In Bangkok alone, the number of new complexes of this type increased from 8,000 to 15,000 in a quarterly comparison between 2017 and 2018. Interest in the Thai real estate market is also justified by an increase in requests for work permits from foreigners. In Bangkok, in the second quarter of 2018, these figures were 88,000 (for comparison, in 2015 – 78,000). The bulk of investment in the housing market in 2018 came from residents of China, who place Thailand in third place after the United States and Australia in the ranking of the most attractive countries for investment.
However, there are a number of restrictions for foreign citizens to purchase real estate in the kingdom. We talked about this in detail in our article “Purchasing real estate in Thailand.” A foreigner planning to purchase a villa or house in Thailand will not be able to become a full-fledged owner. In accordance with local legislation, foreign citizens cannot acquire ownership of land plots on which construction projects are erected. The owner of the house has the right only to long-term lease (leasehold) of the land plot for a period of 30 years with subsequent extension.
Due to this and other legal restrictions, foreign buyers are increasingly turning their attention to Thai condominiums – both for permanent residence in the country and for generating rental income. The share of such housing in the Thai real estate market is about 70% of the total. The popularity of condominiums is due not only to affordable prices, but also to the possibility of obtaining full ownership rights to housing (freehold). This opportunity sets condominiums apart from other types of real estate in the kingdom (link).
What is a condominium in Thailand
A condominium in Thailand is a form of real estate ownership in which the owner of the home owns one or more units of property (most often an apartment), as well as the right to use the common property of an apartment building. Key issues related to the management of a condominium are decided by the council of homeowners. The powers of the council are enshrined in the charter, which is usually drawn up by the house development company.
The residents’ council determines the amount and deadline for payment of contributions aimed at maintaining common property. In addition, homeowners independently develop rules for living in a condominium, and the corresponding norms are enshrined in a special declaration.
According to Thai law, foreigners cannot own more than 49% of the living space in one apartment building. This means that in a residential building consisting of, for example, 100 apartments, only 49 can belong to foreigners. This restriction does not apply to condominiums located in Bangkok. In the event that a foreign buyer acquires the entire residential complex, ownership rights belong only to him. This is the only type of property that can be owned entirely by a foreigner.
The process of buying a condominium in Thailand
What to look for when choosing a condominium
The pricing of condominiums in Thailand is determined by a number of factors that can influence both its increase and decrease. A potential buyer should pay attention to the following points:
- location of the house;
- availability of the necessary infrastructure (shops, shopping centers, schools, hospitals, beaches, sports grounds, etc.);
- technical condition of the premises;
- cost of maintaining real estate;
- availability of air conditioning, cable television, as well as internal infrastructure facilities – playground, sports room, swimming pool, etc.
Purchasing a condominium at the development stage
Purchasing a condominium apartment in Thailand during the construction phase allows the buyer to save significantly. As a rule, the price of an apartment in a residential complex under construction is 30–50% lower than the cost of finished housing. The average price per square meter in 2018 was THB 70,000–150,000 (EUR 1,956–4,191).
The Thai authorities actively support local developers. They help reduce the tax burden for construction companies and establish preferential rates on mortgage loans.
The kingdom’s legislation provides for strict sanctions against construction companies that delay the delivery of projects. If the completion date is extended by more than 6 months, the developer is required to pay a large fine. Failure to comply with deadlines may result in criminal proceedings being initiated against the construction company. Therefore, for a potential buyer, the risks of purchasing real estate in a facility under construction are minimal.
Experienced realtors recommend purchasing housing in condominiums that were built by large developers who have an exemplary business reputation in the market. When choosing objects from a little-known company, you should make sure that the company has a special construction license. A transaction with a reliable counterparty will reduce the risk of loss of funds to zero and relieve the foreigner from the need to defend his rights in court. Text about Just Real specialists
Main stages of buying a condominium in Thailand
After selecting a property, as a rule, the stage of agreeing on the price with the seller and preparing a purchase and sale agreement follows. It is worth noting that in most cases the asking price by the owner of the property is not final. The real estate market in Thailand is quite flexible in this regard, so the seller may well make concessions.
The apartment purchase agreement is drawn up in English and Thai (the version of the agreement in Russian has no legal force). The contract must specify:
- condominium information;
- agreed price and date of conclusion of the contract;
- deposit amount and date of payment;
- method of making deposit payment.
If the contract is terminated at the initiative of the buyer, the deposit remains with the seller. The buyer receives the advance payment in double the amount if the agreement is canceled at the initiative of the owner of the property.
After agreeing on the price and preparing all the necessary documents, the buyer makes an advance payment, the amount of which is 5–10% of the cost of the object (the exact amount of the advance payment is determined by the contract). To make a deposit, you must open an account in a Thai bank. The signing of the contract is carried out in the presence of a realtor and a lawyer.
The remaining part of the funds to pay for the purchased housing is paid by non-cash transfer (for Russians – from a Russian bank to the account of a credit institution located in Thailand; the transfer must be made in rubles). Bank documents must indicate the purpose of the payment: purchase of a condominium property.
The transfer of funds must be certified by a special certificate called Tor Tor Sam. After the money has been transferred, you must receive a special Foreign Exchange Transaction Form document confirming the currency conversion.
All transactions with real estate must be registered with the Land Department of the Kingdom of Thailand. After this procedure, the new owner will be able to receive a document certifying the right to own the property.
The registration documents record the technical layout of the premises, as well as the history of operations with the property. In addition to the certificate, the new home owner receives one copy of the home sale agreement, which bears the seal of the Land Department and the signatures of the responsible persons. The buyer of the apartment is given an extract from the house register, which indicates the address of the property. All papers are prepared in Thai.
Mortgage and installments
A non-resident has no right to take out a mortgage in Thai banks. Local legislation allows housing loans to foreign citizens only from construction companies. You can find out how to obtain a residence permit in Thailand here.
The buyer of the apartment must pay 50% of the cost of the new building when concluding a real estate purchase and sale agreement. The remaining amount is paid within 5–7 years from the date of purchase. The loan rate is 5–7% per annum. Some developers sell apartments in installments, the duration of which is 1–2 years.