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We all know about the temptations that Thailand has to offer: white beaches, low living costs, and real estate that costs a fraction compared to Singapore, Hong Kong, and many western countries.
Maybe you have already decided to purchase a property or just want to learn more about how it works when buying real estate in Thailand.
In this article, I explain how you can buy real estate as a foreigner in Thailand, about foreign ownership regulations, property taxes, if you can rent out property, and more.
Can foreigners buy property in Thailand?
This question is a bit tricky and need some thorough overview. It’s widely known that the regulations are disadvantageous for foreigners and often put Thai people in favour.
One of the most commonly known regulation is that foreigners cannot own the land that physical structures are built on, might it be villas or hotels. But there are some ways to get around this.
1. Leasehold in Thailand
The first and most common option is to lease the land for a maximum period of 30 years, you can renew it up to three times.
Simply put: leasehold means that the landowner contracts you the right to occupy his or her land during a specific time period.
When the leasehold has expired, it can be renewed or renegotiated. A common way to assure a renewed leasehold period is to stipulate so in the contract.
2 Buying property with the help of a spouse
Another option is to let your Thai spouse buy the land and let him or her lease the land for you. This might feel safer as you have a more close person to rely on.
However, beware that if you file for a divorce, your property might be treated as a separate asset of your Thai spouse.
To reduce the risks and hurdles when buying real estate in Thailand, you might be better off buying a condo, which is significantly more straightforward and easier.
3. Setting up a Thai limited company to buy property
Another option is to set up a limited company to buy real estate, which is fairly popular in the US. The property can thereafter be purchased through the company you opened.
The issue here is that foreigners cannot own more than 49% of a limited company in Thailand. Foreigners resolve this by appointing themselves as directors, issue different asset classes, to give themselves majority voting rights.
4. Buying a condo in Thailand
Foreigners often prefer to buy condos in places like Bangkok and Phuket as the buying process is easier.
Condos are often newly built and come with modern interior, thus, these are comfortable to live in and easy to rent out. You’ll also have access to a gym, swimming pools, sometimes supermarkets, and more.
Two of the most notable benefits of buying condos are:
- Foreigners can own the condo with their own name (you get freehold ownership)
- The condo is registered with a Title deed, similar to a Strata title
For those who are not familiar what title deed is, it’s a document showing that you own the property and all the rights it brings.
Strata title is used for multi-level apartment blocks with common areas, such as pools and gyms.
If you’re from the UK, you might have heard of the Commonhold system. In the US, on the other hand, they have a so called Condominium systems.
Even if a condo brings many benefits, beware that Thai nationals need to own at least 51% of the units in the building. Make sure that this is the case for your future condo.
Buying a villa in Thailand
For foreigners who want to reside in less bustling areas, maybe closer to the ocean, a villa can be a better choice.
Sometimes it’s worth to put in that extra effort if you plan to stay in Thailand for a longer period of time and want to avoid the big cities.
Some of the benefits of having a villa, compared to a condo, can be:
- More privacy
- A potentially bigger price appreciation
- Living closer to the nature or the beach
- More convenience and space if you have a family
Consider which option is most suitable to your preferences, current life situation and make your choice wisely.
How to finance a property in Thailand
In case you want to buy a property with cash, you can do so by transferring the funds to a local bank in Thailand.
It might seem easier than it sounds, but the process to transfer money should be studied well in advance.
Let me explain:
First of all, you need to transfer the total amount in a foreign currency to a local bank in Thailand (for instance in USD or SGD).
The bank will then issue a copy of a so called FET-form (Foreign Exchange Transaction Form) where the following information needs to be included:
- The transferred amount in your chosen foreign currency
- The amount converted into Thai Baht
- The name of the sender
- The name of the beneficiary
- The purpose of the transaction
In case an FET-form is not provided, there’s an option to provide a Credit note and a Letter of guarantee that should include the same information as specified in the Foreign exchange currency transaction reporting form.
The Foreign exchange currency transaction form is filled out when transferring your money into Thailand.
Lastly: when you have filled in the above mentioned documents, you’ll need to hand them over to the Land office, to let them manage the transfer of the ownership in your name.
Getting a mortgage as a foreigner in Thailand
If you are not capable of financing the property completely by yourself, you can also apply for a housing loan. The most common way is to apply for a loan at bank that have branches in both Thailand and Singapore, for example.
Previously, it was basically impossible to receive a local bank loan as a foreigner in Thailand, it’s still not common due to the many restrictions involved.
The list of requirements is long and my personal guess is that many foreigners simply don’t qualify. This is not uncommon in developing countries and the same it goes in other regional countries.
What are the requirements to get a local bank loan in Thailand?
