Living the Thai dream

Many have been to Thailand on a holiday and have at some point ended up having a look in the window of a local real estate agent.

You’re on holiday. You’re having a great time. But how good would it be to own your own piece of paradise.

And better yet, property in Thailand looks quite cheap in comparison to most countries in the West.

In this article we’ll look at some of the things you need to consider before taking the plunge into the Thai property market.

Can a foreigner buy property in Thailand?

A foreigner is able to buy a condo freehold so long as the foreign quota isn’t exceeded.

The foreign quota on condo ownership refers to the Thai Condominium Act 1979. This legislation states that foreigners can buy a condo provided that no more than 49% of total unit space in a building is owned by foreigners. And therefore the majority of floor space in a building must be retained for locals under the Thai quota.

Is it possible for a foreigner to own land in Thailand?

In most cases, foreign nationals aren’t able to easily buy freehold land under the current rules. But they can lease it.

If you are married to a Thai national then you can buy land but the property will have to be in your partner’s name.

Another way to buy land in Thailand is to set up a Thai company and then buy the property in the company’s name. However the company must be majority owned by a Thai citizen.

There has been some movement in policy allowing wealthy foreigners to buy up to 1 rai of land (1,600 square metres). However a 40 million Baht capital investment is also required. This is around 1.2 million USD. So not an option for most people.

What are the risks of owning Thai property?

Owning property in Thailand has its obvious perks. But there are also some risks that you should give consideration to before making a decision, such as:

  • Will you be able to easily sell the condo for a good price down the track?
  • Are you happy leaving the apartment vacant for long periods of time?
  • What if Thailand changes its visa policy and makes it harder to access the country?
  • For a new build, what if the builder goes bankrupt before the project is completed?
  • Is the builder reputable?

You should try to ensure that even though you are buying into the foreign quota, that you aren’t paying foreign ‘farang’ prices. A condo can switch from foreign quota to Thai quota and vice versa. But if you have to drop the price to sell it back to a Thai national then that could be a problem.

And just like when buying property in your home country, try not to buy in over-supplied areas. If an area is over-supplied it may take longer to sell. And it may be harder to get your asking price.

If buying a new build off the plan, make sure you carefully review the contract terms for fairness.

Check that the builder is reputable. Make sure that they have already completed other projects successfully.

Regardless of whether you are buying new or established, you should hire a good lawyer to review the documents and guide you through the process of closing the deal. If you would like help finding a good real estate attorney, we can help.

What are the ongoing costs of owning property in Thailand?

When you own a condo in Thailand you will have to pay a monthly common area maintenance fee, known as a CAM fee. This is to cover the cost of upkeep in the common areas such as the garden, lobby, gym, pool etc.

The CAM fee is charged at a certain rate per square metre. As a general rule the newer the building and the more facilities it has, the higher the monthly maintenance fee will be.

Thai property CAM fee
Property information showing Foreign quota, CAM fee

How much does it cost to buy a condo in Thailand?

It really depends what you’re looking for and where you want to be located.

Studio apartments can be purchased for $35,000 in Chiang Mai. But a studio will cost more like $50,000 in Bangkok or Phuket.

If you’re looking to live in your condo then you might want something a bit bigger.

A two-bedder can go for $60,000 in Chiang Mai and $80,000 in Bangkok. But you can also spend much more than this if you are looking for a newer, more luxurious abode.

An apartment in a new project will also come with a payment to the sinking fund. This is a one-off payment to cover the cost of major renovations or replacement of equipment in the complex. It’s usually equivalent to around one year’s worth of common area maintenance fees.

If you’re using a lawyer to assist with the due diligence, it could cost around the $600 mark.

Chiang Mai property
An example of a condo for sale in Chiang Mai, Thailand

What are the property taxes in Thailand?

The closing costs on a sale include a transfer fee of 2% of the sale price. This is normally shared 50/50 between the buyer and the seller.

There is a business tax applicable to owners who have held a property for less than five years. This is charged at the time of sale. The rate is 3.3% of the appraised value or sale value, whichever is higher. The business tax is normally paid by the seller.

