Buying a Holiday Home and Property in Thailand
Buying a Holiday Home and Property in Thailand
If you were to ask tourists queuing up to fly home after visiting Thailand whether they considered purchasing a property during their trip, the vast majority would admit that they had thought about buying a holiday home in Thailand at some point in their holiday. Let's face it, Thailand is a tropical paradise and many envision owning a property here.
Why are thousands of people purchasing a property in Thailand? Is it the lure of intriguing culture and people? Perhaps it's the lush year-round warm climate combined with fresh tropical fruit, vegetables, and seafood? Maybe it's the low-cost healthcare and standard of living? For many, it's all the above.
Buying a Holiday Home - Things to Know
Whether it’s been something you have talked about for a while or a vague notion you got while on a sun-drenched beach in Phuket, pondering the possibility of buying a holiday home in the land of smiles puts you in a very large company, and for good reason. After all, Thailand is one of the most traveled destinations in the world.
Home to rich and elegant culture, Thailand gives travelers a true sense of mystery and wonder while still having the comforts of home close at hand. This East meets West balance is one of the biggest selling points for foreigners who have purchased property here.
However, it’s important to know all of the facts and separate the dream from reality before seriously considering buying a holiday home in Phuket Thailand. Here are some of the most important things to consider before you decide to buy a property in Thailand.
Can Foreigners Own LAND in Thailand?
By law, foreigners cannot own LAND in Thailand.
If a foreigner wants to purchase property in Thailand that involves land there are several options. One is to lease the land for an extended period of time. It's not that difficult to set up safely.
Another alternative is to set up a Thai company. If you choose this option, you will be a shareholder and you will need at least one Thai partner. Property lawyers in Thailand can set this up and put in place safeguards for additional protection.
Another option is to purchase a condominium in Thailand which you can own in your own name and own forever.
Are Condominiums in Thailand the Best Option?
Because some people are put off by the process involving land, many look to buying a condominium instead, which a foreigner can own 100% outright. Condominiums are by far the easiest path to owning property in Thailand.
According to the Thai Condominium Act, foreigners can buy a condominium with a freehold title under the “foreign freehold” quota. In a registered condominium building, 49% of the units are designated “foreign freehold” quota. Foreigners buying these units will be issued a “foreign freehold” title deed.
The main requirement is that the funds used to purchase the condominium come from overseas.
Can I Get a Mortgage from a Thai Bank?
When purchasing a property in Thailand, foreigners find it difficult to secure financing from Thai Banks. This is even true for foreigners who have been living in Thailand for a number of years with good work history and proper documentation.
On a positive note, the number of banks offering options to foreigners in regards to mortgages is increasing. More information about that can be found here.
Perform Due Diligence in Thailand
A local property law firm is capable of performing due diligence on any property in Thailand to ensure that there are no problems. A due diligence report in Thailand is similar to that in Western countries and will entail checking all title documents, the history of the property and owners, size, access rights, and location among other things.
When buying a holiday home or a property in Thailand reservation agreements must allow sufficient time for due diligence to be performed.
How much is the typical Reservation Payment in Thailand?
In many countries, the reservation payment is known as a booking fee.
The reservation agreement and payment reserves the property (takes it off the market) and secures the terms and conditions of the offer that has been accepted by the seller to purchase the property. Later the sales and purchase contracts will be drafted. The due diligence is performed after the reservation payment and before the signing of contracts.
In Thailand, the Reservation Payment is usually no more than 2% of the purchase price of the property and goes towards the total purchase. It is refundable should there be a problem with the due diligence report. Be sure to retain a receipt of the transaction.
Ask for a Succession Clause
For those who are planning to leave your property in Thailand to your children as part of their inheritance, it is wise to add a succession clause to the contract. Although it is not a pleasant thought to think of your passing, this will prevent your children or heirs from the additional stress of dealing with unwanted complications during this sad and painful time.
The Good News - No Annual Property Taxes
Foreigners owning property in Thailand enjoy zero property taxes. There are currently no annual property taxes in Thailand.
There are, however, taxes at the time of purchase and sale along with typical stamp duty and transfer fees. This is common in most countries and these are usually split equally between buyer and seller in Thailand.
With all of the rules, regulations, and restrictions, Thailand may sound like a better place to visit rather than to live, but this couldn’t be further from the truth. Thailand is rated in the top 10 places in the world to retire year after year.