Buying a house in Thailand

 The popularity of Thailand as a second home destination has increased exponentially over the past few years. There has been a boom in the property market in most tourist resorts in the kingdom, including Chiang Mai and Northern Thailand.

There are countless real estate agents in Thailand with more appearing every week. There are also plenty of houses for sale to choose from so knowing what you want and what to avoid is essential. New developments are cropping up at an alarming rate so you really are spoilt for choice if you're looking to buy a house in Thailand.

In spite of our brokerage business we have tried to keep his guide as balanced as possible.

Thai law regarding foreign property ownership

First and foremost it is not possible for foreigners to own land in Thailand, be very wary of anyone that tells you otherwise. Legislation regarding foreign ownership of property in Thailand is prone to frequent change, only recently a loophole in the law allowing shell companies to purchase land was closed, these companies are now under investigation along with their shareholders. Today buyers are being advised to opt for a 30 year lease by real estate agents in Thailand, this option has its own drawbacks as you still don't technically own the land.

Legislation for condominium purchase is a little more relaxed however you still need to read the small print to find out what your entitlements are and the purchase procedures. If you are buying in a Thai name, maybe your partner or spouse, you still need to sign documentation stating that the funds used for the purchase are not yours and you have no legal claim to it.

Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior. We are not going to publish all of the legal spiel regarding property ownership and leases here as it may well have changed by the time you read this. Our only piece of advice is:

Get an independent legal advisor when dealing with any property issues in Thailand.

What to look for

Before you decide

The best thing to do if you are serious about buying property in Thailand is come here first, rent a house, and get a feel for the place. It is very different from what you'll be used to in the west and not always as idyllic as the holiday brochures make out. Even if you have been here on holiday two weeks really does not compare to living here full time. Meet some of the local expats and ask questions, this site covers a lot of the info you'll need but don't be afraid to check out local message boards to ask anything you're unsure of.

Essentially you need to have in mind a list of your preferences for your new home in Thailand. Ask yourself the following questions:

• How much can I afford to spend?
• What part of Thailand do I want to live in?
• What type of property do I want ... house, land, condo, apartment?
• What features should my new home have?
• When do I want to buy or make the move?

Budget

This will be your primary deciding factor and it should be noted that at the time of writing it is virtually impossible for a foreigner to get a mortgage in Thailand. You'll need to consider all the additional expenses also such as government charges, tax, transfer fees, lawyers fees, inspections etc. Always budget a little extra to cover these.

Location

Chiang Mai can no longer be considered a small town, its rapidly expanding urban sprawl covers around an 8 kilometer radius around the city center. Many new developments are appearing every month, most of which are further and further away from Thailand center. Other areas are starting to develop also. You need to find somewhere that suits your lifestyle and consider the following in terms of location:

• Shopping facilities, nightlife and town Centrex
• Public transport
• Work place if applicable
• Schools and educational facilities
• Beaches and attractions
• Infrastructure, water, electricity, telephone and internet
• Quiet safe street and low noise area

Type of property

There are a number of different options in Thailand and many will be constrained by your budget, the cost of a luxury villa can be as much as ten times more than a bungalow or townhouse. You can choose from condominiums, town houses, detached houses, bungalows, shop fronts, apartments, villas and select from a huge range of new and second hand properties in Thailand. You may even wish to buy an empty plot of land for later development or sale.

Property features

Plenty of room for choice here and again it will be budget dependent so you can select from land and house size, number of rooms, kitchen and bathroom styles, terrace or balcony, swimming pool, level of furnishings, secure development, construction materials and quality and so on.

Searching for a property

There are plenty of methods of searching for your dream home in Thailand although the most popular and most effective is the internet. A simple search for "Thailand property" will bring up hundreds of real estate agents listings, be aware though that many of the agents list the same houses so you will see them repeated throughout your web search. Local media publications and magazines also have reams of real estate advertising, there is simply too much to choose from in Thailand!

