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Buy house or flat in Bangkok


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Housing Market in Bangkok

Subject to certain minor exceptions, a foreign national cannot legally own land in Thailand.

Therefore, buying a condo (apartment) in Thailand is an attractive option for many foreigners, predominantly because there are less nationality restrictions in the condominium ownership laws than with land ownership. Condo ownership is popular in Thailand for investment as well as residence and retirement purposes.

If you are a potential purchaser but do not yet have a Thailand residence permit, you must be able to prove that the funds for purchase of the condominium will be brought from outside of Thailand. If you already have a legal residence permit, then you will not be required to show evidence of funds coming from abroad for your condominium purchase.

Exceptions to Foreign Nationals Owning Thai Land

It is often thought that it is possible for a foreign national to own land through a Thai Limited company in which the non-Thai foreign national holds a minority interest, but effectively controls the company through preferential voting rights and other legal. However, in recent years the Thailand Land Department has become stricter in investigating limited companies for the use of the "nominee" Thai shareholders who do not possess a bona fide interest in the company owning the land.

It is still possible for foreign nationals to legally acquire houses, condominiums and, to a limited extent, land through things like usufructs (the right to use or obtain a profit or benefit from property belonging to another person), superficies (a right to build upon land without owning it), and habitudes (the right to stay in a house, or other dwelling, without having to pay rent). This is an extremely specialist area and if this is of interest to you, then you would be advised to seek legal advice at an early stage.

Another method of acquiring land is by leasehold. Foreigners acquire the right to use the land with a 30-year lease at the Land Department. A lease contract is carefully drafted to guarantee the initial 30-year lease with two renewal periods of 30 years each.

Housing Prices in Bangkok

Just like with renting, the purchase price of a condo will vary according to size and location. Note that the average price of a condo in Bangkok has increased by 100% over the last ten years. In central Bangkok expect to pay at least 150,000 baht per square metres with a minimum space of 120,000 square metres.

The Central Business District, Sukhumvit and the Riverside are all considered premium areas. In older developments expect to pay around 90,000-120,000 per square metre.

How to Search for Real Estate in Bangkok

Online Listings for Property in Bangkok

Most real estate companies in Bangkok offer properties to buy as well as rent. Use these sites to find places that fit your criteria:

Another online resource is the Thailand classifieds on EasyExpat.

Newspapers

The Bangkok Post has classifieds which list condominiums available to rent. This section is also available online at www.classifieds.bangkokpost.com

Networking for Property in Thailand

You can chat with other expats on the Bangkok forum or network and receive advice. Inquire about other people's experiences and ask question about buying property.

Also ask your contacts about their experiences with agents, areas, and property. Your friends and colleagues can be a really helpful resource for finding out about potential issues, or available properties.

Estate Agents in Thailand

Estate agents are valuable as they should be a local expert who is experienced in real estate transactions in Thailand. The agent should know how to communicate in Thai and understand the possible geographical and legal pitfalls of buying in the area. A good agent should be able to arrange a viewing of units in your price range that fit your criteria. If you find a property you wish to purchase, they act as your representative in the sale by obtaining a fair price on your behalf.

Agree to a fee in writing before the process begins and determine precisely what services you will be receiving in exchange for that money. It is worth obtaining quotes from a few different law firms and clarifying what each will provide. Before you sign a contract with an agent, be sure you understand the clauses and terms. If you don't speak Thai, bring a trusted advisor to interpret. Remember - cheapest is not always best! Estate agents also earn their commission from the seller and it is usually 3-5% of the agreed purchase price, but can go up to 10%.

Real Estate Contracts in Thailand

There are no standard terms and conditions in a Thai contract for a sale and purchase of a condominium. They normally include the following provisions:

  • Purchase price and deposit price
  • Warranties of condition
  • Timing of transfer
  • Method for payment
  • Transfer Registration Date and Land Department

A Thai condo purchase is normally preceded by due diligence to investigate the ownership and legal issues surrounding the condo unit and the execution of a contract. Titles can be problematic and it is important to familiarize yourself with the different types of titles available.

