Suggestion: Watch the 5 minutes video tutorial before reading this article
Thailand receives by far the most travelers in Southeast Asia and real estate prices in Bangkok have increased significantly in the past decade. Luxury condo units in the central parts of Bangkok can fetch as much as THB 500,000 per square meter.
While most investments are focused on the central parts of Bangkok, smaller cities and islands like Pattaya, Phuket, Hua Hin, and Koh Samui receive a fair share of property investors.
Learning about local buying regulations, taxes, and whether you can rent out properties are just examples of important topics you should learn about before engaging in the Thai market.
In this article, I explain how you can invest in residential real estate as a foreigner in Thailand, including the most important items.
- Can foreigners buy property in Thailand?
- Buying a Condo in Thailand
- Buying a Villa
- Financing a Property in Thailand
- Getting a Mortgage as a Foreigner
- Getting an International Property Loan
- Real Estate Taxes
- Renting Out Property in Thailand
Can foreigners buy property in Thailand?
Thailand has comparably strict ownership regulations by Asian standards. You cannot buy commercial property as an individual but have a few residential options available.
Foreign individuals are allowed to buy 49% of the units in strata-titled projects that are typically branded condominium projects.
Even if you can own strata-titled office units, the supply of these units is scarce and only a few projects available in the market.
Land ownership is restricted is restricted for foreigners, making the process to acquire villas and landed properties more troublesome.
With that said, you don’t necessarily need to own the land, but lease it.
1. Leasing Properties in Thailand
You can lease land for a maximum period of 30 years and can sometimes renew the leasehold period up to three times.
Just for clarification, leasehold means that the landowner contracts you the right to occupy his or her land during a specific time.
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 a Thai Limited Company
Another option is to set up a limited company to buy real estate, which is popular in countries like the US as well. You can then purchase the property through that company.
One issue of setting up a company is that foreigners cannot own more than 49% of the shares in limited liability companies in Thailand, except for US citizens.
Thanks to the ‘Treaty of Amity and Economic Relations between Thailand and the US, signed in 1966, Americans can fully own Thai companies.
To overcome the ownership regulations, foreigners sometimes appoint themselves as directors, issue different asset classes, to give themselves majority voting rights.
This is not recommended among local agents as you’ll have little protection and the method is out ruled by Thai authorities.
3. Buying Property With the Help of a Spouse
Sometimes, foreigners take a shortcut and buy land with the help of spouses. Vietnam has similar regulations and where foreigners get access to freehold property with the help of spouses.
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.
Buying a Condo in Thailand
Foreigners predominantly buy condominium units in places like Bangkok and Phuket, thanks to preferable ownership regulations and less complexity.
Condo projects are often newly built and come with facilities and amenities such as swimming pools, gyms, libraries, and basketball courts. Nowadays, high-end projects might even add Karaoke rooms, cinemas, squash courts, and co-working spaces.
Two notable benefits of buying condos are:
- You can get freehold ownership
- The condo is registered with a title deed, similar to a strata title
For those who are not familiar with what a title deed is, it’s a document showing that you own the property and all the rights it brings. Strata titles are 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 system.
Confirm that the foreign quota of 49% hasn’t been filled before engaging in detailed discussions with sellers.
Buying a Villa
Some foreigners prefer to live in more tranquil areas and closer to the ocean. Therefore, many foreigners also buy villas or other landed properties. Some of the benefits of having a villa can be:
- More privacy
- A potentially bigger price appreciation
- Living closer to nature / the ocean
- 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.
The process to buy a villa is considerably more complex than condominium units. You’ll most likely deal with several transactions and involve a lawyer in the process.
As the physical structure is built on land, which cannot be owned by foreigners. Plan for visits to the land department, land office, and thorough checks of the unit.
Villa purchases are virtually not heard of in Bangkok, but more common in Pattaya, Koh Samui, Hua Hin, and Phuket, for example.
Paying For a Unit in Thailand
If you want to buy a property with cash, you can do so by transferring the funds to a local bank in Thailand. This might seem easier than it sounds, but the process to transfer money should be studied well in advance.
First, you must transfer and convert the foreign currency into Thai Baht, before the transaction can take place.
The bank will then issue a copy of an FET-form (Foreign Exchange Transaction Form) where the following information is 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. The documents should include the same information as specified in the Foreign Exchange Currency Transaction reporting form.
The form is filled out when transferring your money into Thailand.
When you have filled in the documents, you hand them over to the Land Office that manages the transfer of the ownership in your name.
Getting a Mortgage as a Foreigner
Previously, it was impossible to receive a local bank loan as a foreigner in Thailand and it’s still difficult due to the many restrictions involved.
Preferably, the bank should have branches in both Thailand and Singapore. The list of requirements is long and many foreigners don’t qualify. This is the standard in developing countries.