Selecting and meeting up with a real estate agent is also a good idea as they can do the hunting for you however finding a good one out of the masses of new "band wagon riders" in the Thailand property market is not so easy. Look for one that is well established, has a good reputation, and is professional. Their website is usually a good indicator of this and their response time to your enquiry from the site is a better one. The agent will be able to keep you updated with the latest properties on the market and any that fit your requirements.

Property inspection

You are likely to view quite a few properties so keep notes on them for ease of comparison later. Before you check the physical house take a look through the documentation and details of the property such as planning permissions, title deeds and land paperwork (chanote), any outstanding debts, additional expenses and any building restrictions.

A comprehensive inspection of the property will give you a good, but not perfect, idea of its condition, you don't want any nasty surprises down the line. Make sure you include the following during your property inspection:

INSIDE THE PROPERTY

• Check that all the floors are level and that there are no gaps between the floors and the walls.
• Jump lightly on wood floorboards to assess their stability and check tiled floors for any loose tiles.
• Look for signs of rising damp, including mould on the walls or ceiling and musty odors.
• Check the walls and ceilings for warping and cracks. Fresh paint or wallpaper may be hiding problem areas.
• Check whether doors and windows are square. Jamming may indicate structural subsidence.
• Make sure all light switches work. Also check each power point by using a power tester, corners are often cut with electrics in Thailand.
• Check the circuit breakers/fuse box.
• Test the water pressure in both hot and cold taps, and check the shower hot water systems.
• Partially fill the bath or sink and observe the drainage of the water. Sluggish flow may indicate damaged or blocked drains.

OUTSIDE THE PROPERTY

• Inspect any fences and gates for stability.
• If there are any large trees near the property, check for any possible root damage to the building.
• Check that any water runoff will drain away from the building, Thailand often floods during rainy season.
• Check the condition of the brickwork, concrete work and plastering on the building.
• Check the condition of the eaves, water staining may be an indication of damaged rain water gutters.
• Check the line of the roof to make sure it is straight, check for any broken tiles.
• Check the woodwork/timber and any stumps for rot, borer or termite attack (very common in tropical climates).

If you are still not satisfied you can always arrange for a professional property inspection.

Negotiation

In Thailand negotiation occurs everywhere and property is no exception. It is often the case that a house is priced higher as they are expecting the buyer to ask for a discount, bear this in mind. Always remain unemotional and give the impression that you're not bothered either way about the purchase. The agent will assist you in the negotiations but be aware that their commissions are riding on it so a higher price benefits them and the seller more than you. Once you have agreed a price get a purchase agreement made up by your agent or the development.

Fees and deposits

There are a number of additional fees and expenses incurred when buying and selling real estate in Thailand, you should be aware of these and it should be clear in your purchase agreement who is responsible for them.

Fees, Taxes and Duties

The sale or transfer of property in Thailand will be subject to the following fees:

• Stamp Duty : of 0.5% of the property price is payable to the Ministry of Finance.
• Specific Business Tax of 3.3% of the assessed value or the sale price - whichever is higher - this will be applied to all sales by companies and to any private sales that occur within 5 years of the date of purchase.
• Income Tax : this is calculated on a very complex formula based on the assessed value of the property, the length of time owned and the applicable personal income tax rate. In practice, this will work out to under 2% of the price for low to medium value properties, and up to 3% for higher value properties (this is the Thai equivalent of a Capital Gains Tax).
• Transfer Fees : of 2% of the sale price (or Land Department assessed value) payable to the Ministry of Finance.

A holding deposit of around 10% is often asked to secure the purchase. This is refundable should the sale not go through so make sure you get proper documentation for it, it is often a good idea to pay the deposit to the real estate agent.

Transfer and settlement

You should really have a legal advisor assist you with the final stages of your purchase, they can ensure all the correct documentation is handled properly. Make sure that it is clear what is included with the property, this should be in your purchase agreement. It is also advisable to take out insurance if you intend to move any valuables.

We strongly advise getting an independent legal advisor when dealing with any property issues in Thailand.