So you have fallen in love with Thailand? Like so many others before you, and the thousands that will follow? For whatever reason, you have chosen to own a property in Thailand? This could be for the long term prospect of making this wonderful country your permanent home, or as a potential investment, and/or for the pleasure of having a luxury holiday home in the sun. Whatever the reason, there are certain things you need to consider before jumping head-first into a purchase.
Naturally, what seems like a great idea at the time can often change after a full investigation of the pro’s and cons? There is certainly no reason not to consider such a purchase, but like any property deal back in Europe or the USA, it is advisable to carry out due diligence beforehand. Find out the facts before you sign anything, and be sure you have covered everything before you proceed.
Thailand is a wonderful country with some beautiful beaches, an amazing climate and a very laid back approach to life. All very appealing to the foreigner just off the plane from their stressful lifestyles back in Europe or the USA? But before you sign on the dotted line of a contract, please ensure all the necessary due diligence has been carried out, as it would have been back home.
Always seek professional legal advice and get a qualified registered lawyer
The first and probably most important decision you will make is to talk to a Thai registered, qualified lawyer who is respected and/or has been highly recommended. This is incredibly important as until you have some in depth knowledge of Thailand and the Thai real estate market, you will need professional and honest advice. A good, trustworthy Thai lawyer can assist you in so many ways, save you money and provide many answers to the numerous questions you undoubtedly will have? They can also help you avoid any unnecessary pitfalls created by your lack of understanding of the market, and will guide you through any language barriers.
Always remember when appointing a Thai lawyer, you are basically hiring his/her professional services in order to help protect you from any unforeseen pitfalls, guide you on Thai real estate law, help with any lack of understanding and/or protect you from any unscrupulous individuals that may be looking to take advantage of you. Lawyers are worth every baht they charge if they are honest, qualified and licensed. Hire a good one and they are an invaluable source of information and expertise.
A Good Law Firm will:
* Check the current owners have the correct title to the property
* Check for any charges and liabilities still owed on the property
* Check your contract and advise you on the obligations/responsibilities of all parties
* Guide you through the payment/funds transfer
* Ensure that the property is registered appropriately and in the correct name
* Provide valuable and essential legal information
* Advise on visa regulations and your options
* Safe guard you against unscrupulous persons wishing to take advantage
Ownership Laws for Foreign Buyers – Ask a Registered Thai Lawyer to Help
Currently the laws in Thailand only allow certain types of property to be purchased and owned on a freehold, and you need to know what they are. A Condominium is the first type that comes to mind and a very good option. But even with a condominium one needs to check the unit to be bought falls into the correct legal category. Check the laws governing this, and make sure you carry out all the right actions that create a smooth and hassle free purchase. As already mentioned, a licensed Thai lawyer will do all this for you, and they are worth very baht they charge! It is only the foolish who buys a 15 million baht property and then objects to pay a lawyer 50,000- 100,000 to deal with the transaction. A Thai lawyer is there to protect you and your hard earned money. Don’t be foolish, and always make sure you seek good legal advice. It can also be foolish, to go the cheap route and use any of the numerous unqualified legal advisers who offer ridiculously cheap legal assistance. Many, you often see in the back of tourist magazines, newspapers and occupying numerous street shops. Once again, be careful, take your time and be sensible. There are some excellent lawyers out there and you just need to find them.
As a foreign investor, there are also ways to lease property in Thailand for up to 30 years! Many are happy to choose this option as a freehold property can be owned by a foreign investor on leased land. And even then, there are ways to extend a 30 year lease, but not necessarily with a complete guarantee. Once again, check with a qualified, registered lawyer.
Buying on one of Thailand’s fabulous developments
There are numerous fabulous developments throughout Thailand and one should take their time looking. Decide on the location such as beach area, city, country side, and take the time to look at the various projects in that location. There are many locations to consider depending on where you wish to live. The main areas and popular choices are: Bangkok, Pattaya, Koh Chang, Rayong, Hua Hin, Cha Am, Chiang Mai, Ko Samui, Phuket, and Krabi. Each area has its advantages and disadvantages, and there are a wide variety of developments to choose from.
