Buying a property in Thailand is a very different experience than in your home country, made even more so by the cultural differences between the Western and Asian legal systems.
Land purchase
Although Thai law stipulates that foreigners may not own land in their own names in the Kingdom, they are allowed the right to freehold ownership of any property or other buildings on the selected plot. There are two options available for foreign acquisition of land on which to build.
- The first option is to purchase a lease on the land, valid in the first instance for 30 years with two further 30-year periods available, giving 90 years in total. Any buildings on the land are fully and securely foreign-owned, and cannot be seized by the landowner on final expiry of the lease.
- If a foreigner plans to open a business in Thailand, the freehold of the land may be purchased by his company, with its ownership registered to the company, not to the individual. The foreign business-owner will then have complete control over the land and property. Recent changes allowing the male or female Thai spouse of a foreigner to purchase land in his or her own name are mitigated by the requirement that money used in the purchase legally belongs to the spouse and that no foreigner can lay claim to it.
Note:-
Buyers should be conversant with the different grades of title applied to land in Thailand in order to ensure the land title of the selected plot is commensurate with its proposed usage.
Land measurements explained
Building plots in Thailand are measured in rai or talong wah, with a rai made up of 100 talong wah and equal to 1600 sq m. An acre is approximately 2.471 rai (43.560 sq ft) and a talong wah approximates four square metres. A lesser-used unit of measurement, the ngan, equates to 400 sq m. The average size of plots of building land offered here is between one rai and one ngan or even less, dependent on location.
Land title deeds explained
There are six defined types of land title of which three are generally used by foreigners wishing to lease land for a new-build home or own land through a spouse or company.
- Nor Sor 3
- The Nor Sor 3 land title allows the legal construction of a property on the land, but only represents a usage certification by the government given to the proprietor. It is not a title of possession, but does ensure that the person holding the title can benefit from the land or use the title deed as a legal document. As it’s issued only for a specified plot unconnected with other adjacent plots, it’s regarded as a floating map with no defined boundaries. Problems can occur with defining the actual area referred to on the title deed, and any legal developments must be publicised in the public domain for 30 days.
- Nor Sor 3 Gor
- The Nor Sor 3 Gor land title is similar in legal format to the Nor Sor 3, but refers to a measured-out parcel of land defined by small posts at its borders. The land can be divided into smaller plots, and publication of legal developments does not have to be made.
- Chanote Land Title (Nor Sor Gor 4 Jor)
- The Chanote land title is the preferred option for foreign buyers, as it acts as a certificate of legal leasing of the land. The deed itself is issued using GPS to accurately determine the land boundaries and can be used to confirm the lessee’s legal right of occupation to the local authority. The total area can be divided into no more than nine separate plots, subject to Section 286 of the Land Allotment Law. A Chanote deed is the most secure of all the available title deeds.
Condo ownership
Condo ownership is the easiest, most popular and least risky way to buy into Thai real estate, as foreigners are able to purchase a unit outright provided they satisfy the country’s Condominium Act. Those entitled to purchase must have permission to live in the country via a recognised visa. Each condo block has a foreign ownership quota of 49 per cent of the units available, although 100 per cent percent ownership by foreigners by special permission is the norm in many Pattaya and Bangkok condominium blocks .
Freehold condos are the safest option, as ownership is transferred straight to the buyer’s name. In order to buy a freehold condo unit, foreigners are required to remit the funds for purchase from a bank outside Thailand directly to a Thai bank and thus to the seller. The Thai bank will then record the purchase and issue a Foreign Exchange Transaction form to the foreign purchaser.
Legal and paperwork
The services of an experienced, preferably bi-lingual, lawyer are an essential part of any property transaction in Thailand, and your real estate agent will be able to recommend an experienced property lawyer. Legalities for land lease include a Land Office search of the property’s title deed to establish previous landowners and ensure no claims are set against the land by third parties.
If you’re buying a condo or house off-plan, a search will ensure all necessary building permits are in place and that standards have been met as per specifications. If you’re buying second-hand, a survey of the property is essential, and your lawyer may need to make a court search to ensure the seller has no financial judgements against him.
Your lawyer will prepare all necessary documents, carry out due diligence and review all documents provided by the seller, landowner or developer to ensure your investment is legally protected.
Finance and mortgages
Financing a new-build property is done by an initial deposit followed by stage payments, with the final payment only due after the purchaser has taken possession and performed a full inspection of the property. A paper trail of all transfers of the stage payments from your overseas bank should be kept, and the real estate company or builder should be required to sign off after the last payment is received.
Getting a mortgage in Thailand is easiest if you have a Thai spouse, although certain restrictions must be met and overcome. These include proof of income from a job in Thailand and a work permit held for more than a year. However, for single purchasers of condominiums, since the beginning of 2013 there has been an easing of regulations by Bangkok Bank and others, making condo purchase the most convenient option for single foreigners. General loan parameters include a verifiable income of US$60,000 a year (approx £35,000) for those with a job and work permit or US$85,000 per year (approx £50,000) if unwaged.
Freehold condos valued at more than three million baht are eligible, and the property must be located in Bangkok or one of Thailand’s major beach resorts south of the capital. Loans of up to 70 per cent of bank valuation are on offer, with interest rates of around 6 to 7 per cent and terms of between three and 20 years. For older foreigners receiving a home-country occupational and state retirement pension, a mortgage can be a good way to acquire property without needing to sacrifice capital.
