Purchasing | Purchasing a house in Thailand
After the spectacular recovery from the Asian economic crisis (which began in 1998), a period in which the land and house prices in Thailand fell dramatically, there are favourable developments presently concerning the exchange rate of the Euro and the Baht (€1 = 46 Baht). Now is a very favourable time to buy real estate in Thailand. The land and house prices are, however, rising again, as well as the building prices. Interest rates on mortgagers are low and stable. Banks are issuing loans and the economy is presently growing at a rate of between 8 and 10%.
What are the conditions for a foreigner to purchase real estate in Thailand?
- The foreigner owns an apartment in a registered apartment building.
- The foreigner buys an apartment and/or a different building (without the section that it stands on).
- The foreigner can enter into a registered long-term lease of land and/or building for a period of up to 30 years (including the right to extend and the right of the first purchase).
- The foreigner can start a Thai business that owns a section and/or building. The business has seven shareholders and the foreign shareholders own a maximum of 49% of the shares. The business structure can be set up in such a way that the foreign investment is made secure.
- The foreigner owns 39% of the real estate that is under the name of a business.
- The foreigner is permitted to purchase a maximum of one Rai of land (=1600m2), if he has invested a minimum of 40 million Baht in Thailand.
Buying a house
Thailand has plenty of choice of houses for every budget, according to what your wishes may be. In Thailand, your wishes can be made a reality, provided some care and attention is given to the preparation and carrying out of the purchase. The prices of Thai homes are much lower than Western homes, but more attention must be given to the sanitary, electricity and water facilities and to the documents. The 'Janot', that is, the land registration document or 'title-deed' is definitely the most important. What should you pay attention to? First of all, it is crucial that you deal with a trustworthy project developer and/ or real estate agent, who works together with a good lawyer. These people can make sure that all the documents are in order and also arrange all the procedures to do with the handing over, leasing and registration for you. Furthermore, they will inspect aspects such as the location, measurement and borders of the section.
In some cases, it is advisable to make a temporary buying contract. Such an agreement states when, for what purpose and under what conditions a certain transaction will take place. In the case that one of the parties does not fulfil the agreements, sanctions should be reported. This prevents the changing of details or prices after the agreement has been made. It also gives time to arrange the financing and to complete other procedures such as the inspections mentioned above. Always let your real estate agent or lawyer check the standard buying contract (whether or not there has been a temporary contract) and definitely ask for an English translation.
Normally a down payment of 10% is made, to insure both parties that the agreement will be met. The remaining sum is expected to be paid within 30 to 60 days. It is possible to agree to a longer payment period, but this is usually in return for a higher down payment. This down payment is not paid back, unless the other party does not fulfil the requirements. Therefore, the purchase has in fact taken place when the down payment has been made.
Besides the agreed price and the payment date, the deed of purchase must state which party will pay for the handing over, the commission costs, lawyers, transfer taxes, as well as the costs for the translations. In addition, the determination of the book value, which for tax purposes is mostly close to the minimal amount stated by the authorities, should be included in this agreement. Houses and buildings, unlike apartments, do not have a land document. However, the change of ownership by purchase or leasing can be registered at the District Council. This is, by the way, advisable. You must be able to prove ownership, by showing a building contract or an earlier deed of purchase. Do not confuse this with the house registration document, as that only states who the owners of the house are.