Make sure you deal with a reputable developer, one that can help you as much as possible. Ask your Thai lawyer to check any contracts and title deeds they may provide, and always seek legal advice before signing or paying for any property. If the developer is reputable and serious, they will fully understand the need for your lawyer to be involved and in fact should welcome it, as it shows they are open and honest with nothing to hide. A reputable developer should also be happy to provide all information as regards the building of the property you are purchasing, and any information regarding title deeds, ownership, communal areas, guarantees and whatever pertains to the successful purchase.
Building your own Home in Thailand – Exceptional Value for Money!
Building your own home is a fantastic option and probably the one that allows you to take full advantage of Thailand’s very reasonable prices. It allows you to get the most for your money. But once again, this can be problematic if you do not consult a professional, registered construction company. There are many unqualified builders out there, as in the West, and many are carrying out construction with no previous experience whatsoever. Some do it as a hobby, others foolishly do it as they think it’s an easy way to make money; and some even do it because they think it’s an easy thing to do. But as we know from Europe or USA the reason we have qualifications, the reasons we have regulations on construction, is because it is, a very complex task. If you wish your house to be built to a standard acceptable to international standards, then make sure you get a registered company to do it for you that can provide examples of their work as well as testimonials and references.
Make sure you use a Company with Construction Experience
Remember standards in Thailand vary widely and don’t be one of the many victims who end up with a home whose electrics are not earthed; windows have gaps around them, doors that do not fit, and structures that have no guarantees. Be sensible and careful. Ask the right questions and make sure the company you choose has a good reputation and is registered as a construction company, not as an individual or via their wife’s name. There is little come back if it is built under a person rather than a company, and any serious builder will have a registered company set up. But even then, make sure you ask the right questions, and make sure they have many years experience in construction.
1. If something sounds too go to be true; then it probably is?
A Registered Construction Company will:
* Assist and advise you on the prices, styles, types of property
* Provide recommendations, references or testimonials from satisfied clients
* Provide a synopsis of their experience within the construction industry
* Assist you with architectural plans and consult with you on them
* Make sure your plans are signed by both a qualified architect and structural engineer. Very important if you insure your property later on, as many insurance companies will contest any payouts for damage or problems, if the property construction was not carried out by professional people and/or was not designed by a qualified architect and checked/signed off by a structural engineer. So make sure it is.
·Make sure the architect provides you with a complete set of detailed plans and will provide copies for all government offices that require them
* Provide a professionally written legal contract, outlining both parties’ responsibilities and safeguarding both parties’ against disagreement or conflict. It should list all the particulars of the agreement and any additions, changes or alterations to the detailed plans. If specific materials or finish have been agreed, this should also be listed clearly with in it.
* Obtain official permission for your property to be built and provide the government with an documentation they require
* Provide a clear and concise construction payment schedule
* Offer stage payment options
* Provide full invoices for each construction stage
* Be available to answer questions and give advise throughout the construction process
* Provide guarantees
Find the Right Company and Build that Dream Home for a lot Less than you think!
Find the right construction company and you can build a quality luxury 4 bedroom house with pool for 7-10 million baht, a 3 bedroom bungalow for 3 million baht and an exclusive millionaire’s home for 25 million baht. The choice is yours to make on how much you wish to spend. However once again you need to check with a registered lawyer as regards the law and make sure you are able to do what you want to. Many foreigners who are married to Thai nationals choose this option to build and have a contract drawn out by their lawyer, between them and their wife. It satisfies their desire to live in their own home, safeguards them as much as possible and maximizes the money they have to spend. Once again seek good legal advice and there is no reason why you should have problems. The major plus point of building your own home and using a professional construction to do so, is you get so much more for your money than if you bought on a development and can customize the property to your own needs, preferences and budget.
Check all Your Options and Consider Everything Carefully
If you are married to a Thai national then there are other ways to purchase and complete your property ownership. As is the case if you are investing large sums of money into Thailand. There are so many aspects to consider and it is actually not so different to any country in the world. England and America have rules governing such activity albeit they have learnt fairly quickly that is far, far more beneficial to free up such laws, as foreign investment greatly benefits the economy. However this is still early days for Thailand and it will take time for the change to take place. But ultimately, you can buy property here and thousands do. As long as you know the laws, understand your position and are happy to buy on that basis, then you could be the proud owner of a luxury property that cost five times less than a similar property back home!