The following conditions come from Bangkok bank’s website at the moment I’m writing this article:
- The applicant needs to be over 20 years old
- The loan term cannot exceed 30 years (up to 35 years for permanent employees only). The applicant’s age and the loan period cannot exceed 65 years when added together
- The maximum loan amount granted will normally be up to 80% of the appraised value
What documents do I need to bring when applying for a mortgage?
Normally, the following documents should be provided, at a minimum:
- A copy of your passport
- A copy of your professional license (Home loans for professional)
- A copy of your housing registration record
- A copy of your marriage/divorce/death certificate of spouse (if applicable)
- A copy of your changed name/surname certificate (all copies)
- A letter of earnings from your employer (not older than 3 months)
- Latest salary slips and a copy of your payroll account records
- A copy of the annual tax statement (if payments are paid by cash)
For business owners
- A copy of your business registration certificate (not older than 3 months
- A copy of VAT records (not older than 3 months)
- Working capital account (for example savings) over the past six months
- Latest financial statement or a copy of annual income tax records
Check with your chosen bank as regulations change and requirements can differ between banks.
Getting an international bank loan when buying real estate in Thailand
A more common way is to apply for an international loan when buying overseas property.
Previously, Bangkok Bank was the main provider of international loans for property purchases in Thailand. In recent years UOB, ICBC, and Bank of China have become new choices for investors.
How much down payment do I need to pay as a foreigner?
As you can see from UOB’s website, you can get loans of up to 70% of the total property value, hence you need to put up a down payment of 30%.
You can choose the currency to be, for instance, USD or SGD depending where your bank is located. The loan period is normally up to 30 years.
To receive up to date information, I recommend you to contact a handful of banks in Thailand, Hong Kong or Singapore directly, before visiting Thailand.
Property taxes in Thailand
Below you can find a general overview of the property taxes to be paid by the seller or the buyer.
Luckily, the seller pays most of the taxes:
2% of the property value – generally paid by the buyer but can be negotiated. It’s sometimes split between the seller and buyer.
0.5% of the property value – paid by the seller. Stamp duty is a tax placed on legal documents during the transfer of the ownership of the property.
Increases progressively, depending on for how long you own the property.
The taxable amount is calculated by multiplying the sales value with a deduction factor (%). The deduction factor ranges between 0.08 – 0.5%, the longer you hold the property, the higher the deduction rate.
For more information how to calculate withholding tax, I recommend you to read this guide.
Rental income tax
If you buy-to-let, you’ll be subject to a House & Land Tax set to 12.5% and deducted from your yearly rental incomes.
You also need to pay a rental income tax on the rental incomes that increases progressively from 0% – 37%:
- THB 0 – 150,000: Exempt
- More than THB 150,000 but less than THB 300,000: 5%
- More than THB 300,000 but less than THB 500,000: 10%
- More than THB 500,000 but less than THB 750,000: 15%
- More than THB 750,000 but less than THB 1,000,000: 20%
- More than THB 1,000,000 but less than THB 2,000,000: 25%
- More than THB 2,000,000 but less than THB 4,000,000: 30%
- Over THB 4,000,000: 35%
Business tax (Capital gains tax)
3.3% of the property value or the appraised value (the highest value used).
Interestingly, locals and foreigners don’t need to pay annual property tax in Thailand, which is kind of unique.
Best places to buy property in Thailand
Choosing a city is not that difficult and comes down to your preferences. Is your plan to have a holiday retreat, an investment vehicle that generate rental incomes, or a place to stay long term?
Do you prefer to spend the days on a calm beach in Hua Hin or enjoying the bustling nightlife of Bangkok?
You need to consider these questions before you even start looking for property.
Buying a cheaper property (~USD 60,000-150,000)
If you target the lower price segment, you can find a one or two bedroom flat in a condo located in the outskirts of Bangkok, such as On Nut area.
Don’t misinterpret the word “outskirts” as these areas are densely populated with easy access to malls, convenient stores (you can find a 7-eleven on literally every street), and food courts.
The condos have 24/7 security and often offer good amenities with access to swimming pools, gym and saunas. Transportation is not a problem as the condos are built close to the BTS (Skytrain) or MTR (Subway), at least in Bangkok.
If you frequently go for business trips to Bangkok, or want to have a retreat in Thailand, then a condo below $150,000 might be suitable.
Buy real estate in areas with investment in infrastructure
An important point to mention is that Bangkok has seen increased investment in infrastructure, such as several new subway lines.
Consider the fact that property close to subway lines often see a greater appreciation in value.
If you want to keep your budget lower, or get more space for the same amount of money spent in Bangkok, Chiang Mai is also a good option.
Located in Northern Thailand and with a mere population of almost one million, Chiang Mai attracts many tourists. Persons who enjoy a more relaxed lifestyle and a bit more spacious property might find this city more suitable.