There is stamp duty on the sale of Thai property. This is levied at 0.5% of the registered sale price. However stamp duty is not applicable when there is a business tax. I.e. if the property was held for less than five years. This is normally paid by the seller.

Withholding tax is charged at 1% of the appraised value or sale value, whichever is higher. This is normally paid by the seller.

There is no ongoing annual property tax for home owners in Thailand.

As we have covered here, some fees are normally paid by the seller, and other fees by the buyer. But this is not always the case. Everything is open to negotiation between the buyer and seller.

If you rent out your property there will be a 12.5% rent tax applied to your rent income.

Is it possible to take out a mortgage on Thai property?

It’s not impossible to get a bank loan in Thailand to fund a property purchase but for most foreign investors it will be quite difficult.

The better option would be to finance the purchase using lenders in your home country. It is unlikely that a bank in your home country will directly finance a property in Thailand. So you would have to use an indirect funding approach instead.

This could be done by utilizing a redraw facility on an existing loan, an offset account, or a home equity line of credit (HELOC).

But for the more established investors it could well be easier to simply buy in cash.

Can you rent out your apartment when you’re not there?

It is possible to rent your apartment out when you are not in Thailand. To do this you will need to find a real estate agent to manage the property for you.

Officially Airbnb in not allowed in Thailand. But Airbnb’s do exist. It doesn’t seem to be too heavily regulated though. That said, we wouldn’t recommend renting your condo out on Airbnb.

It’s not worth the risk of running afoul of the local authorities. Remember, this is not our country, we are guests. Doing the right thing and following the local laws is the way to go.

Does Thailand have a residence by investment visa for property?

Foreigners who invest 10 million Baht are eligible to apply for a renewable one year visa. At around $290,000 you would be looking to buy more of an upscale apartment in order to qualify.

If upscale is what you want then this could be an option.

However you certainly don’t need to spend $290,000 to buy a nice condo.

You may be better off buying something more affordable and then investing in a Thai Elite visa, retirement visa or Long Term Resident visa.

Talk to us if you are unsure about which option is best for you.

Bangkok Chinatown

Is it a good idea to buy property in Thailand?

There are some great advantages to owning a condo in Thailand. It’s your own place in a secure complex. Your Thailand wardrobe will be stored there. And your kitchen just the way you like it. You can keep a motorbike or bicycle securely parked ready for whenever you arrive. It’s a great lock-and-leave option for the traveler who likes to stay mobile.

But of course you should always give proper consideration when looking to buy property in another country.

Do your research. Talk to professionals. Do your due diligence.

Sure there are risks. But there is also upside. Some will tell you it’s a terrible idea. But there are others who have thoroughly enjoyed being a property owner in Thailand.

At the end of the day it’s a personal choice.

It’s not so much an investment where the sole purpose is to make money. That’s not to say you can’t profit from capital growth and/or rental income. It’s just not the angle we would be approaching it from.

From our perspective, buying property in Thailand is more of a lifestyle play. A diversification play. And potentially an offshore asset protection play.

So have a good think about the reasons why you are doing this.

Putting the property in your spouse’s name or setting up a Thai company – so that you can buy land – also comes with some risk.

If you can be happy with a condo then that would be a much better option. This way you can own the property freehold in your name. One less thing to worry about.

And don’t rush into this. Go and live in Thailand for a while first. Make sure that you really do want to be there and own property there before making a larger financial commitment.

Try living in a few different areas before settling on the location where you want to stay longer term.

Rent is quite cheap in Thailand, for now anyway. It’s easy to secure a rental. And it’s easy to move on without hassle. So think about that as well.

Where can I research Thai real estate?

There are many online platforms for viewing real estate listings in Thailand.

Fazwaz is one that we like.

Listed properties on real estate websites aren’t always up to date. But they are a good starting point for your research. They will help you to get an idea of the prices in different areas and they are a good way to make contact with real estate agents.

If you would like help finding a quality real estate agent, reach out to us.

Thanks for reading.