Why Would We Consider Buying a Property in Thailand
Asia is undoubtedly one of the world's great growth centres. Even if you doubt its potential in the short term, over the next fifty years few can question its potential, with China set to become the world's true superpower during this time. After a rockier-than-most-in-the-region financial crisis, fuelled in no small part by the country's political instability, Thailand is now surging back to growth, and property in Thailand is becoming a very popular choice with global property investors.
In decades gone by Brits and westerners have emigrated to far flung destinations to make their lives, many Brits have taken residence around Europe, like the builders going to Germany in the 80s, many more went to America for better opportunities, and now many are going to Asia. Thailand property is very popular with these buyers, with holiday home investors, and with pure investors.
And rightly so. Looking at property in Pattaya, we have a fantastic combination; some of the lowest property prices in the world, in a city ranked one of the most successful beach resorts in the world. This is a golden opportunity, except for one thing: Thailand isn't completely open when it comes to foreign buyers, and worse, there are many misconceptions about how closed or open it is, how easy or hard buying property in Thailand is.
Can Foreigners Buy Property in Thailand?
In a word, yes. Foreigners can buy in Thailand, and in fact it is a lot more open now than it was during the boom. However, it is not as open as say Malaysia.
Foreigners cannot buy land in Thailand. This rules out houses and ground floor apartments, leaving foreigners able to buy condos and apartments from the first floor up. On top of that, foreigners can only own up to 40% of a development. Apart from that they can buy freehold with no problem at all.
When it comes to buying property in Pattaya, the above restrictions still leave buyers with a very wide choice, because in Pattaya, apartments and condo developments are very popular indeed. So, how is the next step.
How to Buy a Property in Thailand
Buying Land, Groundfloor Apartments and Inside the Law
While the restrictions still leave plenty of choice, it is still not sufficient to for everyone. If a foreigner wants to buy land, a house, or a ground-floor apartment in Thailand there are several options.
Running Leasehold
Foreigners can buy all the above on a leasehold tenure, typically of up to 30 years, with optional renewal at the end of the term.
Through a Thai Company
This is probably the most popular choice, because it allows the foreigner full ownership. Companies where the majority is owned by Thai residents are allowed to buy land (and the other above properties) freehold in Thailand. A foreigner simply buys a minority share in a Thai company, and buys the property through the company, or sets up a company with a Thai resident at 51% - 49% in the latter's favour, and then again, buys their chosen property through the company.
Other Options
There are a couple of other options, such as buying through a Thai spouse, and investing at least 40 million baht per year for five consecutive years, which allow full and free purchases of land and all properties in Thailand, but obviously these are only available to a limited number of people.
The Buying Process
The Thailand property market is still very under regulated with comparison to the UK for example. Thus, the first step in buying a property in Thailand is to hire a qualified real estate attorney fully versed in the law in the area you wish to buy.
In order to buy a Thai property you will need two important documents: a passport and an Exchange Control Form. However, many more documents are needed if you wish to buy through a company, as follows:
- 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
As with any property purchase, you should always conduct your own due-dilligence before signing or paying anything. In Thailand this means having your lawyer conduct a caveat search and verifying the property's actual condition before engaging in purchase transactions. Once the seller accepts the offer, his lawyer will prepare a purchase agreement. This should include, among other things, which party pays the legal fees, transfer fees, and taxes.
A deposit of 10% will be paid upon signing. Bear in mind: Deposits in escrow are still rare. Furthermore, deposits are non-refundable unless it is the seller who backs out. In that case, he will need to pay you double the amount for damages.
The buying process of property in Thailand usually takes 30-60 days. This includes the exchange of contracts and settlement of the remaining balance. When these have been accomplished, the title deeds will be submitted to the Land Department for registration and payment of government duties.