Requirements to get a local bank loan in Thailand
Requirements are similar between banks and I have included the conditions that derive from Bangkok Bank’s website. For more information, I recommend you to contact a handful of banks individually for the latest information.
- 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
Getting an International Property Loan
A generally easier option is for foreigners to apply for overseas property loans in their country of residence.
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.
UOB, for instance, supports investors in Singapore with financing for units located in Bangkok and selected upcountry locations. The units can be both owner-occupied or for investments.
Thailand and Malaysia are basically the two only Southeast Asian countries where Singaporean banks grant loans and allow citizens to invest in real estate.
How much is the down payment?
As shown on 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 on where your bank is located. The loan period is normally up to 30 years.
To receive up-to-date information, I recommend you contact a handful of banks in Thailand, Hong Kong, or Singapore directly, before visiting Thailand.
Real Estate Taxes
Before you decide to buy a unit, you must understand your tax obligation when purchasing, holding, and selling the unit.
Below I have listed the most important taxes you have to pay when buying properties. Additional fees might apply, confirm with your agent if that is the case.
The transfer fee is calculating the property value by 2%. It’s generally paid by the buyer but this can be negotiated. The fee is sometimes split between the seller and buyer.
Stamp duty of 0.5% is charged and multiplied by the property value. It’s paid by the seller at the time of the transaction.
In short, stamp duty is a tax placed on legal documents during the transfer of the ownership of the property.
A withholding tax is charged that increases progressively, depending on how long you own the property.
The taxable amount is calculated by multiplying the sales value by a deduction factor in percent. The deduction factor ranges between 0.08 – 0.5%, the longer you hold the property, the higher the deduction rate.
For more information on how to calculate withholding tax, I recommend you read this guide.
Rental Income Tax
Investors that buy-to-let are subject to a House & Land Tax of 12.5%, which is 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)
A Business Tax is charged by multiplying the property or appraised value (whichever is higher) by a rate of 3.3%.
Interestingly, locals and foreigners don’t need to pay annual property tax in Thailand, which is kind of unique.
Renting Out Property in Thailand
Many foreign investors seek to rent out their units to earn passive incomes. Yields differ depending on where and what type of unit you buy.
You generally have have two options when renting units:
- Renting through Airbnb
- Renting long-term with the help of a local agency
Renting Property on Airbnb
The Thai hotel industry has bashed on Airbnb badly in recent due to financial losses. Airbnb has not been generally accepted and many foreigners don’t know about the local regulations when renting on the website.
To better understand this, we have to check Thailand’s Hotel Act.
Thailand’s Hotel Act
According to the Hotel Act B.E. 2547 (2004), you have to rent a unit for a minimum of 30 days. If not, it’s considered a hotel business, and a hotel license is required.
That’s why you see considerably more options on Airbnb if you use a rental period of a month or more in comparison with a week.
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 stay there.
Yet, the condo or apartment building you live in might still be able to have a hotel license, although it’s not a hotel. To get a hotel license it needs to meet some specific criteria.
Drawbacks of Renting on Airbnb
One of the drawbacks when renting through Airbnb is that most 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 Through a Real Estate Agent
Foreigners who plan to rent out a property for a longer period at a time should work with a local agency.
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 offer.
There are plenty of agencies available in cities like Bangkok and Phuket and that are used to cater to foreigners.
Below I have included some commonly asked questions and my replies. If there’s anything else you wonder about, feel free to write a comment or send us a message directly.
Can foreigners buy condos in Thailand?
Yes, foreigners can own condos on a freehold basis in their own names. 49% of the units in condominium projects can be bought by foreigners, while the remaining 51% needs to be allocated to Thai citizens.
How much is a condo in Bangkok?
Prices vary greatly depending on where you buy, the size, and the standard of the unit. Condo units can be bought for as little as USD 60,000 in the outskirts of Bangkok and you can find luxury units for millions of dollars. If you want a decent 2-bedroom unit in the central areas of Bangkok, you should set aside at least USD 200,000.
Is buying a condo in Thailand a good investment?
Bangkok, in particular, provides decent yields, averaging at 4% to 5%. But it also depends on which area you buy and the size of the unit. Preferably, you should buy a 2-3 bedroom unit in the central areas, close to the BTS and MRT lines.
The reason is that there’s been an oversupply of 1-bedroom units. The quality of tenants is generally higher for bigger units too. You should also have a look at areas where they plan future infrastructure projects (such as new BTS or MRT lines).
Can foreigners buy houses in Thailand?
Foreign individuals can buy and own houses, but not the land on which the houses are built. Instead, you need to lease the land with a leasehold period of 30 years.
Can a US citizen buy a condo in Thailand?
US citizens are treated like any other foreigners and allowed to buy 49% of the units in condominium projects. Having said that, US citizens have an advantage as they are allowed to be majority shareholders in Thai companies, using these as investment vehicles.
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.