  • Chanott ti din - Title deeds with land accurately surveyed, giving incontestable possession of the land. This is best title a property can have, and can be hard to find.
  • Nor Sor Sam or Nor Sor Sam Kor - Land title deeds provide a record of ownership and may be sold or leased, but tend to be less accurately surveyed than Chanott titles. Most titles in the country fall under this category.
  • Sor Kor Nung / Tor Bor Tor Hoc / Tor Bor Tor Ha - These titles are essentially squatter's rights registered at the district office for a small fee. They cannot legally be sold, nor can the purchaser build on the land.
  • Sor Bor Kor - True title deeds which are accurately surveyed and pegged which can be mortgaged and developed. But they cannot be leased, sold or transferred.
  • Condominium titles - Established under the condominium act of 1979, this is a title to a part of a building or buildings with multiple owners, a fractional interest in the land, common assets, and common parts of the building. This percentage represents the value of the voting interest in the condominium company or owners' association.

Off-plan condominium purchases are more complicated as they have not yet been constructed. Therefore, issues of payments schedule transfers and warranties are often included.

Real Estate Purchase in Thailand

The sale and purchase process is generally straightforward in Thailand, but there are still aspects to be aware of. It is highly recommended to hire a real estate attorney when purchasing property to represent your interests. The real estate market in Thailand is buyer beware.

Once the seller accepts a proposed offer, their lawyer prepares a purchase agreement. This should include, among other things, which party pays the legal fees, transfer fees, and taxes.

The purchaser must also supply documentation asserting their identity and ability to purchase the property. These may include:

  • Passport
  • Exchange Control Form (Make sure the name on the form is the same as the buyer's to avoid delays)
  • Certified copy of the certificate of incorporation
  • Certified copy of the memorandum of association
  • Notaries certificate
  • List of shareholders (in English with Thai translation)
  • Minutes of directors' meetings with resolution to purchase the property
  • Letter of advice regarding specific signature
  • Power of attorney - if you, as a director, will not be present in the transactions
  • Free debt letter
  • Foreign co-owner letter
  • Certified copy of IDs of authorized director(s)
  • Certified copy of the house registration of the authorized director(s)
  • Title deed of the condominium unit

Mortgages, Payment & Fees for Property Purchase in Thailand

In Thailand, payment of the purchase fees is a private arrangement between you and the seller. Payment can be made in cash or via a bank transfer. You should also check whether any of the fees will be payable upfront and what happens if the transaction falls through.

Upon signing the contract, a deposit of 10% is usually paid. This may be held in escrow depending on the contract. In Thailand land law, an escrow refers to money held by a third-party on behalf of transacting parties. An escrow holds the money in trust, giving added protection to both the purchaser and seller from real estate fraud. They are becoming more commonly used in Thailand land law for purchases of property, land and condominiums. In the event that the seller cannot complete on the transaction, the escrow service provider will return the funds to the purchaser.

It is possible for foreigners to be granted a mortgage by a Thai bank. However, banks and finance companies in Thailand may be more cautious with foreigners due to their perception that their situation is less secure than Thai nationals. Additional checks and security may be required before a mortgage can be secured.

On top of the property fee itself, there are several government fees and taxes which are also payable during various stages of the real estate transaction. The total transfer fees and taxes payable can differ depending on the amount of income tax involved for the seller. Generally, all fees and taxes become due when the property transfer is registered at the Land Department. However, certain payments, such as lease payments may also create additional tax liability that would be paid afterwards.

Type of Tax or Fee

Payable By

Amount

Transfer fee

Buyer or a shared duty

2% of the property's registered value

Stamp duty

Seller

0.5% of the property's registered value but note this is only payable if the transaction is exempt from business tax

Withholding tax

Seller

1 % of the appraised value of the property if the seller is a company.

If the seller is a private individual tax is calculated at a progressive rate based on the appraised value of the property

Business tax

Seller

3.3% of the appraised or registered sale value (whichever is higher) value of the property if it is sold within 5 years. This is applicable to both individuals and companies

Closing on Property in Thailand

Closing usually takes 30 to 60 days and includes the exchange of contracts and settlement of the remaining balance. When this has been done, the title deeds are submitted to the Land Department for registration and payment of government duties. Take some time to double check that all of the documentation has been properly and accurately recorded.

Once you have submitted the transfer, you should be given proof of the transfer. This will be recorded on the title deed (known in Thailand as a chanote/nor sor 4).

Auction

Property auctions do exist in Bangkok. If an individual defaults on a Court judgement, then their assets are seized. If this includes property, then said property is often put up for auction. Keep an eye on newspaper listings (such as the Bangkok Post - www.classifieds.bangkokpost.com) for more details.

Consult:
http://www.cimbthai.com/CIMB/en/properties/auction_criteria/ for property on auctions.

Update 15/09/2013



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