Property in Thailand
Thailand has everything you want from a holiday paradise – golden sandy beaches, year-round warmth, exotic cuisine and culture, friendly people and a low cost of living. It’s also easy to get to from anywhere in the world and has close and friendly ties with the West.
Thailand was part of the “hippy trail” from the 1960s and a backpacker standby since the ‘80s. Don’t think it will be in any way grungy though; these days it has a superb tourist infrastructure and the kind of luxury villas we used to associate with sparkling colonial favourites like Singapore.
Thailand is an 11-hour flight from the UK, but being a similar distance from Australia and New Zealand too it’s a fascinating meeting place for the world’s tourists and adventurers, helping to attract globetrotters like David Beckham, Kimi Raikkonen and Damien Hirst. You don’t need a fortune to buy here, however, apartments in tourist areas of Thailand start at around TBH2million (£40,000 as of February 2016).
Thailand has the same population as the UK but in an area twice the size. The mainland sits in the IndoChinese peninsula between Laos, Cambodia and Burma. There are property buying locations here, notably Bangkok itself at the mouth of the Mekong River and the beach resort of Pattaya nearby, but also Chiang Mai further north near the border with Burma. Already a tourist hotspot, the north is likely to be boosted by Burma’s turn to democracy in 2016.
Most foreign property buyers head for the south though, to the Isthmus of Kra that curls around the Bay of Thailand and includes the island of Koh Samui. On the western side is the Andaman Sea, including the island of Phuket, where the celebs tend to buy their villas.
The British are the biggest buyers, though there are Australians too, and Scandinavians looking for an escape from those dark winters. You certainly know where you are with the weather in Thailand. In Phuket you have daily maximums of around 31-33ºC all year and it rarely dips below 20ºC. The rain, however, virtually non-existent from November to February falls as monsoons both in May and in September/October.
In Thailand foreigners cannot buy freehold property except through a company. Most buy a 30 year lease which is automatically renewable two more times, making 90 years. Like in any purchase, ensuring you have a specialist and independent property lawyer will iron out any problems or worries.
Where to Buy Property in Thailand
On the Thai mainland, Pattaya is one of Asia’s largest beach resorts and the second most visited city in Thailand (after Bangkok, 150 kilometres north). The typical buyer in Pattaya is changing; from single males, drawn by its nightlife, to more families.
In particular those younger visitors are visiting Jomtien, a few kilometres away, and wanting to experience Pattaya's floating markets and other cultural experiences.Houses in Pattaya range in value from 2 million baht to 50 million baht.
A typical house 15 minutes from the city centre would be 3 million baht, in a gated community with a communal swimming pool. Apartments run from less than 1 million baht all the way up to penthouses in excess of 80 million baht. You can buy a very nice apartment close to the beach from 1.2 million baht.
Meanwhile, on the other side of the Gulf of Thailand, 200 kilometres from Bangkok, is the country’s oldest beach resort, Hua Hin. Here, new residential and retail developments, as well as golf courses, are attracting an increasing number of buyers from Bangkok, as well as from Europe - and there’s now a sizable community of expat Brits.
Forty-five minutes south of Hua Hin is the quiet beach village of Kuiburi where you can find boutique developments with access to the beach, private infinity pool, Jacuzzi and rooftop terrace.
Before you follow Posh and Becks to Koh Samui, with its choice of five-star resorts, consider its little sister, Koh Phangan. Given that 70 per cent of Koh Phangan is protected by national park status, the island should always maintain its unspoilt charm.
On the west coast, idyllic properties with infinity pools can be found in Baan Tai for 15 million baht and at Bay Residence, you could take on a self-build villa project near the pretty bay of Haad Salad with plots starting at around £50,000.
James Bond fans might prefer a home on the island of Yao Noi in Phang Nga Bay, famous as the setting for villain Scaramanga’s hideaway in The Man with the Golden Gun.
With a larger budget, you could consider the natural eden of Yao Noi – 60 per cent of the island is covered in rainforest – where a one-bedroom villa will start at around £517,000; two- and three-bedroom options are available with prices reaching £800,000.