Buying a property in the price range USD 150,000 – 350,000
If you plan to buy a property in this price range, Bangkok and Chiang Mai could be two options.
However, at this price level you also have the opportunity to buy a medium sized house in places like Hua Hin (located around 2-3 hours by car from Bangkok) or Phuket (located in Southern Thailand).
These cities have many tourist resorts with access to miles long white beaches, golf courses, and scuba diving.
If you want to spend a family holiday, enjoy astonishing beaches or just have a more relaxed lifestyle, then these places might be better options compared to Bangkok or Chiang Mai.
Worth mentioning is that Hua Hin is a smaller city, with a more authentic touch, whilst Phuket is an island with more beautiful beaches, attracting many tourists.
Phuket is also known for being a bit more pricey when it comes to food and transportation. Yet, Hua Hin is not as bustling and attracts many western retirees, especially from Scandinavia.
Buying a property in the price range USD 350,000 – 600,000
You can be sure to find a high-end property in any of the above locations within this price range.
You would be able to buy a big condo unit in the most central areas of Bangkok, like Phrom Phong or Asoke.
Expect a higher standard with facilities that has rooftop swimming pools, high standard gyms, and great service.
Not to forget:
One of the considerably most beautiful islands in Thailand is Koh Samui. Here, you can find spacious houses located just next to the beach, with an astonishing view of the ocean.
I also recommend you to read my article that lists the best places to buy property in Thailand.
Renting out property in Thailand
You should definitely consider earning some passive income through rentals when buying real estate in Thailand.
The first things you might ask yourself are: how you can find tenants, how high rental incomes you can get, how to manage the tenants, and the list goes on.
The two most common options when renting out property are:
- Renting through AirBNB
- Renting long-term with the help of a local agency
Let’s have a look at both.
Renting out property on AirBNB
Airbnb is getting increasingly popular as you can bring in decent rental incomes with short-term tenants.
Sounds great, right? But there’s an obstacle.
The Thai hotel industry has bashed on Airbnb quite badly due to the economic loss it brings in the tourist business.
As Thailand is heavily relying on tourism, Airbnb has not been generally accepted and many foreigners don’t know about the local regulations.
So let’s bring the facts to the table.
Thailand’s Hotel Act
According to the Hotel Act B.E. 2547 (2004), a property needs to be rented out for a minimum period of 30 days, otherwise it’s considered as a hotel business, and a hotel license will be required.
That’s why you see considerably more options on Airbnb if you fill in a rental period of a month or more, in comparison with a week or two, for example.
This is rarely mentioned and you sometimes see notes inside condos, stating that short term rentals are illegal and that only residents have permission to live there.
The condo or apartment building you live in might still be able to have a hotel licence, although it’s not a hotel. To get a hotel license it needs to meet some specific criteria.
Drawbacks of renting out on AirBNB
One of the clear drawbacks when renting through Airbnb is that most of the people use it for short periods.
Maybe you are happy to have tenants only parts of the year, in that case, AirBNB can be a good choice. Just make sure that your condo management allows it. The management might have separate rules for your specific condo.
There might also be more wear-and-tear, as people come and go and you can’t always control who rents the property.
Renting out through a real estate agent
Foreigners who plan to rent out property for a longer period at a time should consider doing this through a local agency.
Before you choose a rental agency, pay attention to the following guidelines:
- The best rental agencies are often located in areas with a high density of expats, or in more central parts
- As you might be dealing with the agency directly, it’s important that your communication works flawlessly and without delay
- Make sure that the staff can speak decent English and verify their seriousness by checking their website. Is it up to date and substantial?
- Confirm their track record and if they have testimonials from previous clients
Ideally the rental agency should handle all the communications with your tenants, including contractual matters to the maintenance of your property.
Be sure to make a thorough analysis of the rental levels before setting your own level. This can be made online by checking other properties in your area, or by simply asking other agencies or landlords what they have to offer.
Thailand is one of the most popular destinations for foreign travellers in the world. I’m not saying this by random, in fact, Bangkok is the most visited city.
Even if foreigners are not able to own land, you can “control” land through contractual setups. Be sure to hire a reputable solicitor and agent, to minimize costly and unexpected problems.
The most popular places for foreigners are undoubtedly: Bangkok, Pattaya, Chiang Mai, Phuket, Hua Hin, Koh Samui and Koh Samet.
Bangkok is the business hub (with the second biggest stock exchange in Southeast Asia, after Singapore). If you want a more relaxed lifestyle, you should go for any of the remaining options.
Unfortunately, foreigners are generally not able to get local bank loans. Instead, a more common option is to pay with cash or by getting an international loan from overseas.
I hope that this article has been helpful to you and wish you all success with your procurement of a property in the near future.
If you plan to buy off-plan, I recommend you to check my separate article that explains everything you need to know about the biggest property developers in Thailand.
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