This is justified not only by the special love for the resort centers of Thailand, but by the steadily developing economy of the island and the city, as well as the high demand for tourist accommodation throughout the year.
Phuket has experienced a tourism boom and high price increases in the last decade, and was hit hard during the 2008 economic crisis. After the economy recovered, housing prices began to skyrocket, and today the island is visited annually by more than 10 million tourists, most of whom are from China.
Pattaya, in turn, is the second most visited city in Thailand after Bangkok and is one of the largest beach resorts in Asia.
Features of buying real estate in Thailand by a foreigner
Restriction of property rights. The first feature that our compatriots encounter when purchasing real estate in Thailand is that foreign citizens cannot acquire full ownership of all real estate in the kingdom.
There are two main forms of ownership in Thailand:
- full ownership (Freehold),
- long-term lease (Leasehold).
A long-term lease agreement is concluded for 30 years with the possibility of renewal 2 times, so the tenure of real estate is 90 years. In recent years, properties with Leasehold ownership have been receiving more and more attention from foreign buyers, as the price of such properties is usually 20-30% lower than those sold in full ownership.
Ownership by foreigners of no more than 49% of the area of the residential complex. Another feature of buying real estate in Thailand is the restriction on foreign ownership of the area of any property – up to 49%. That is, when building a new residential complex or villa complex, the developer can sell 49% of the total living space to foreigners, and the remaining 51% must belong to citizens of the Kingdom of Thailand.
If 49% of the residential complex has already been sold to foreigners, then the apartment or villa the buyer likes can only be issued for long-term rent (Leasehold).
The impossibility of purchasing land. It is also worth noting that according to Thai law, a foreign citizen cannot acquire ownership of a plot of land. Those. land in principle cannot belong to foreigners. Thus, villas and houses are decorated in a mixed form:
- the building is in full ownership,
- land plot – in the form of Leasehold, i.e. for long-term rent.
There are also ways to circumvent this rule – opening a legal entity in the Kingdom of Thailand and purchasing an object for the legal entity. But, again, at the time of opening the company, 49% of the shares must belong to the potential buyer of the property, and 51% to one or more Thai citizens.
Subsequently, the second owner\owners will be able to abandon their shares in favor of the foreign owner. A legal entity in Thailand has the right to register real estate of any type as full ownership of Freehold. If you plan to rent out the purchased property, you should choose residential complexes located nearby or in the area of popular cities. As a rule, developers also offer services for renting out apartments, but it is worth checking whether a hotel license has been obtained, which allows renting out the property for a period of less than 30 days. Long-term rental of apartments (more than 30 days) does not require special permits.
Most of the real estate in Thailand for sale is located in condominium-type complexes, which are equipped with a reception area, a swimming pool, a gym and elements of internal infrastructure. We wrote in detail about purchasing real estate in a condominium in the article “Purchasing a condominium in Thailand.”
Stages of buying real estate in Thailand
Conclusion of a preliminary agreement. After you have chosen a property, a preliminary reservation purchase and sale agreement is concluded, which specifies: data of the buyer and seller, information about the property, the agreed price, payment procedure and details. The buyer pays 1% of the cost of the object to the seller and the object is removed from the market. If the transaction does not take place due to the buyer’s fault, then this 1% is not returned.
Negotiation of the purchase and sale agreement. Next, the seller sends the main purchase and sale agreement for approval. This agreement contains more detailed information about the property, conditions and method of acquisition, costs of maintaining the property, etc. Copies of property documents are attached to this agreement. When making a transaction with a developer company, the contract is standard. However, a foreign buyer should make sure in advance that the contract complies with the agreed parameters and seek the help of professional lawyers. Since all documents are drawn up in Thai, there may be inaccuracies in understanding the terms of the contract.
Object examination. Next, the buyer, if desired, checks the property and/or the seller company for the presence of encumbrances and compliance with the information stated. When purchasing an apartment or house from a developer, it is not necessary to carry out an examination, but it is highly advisable when purchasing secondary real estate in Thailand.
Payment and conclusion of the transaction. After agreeing on all the terms of the contract, payment for the property follows and the transaction is concluded at the Land Department of Thailand.
If the transaction is concluded with a developer, then the buyer can directly transfer funds to the construction company’s account from any bank in another country. If the transaction is carried out on the secondary market, then the buyer needs to open an account in a bank in Thailand and transfer funds to it from a bank account in his country. Next, payment to the seller is made via internal transfer.
Please note that if you are planning to purchase real estate in Thailand with the right of Freehold (free ownership), then the funds for its purchase must necessarily come into the country from outside its borders. Compliance with this condition is necessarily verified by the Land Department. You will definitely need proof of the transfer in order to withdraw money from Thailand upon the subsequent sale of the purchased property.
In the Land Department of Thailand, all paperwork is carried out in Thai, and employees, as a rule, speak only Thai. Therefore, in most cases, foreigners are represented in transactions by either the development company or a lawyer – both on the basis of a power of attorney received from the buyer.
On the day of the transaction, the buyer receives a complete package of documents:
- purchase and sale agreement with signatures and seals of department employees;
- certificate of land with a site plan (even when purchasing an apartment);
- house book, which contains the address and all information about the property.