibilities, and the amount he will spend on advertising.
It is highly advisable that you take your lawyer also to the bank when you bring in money from outside to buy a property. It is imperative that you get a T.T.3 form. This form states that the money you brought from outside is used to buy the property. You will have to show the T.T.3 form to the bank at the time of exporting the funds back to your country.
By Gregory S
Gregory S. is an independent author providing assessment and comments on leading International Property Consultants in Thailand, especially CB Richard Ellis.
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