Thailand Property Investment Guide for Foreign Buyers
Below is a general procedure of buying a Thailand Property as a non-resident. This guide is applicable to buying properties in Bangkok and Pattaya.
1. Reserve Unit
First, select the property and unit type. Then, a reservation fee is payable which is non-refundable to hold the unit.
2. Contract Exchange
The Thailand developer will then send the contract to your agent. Your agent will ask the buyer to sign the Sales & Purchase Agreement in Hong Kong.
3. Pay First Instalment
After signing the Sales & Purchase Agreement, 10%-25% of the purchase price is payable by the buyer to the developer in Thailand.
4. Applying for Mortgage
3 - 6 months before handover and settlement, the foreign buyer is required to apply for mortgage. We could provide Thailand mortgage referral service to our clients.
5. Handover and Settlement
When the Thailand property has been completed, the attorney will notify the foreign buyer to check the unit. (It can either be carried out by the attorney or local surveyors). After checking the unit, the attorney will confirm the handover date. On the day of handover, the bank will release the mortgage amount to the developer. The foreign buyer is required to transfer remaining amount of purchase price before that. When the foreign buyer gets the key, the transaction is officially completed.
7. Rent Out the Property in Thailand
When the foreign buyer has got the key, you can assign a property management company in Thailand to manage your property. They can provide services such as tenant recruitment, checking and maintaining the property, paying taxes for the owner etc.
Q: What kind of land title could foreign investors obtain from buying a property in Thailand/Bangkok?
A: Mostly, the apartments in Thailand/Bangkok are freehold properties. