For years, Thailand has been a popular destination for tourists, expats, and retirees. They are all captivated by the nation’s beautiful scenery, warm climate, rich culture, and low cost of living. In 2024, many foreigners choose to buy real estate in Thailand, either as a second home, an investment, or a holiday rental.
However, buying property in Thailand as a foreigner is not as easy as in some other states. You will have to deal with legal restrictions and cultural differences. Besides, be aware of various practical challenges that you will have to overcome. In this article, the International Wealth team will detail the basics of purchasing real estate in Thailand, including the types of properties you can buy, steps to take, costs to pay, and risks to avoid.
Property purchase in Thailand: ownership options for foreigners
As a foreigner, you are not permitted to buy land in Thailand, unless you have a Thai spouse or own a company in the country. Still, an opportunity does exist to purchase apartments and condominiums, as long as the foreign ownership in the building does not exceed 49%. You can also acquire the whole structure, but not the land on which it stands.
Willing to buy a house or a villa in Thailand? In this case, two options are available: leasehold or freehold. When talking about leasehold, we mean that you rent the land from the owner for a fixed period, which usually makes 30 years, renewable up to 90 years. With freehold, you will own the land through a Thai company, in which you hold 49% or less of the shares. Without a shadow of a doubt, both options have their pros and cons, so be sure to consult a lawyer well-versed in the real estate sector of Thailand before choosing one.
Property purchase in Thailand: steps to take
The process of buying property in Thailand will vary depending on the type of property, its location, and the seller. However, here are some general steps that you need to follow:
- Find a property that suits both your needs and budget. You can search for your dream real estate online, visit local agents, or hire a buyer’s agent to help you.
- Negotiate the price and terms with the seller or the agent. It may be necessary to pay a reservation fee or a deposit to secure the property.
- Hire a reputable independent lawyer to handle the legal aspects of the transaction. The said lawyer will conduct due diligence checks, draft and review all contracts, and advise you on the best ownership structure.
- Open a bank account in Thailand and transfer funds for the purchase. Be prepared to obtain a Foreign Exchange Transaction Form (FETF) from the bank to verify your source of funds.
- Sign the contracts and pay the remaining balance. Please note that you will also have to pay the taxes and fees associated with the purchase.
- Register your property at the Land Department of Thailand and obtain a title deed for it. This is the final and most important step, as it transfers the ownership of the property to you.
Property purchase in Thailand: costs
First-time buyers may think that a property price is all they have to pay when purchasing real estate in Thailand. However, nothing can be further from the truth than this belief. Please be aware that your new property comes with various costs impacting apartment and villa prices in Thailand:
- Taxes: In Thailand, you will encounter four types of taxes that you may have to pay when buying local properties. Namely, we are referring to the transfer fee, stamp duty, specific business tax, and withholding tax here. For each tax, the exact amounts and the corresponding liabilities depend on your property’s type and value, as well as ownership duration. Generally, these taxes range from 1% to 6.3% of the property’s appraised value or sale price, whichever is higher.
- Fees: There are also fees to pay to the Land Department, your lawyer, agent, and bank. These amounts vary depending on the particular service and provider, typically amounting to 1% to 3% of the property value.
- Maintenance: If you buy a condominium or a house in a gated community, you will pay a monthly or annual fee for the maintenance and management of all common areas and facilities you use. The above charge varies depending on the property’s size, its quality, and services provided. On a standard basis, you will pay approximately THB 20 to THB 80 per square meter every month.
Property purchase in Thailand: risks to avoid
Although buying property in Thailand is a rewarding and profitable experience, and your dream house or apartment in an exotic location is well worth all the worries, it pays to be aware of the related pitfalls, especially if you are a foreigner without much experience in the Thai business world or real estate legislation. First and foremost, be aware of these risks:
- Fraud: Some dishonest sellers, agents, or developers in Thailand may try to cheat you by selling a property that is either fake or stolen. This is a serious risk that may cost you a lot of money. To avoid this, do your research, verify the documents, and hire a trustworthy lawyer. Always check the seller’s or the developer’s reputation and track record, and inspect the property before buying it.
- Disputes: Disputes may potentially arise when you purchase properties in Thailand. You may be involved in boundary conflicts or ownership claims. If you discover any construction defects, you may have to go to court as well. This is why you do your best to inspect the property before the purchase, thoroughly check the title deed, and follow all legal procedures to a tee.
- Market Fluctuations: Economic conditions, political stability, tourism trends, and natural disasters may all affect the property’s value and demand for it in Thailand. Would you like to minimize these risks? Then diversify your portfolio, choose a good location, and monitor the market.
Are you here because you are interested in purchasing property in Thailand? Talk to International Wealth experts first for further guidance and valuable recommendations! Don’t miss this once-in-a-lifetime chance to own a lovely home, villa, or condo in an amazing and friendly country!