How to Buy Property in Thailand
When buying a property in Thailand you should never proceed without the assistance of an experienced solicitor.
Using a real estate lawyer is not required in Thailand, but it is highly recommended. By failing to engage the services of a competent lawyer you are inviting unwelcome and unnecessary complications.
A trusted lawyer will be completely independent and impartial – not tied to a developer or an estate agent. In addition to helping you understand the complexities of any contracts, they will also be able to explain key elements of Thai property law.
But even before there are any sale and purchase agreements or contracts to sign, a lawyer will conduct all the necessary due diligence on the property (and even the developer) for total peace of mind in your purchase.
This will usually involve a full title search on the property to ensure that the developer is legally entitled to the land, and that there are no complex third-party arrangements which could impact your personal ownership. In the case of a condominium purchase, a good lawyer will insist upon seeing the Chanote Land Title for the whole development, which will identify any mortgages, loans, or liens against the property.
While it possible you may be asked to pay a deposit to secure the property while due diligence is being conducted, a good lawyer will ensure that the refund of that deposit is legally secured if the search turns up anything which should cause you to rethink your purchase.
For more detailed information on the use of lawyers in Thai property transactions and much more, the Thai Residential Phuket Property Guide covers all this in section 3: Buying and Leasing Property in Thailand. The full guide is broken down into sections for you below.
1: Introduction to Phuket Property
2: Overview of Phuket Real Estate Market
3: Buying and Leasing Property in Thailand
4: Economic Overview for Thailand Property Investors
5: Key Drivers for the Phuket Property Market (2019 & Beyond)
Buying costs in Thailand
Conveyance fees for property transactions are relatively low in Thailand, compared with other countries.
For condominiums, the transfer fee is 2% of the assessed value, but on a new-build, this is typically split between the buyer and the seller. Also, if you are buying a foreign freehold condo (which is typically recommended) there will a freehold upgrade fee, which is either a fixed amount or a percentage, depending on the development.
Buyers of condominiums must also factor in the ongoing running costs of the unit they are acquiring (i.e. sinking fund, common area/maintenance fees, utilities, etc.).
Sellers are typically responsible for either stamp duty of 0.5% or a business tax (SBT) of 3.3%. All businesses pay the latter, but individuals who have owned the property less than 5 years are also subject to the SBT.
When it comes to villa or house purchases, the fees are quite similar and should total no more than 6.3% of the purchase price. A developer may or may not split these fees with the buyer. For landowners, a new tax regime will come into place in 2020. It will tax land between 0% and 1.2%, depending on its value, whether it is being used for residential purposes, or if it is vacant.
What buyers really need to know
Under current Thai law, foreigners are not allowed to purchase freehold land, which includes landed property such as bungalows, houses and villas.
Foreigners may purchase a 30-year leasehold contract, which is fully endorsed by the Thai authorities. Extensions are not automatic, although most landlords are amenable to a 30-year renewal at the end of the original lease term.
A lease can be registered in your own name with the Land Office, and once this is done the property is yours for 30 years. (Any renewal after 30 years must be separately registered and re-filed with the Land Office.)
Many foreigners operate companies in Thailand, and it is possible to acquire landed property through the company (as it is necessarily a Thai entity).
It is important to note, however, that the company may not be set up for the express purpose of buying a house or villa – such a “holding company” activity is illegal in Thailand. Furthermore, 51% of the company shareholders must be Thai nationals, but they may not be nominee shareholders, enlisted only to get around the company regulations so that the property could be acquired.
The company must, in other words, be a legitimate company, paying taxes, filing audited accounts, and paying dividends to local shareholders. In this way, the foreigner will never have the title in their own name, but they can make use of the property as a director of a proper Thai company.
The one exception to the rule that foreigners cannot own land in their own name concerns a “Prescribed Investment”. If a foreigner invests at least THB 40 million, they may be granted up to 1 Rai (1,600 m2) of land. Such an investment must be in bonds of either the Bank of Thailand, the Thai Government, or another State Enterprise. They may also be bonds whose capital is secured by the Ministry of Finance.