Check the Visa Regulations and any Taxes or Transfer Fees
Another aspect you need to consider, is how long you wish to stay in Thailand and what the visa regulations are in relation to your country of origin? There are various types of visas available and once again you should seek the advice of a registered Thai lawyer. It wouldn’t be a good idea to buy a beautiful property only to find out that you can only stay in Thailand for one month at a time right? So this needs careful consideration, and preparation.
Make sure you fully understand the taxes and transfer fees you may have to pay on final transfer of ownership. This is important and once again a good lawyer can help you with all of this.
Quick Purchase Guide
The Initial Purchase Agreement
The initial purchase agreement will detail price, terms and conditions, settlement date etc. and in most cases a 5-10% deposit will be required to secure the property. This deposit is refundable should the sale not go through, as long as it is not your fault.
When buying a new condominium, an initial reservation deposit of is required and this amount is deducted at a later stage from the total price. Once an agreement is signed, usually 10 to 15 days after the reservation, the buyer is required to pay 5% - 10% of the total price. Depending on the terms of the contract, the balance then could be due in installments or as a lump sum at the time the title is transferred
As a general rule, for residential sales you can expect the total fees and taxes to work out to be approximately 2% to 3% of the property market value.
There is a stamp fee of 0.5%, a transfer fee of 2%, a business tax of 3.3 % (levied against a vendor who has been in registered possession of the property less than 5 years), and income tax (similar to capital gains tax) at a variable rate.
There are 2 different types of tax levied on property in Thailand:
1. Land Tax
This is an annual tax levied on land ownership. The amount is often so small that in practice the body charged to collect it rarely bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.
2. Structures Usage Tax
This only applies to commercially used properties. The rate is 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.
If the property is purchased through a company, you need to consider that corporate tax is higher than personal tax, and the cost of setting up the company must be considered as part of the initial investment.
Capital Gains Tax
There is no capital gains tax in Thailand and income tax (usually between 1.0 - 3.0%) on property is the comparable replacement.
Mortgages in Thailand are still difficult to arrange. However, recently a new branch of the Bangkok Bank has opened in Singapore, which has opened up borrowing possibilities for property investment in Thailand, financing as much as 70% over 10 years for property purchase. You should expect to get no more than 50% in finance, with the exception to some well-known developments where finance of nearer 70% is available.
HSBC and UOB has a presence in Thailand and can offer loans of between 1,500,000 and 35,000,000 Thai Baht. Typically they will lend up to 80% of the purchase price and interest rates can be fixed for up to three years.
To buy a condo or another property with a loan, many purchasers get a mortgage in their home country and then transfer the money to a Thai bank account, while using a lawyer to oversee the logistics of the process.
But please check the current situation and speak with banks direct.
Please note: Laws and regulations do change and can vary, so please make sure you check with a qualified lawyer. The above information is only to offer an insight into the property world and not as an accurate guide. We are not legal experts and nor profess to be so. Always clarify everything with a lawyer and get an up to date perspective on your situation and any laws regulating what you wish to do in Thailand. The above article was written at a specific time and maybe regulations, taxes and laws have changed since this was created. We waiver any liability, legally or otherwise in its detailed accuracy and can not be held accountable in any way.
Thailand is an amazing place to live and a there are some wonderful real estate and investment opportunities. If you take care and be sensible, then you too can be the proud owner of an amazing new property at half the price it would cost in the west.
By Peter Evans
Forbes Le Brock is a professional and extremely helpful real estate agency specializing in general real estate and investment property throughout Thailand; and although they are not qualified legal advisors, they aim to provide as much accurate and up to date information in relation to property purchase, as possible. Any information they provide is by no means meant as a definitive guide, it’s just their way of providing a value added service. Please, always ensure you seek advice from a professionally qualified and registered Thai lawyer, and attain current information at the time of your purchase, or in interest of a purchase. If you are looking for unbiased investment advice or wish you to purchase a property in Thailand please contact: email@example.com www.forbeslebrock.com or Skype: peterflb
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