Are you considering buying a house or a condo in Thailand? If so, it might be a good idea to get yourself updated on the regulations for that kind of an investment. Try also to become aware of how to behave not to get cheated or to take unnecessary risks. The most valuable advice is most likely to consult with a trustworthy lawyer before acting. In the text below, we have stated some important issues for you to have a look at before actually making the investment.
The last couple of years, it has become increasingly popular among foreigners to reside in Thailand. Many people have chosen to invest in houses and condos. When it comes to investing in condos, this works out pretty much as in the rest of the world — you simply hold the condominium in your name. To invest in houses and villas is, however, a bit more complicated due to the fact that a foreigner, in his/her own name, cannot hold land in Thailand — only buildings. There are mainly two established ways of getting around this problem. One is to register the land on a Thai company, and the other is to lease the land.
To Hold an Apartment in Your Name
The great advantage of investing in condos in Thailand is that you can hold the property in your name. This is possible in accordance with the articles of the Condominium Act. The Act states that foreigners can own condo units up to 49 percent of the total space in every condominium project (in projects located in some selected areas, the total foreign holding can exceed 49 percent). Together with the property holding comes the right to utilize the common facilities for a yearly maintenance fee.
To Own Land through a Company
During 2006, a decreasing interest among foreigners for house investments in Thailand could be observed. The main reason was that a change in the domestic political conditions created uncertainty. The new political situation was a result of the military coup in September, 2006. More about what has happened, and what is on the agenda, can be read about in our text on Thailand’s contemporary politics. To mention one important parameter, the military regime has placed a significant focus on revising the Foreign Business Act. If the proposed changes are to be approved, this will make it substantially more complicated for foreigners to acquire land through the previously so popular method of establishing a company to hold the land. As of today, however, no actual decision has yet been made, implying that the method is still — despite being complicated as well as risky — possible. If the model is to be prohibited, which is in accordance with most experts’ beliefs, this way to go is clearly not recommendable. Given today’s prevailing situation, most lawyers advise against using the company model for foreigners to acquire property in Thailand.
Land Lease
Since the company model has become less attractive, the leasehold model has instead gained increasing popularity. Today, most housing projects use a leasehold solution where the buyer of a property leases the land for 30 years from the project company. When the lease period expires, the owner of the property has the possibility to extend the lease for another 30 years. This can be done twice, which implies that the total lease period, in principle, can be 90 years. However, the lease period is far more complicated than what is often communicated to the buyer. Among the potential complications can be mentioned the bankruptcy risk of the developer, the risk of the developer mortgaging the land, and that the developer can reject extending the lease period. To put it clear: in most cases, it is only the first 30 years that can be guaranteed. Nevertheless, there are ways also around this issue, where a professional business lawyer is the best way forward (contact us here fore more details).
Money Transfers
When it comes to transferring money into Thailand, with the purpose of buying property, there are no restrictions. In case you send money to Thailand from a bank account in your home country, there is normally the option to execute the transfer in your country’s specific currency as well as in Thai baht. Some good advice is to compare the exchange rates between the sending bank and the Thai receiving bank. The links below will take you to the websites of the major Thai banks:
www.bangkokbank.com/Bangkok+Bank/Web+Services/Rates/FX+Rates.htm
www.kasikornbank.com/GlobalHome/EN/miscellenous/rate/rate.html
www.krungsri.com/thai/exchange01.aspx
www.scb.co.th/html/exchange/bk-txtexchange.htm
Normally you are, without any fees or taxes, allowed to bring out the same amount of money from Thailand as you evidently brought in. Therefore, you will have to save the transfer receipts that the bank issues in connection to each transfer. If you are to transfer money with the purpose to purchase a condominium, it is crucial to make sure that each transaction amounts to 20,000 US dollars or more as this will enable you to request a Foreign Exchange Transaction Form (“Tor Tor Sam”) from the receiving Thai bank. It is important that the transaction form is issued in the same name as stated in the purchase contract of the condo.
Mortgaging Your Property
To borrow money with the purpose to buy a property in Thailand is in principle impossible if you are a foreigner. This has to do with the regulations laid down by the Bank of Thailand. If you wish to borrow money, the best solution is most likely to do it in your home country — implying both better conditions and a smoother process.
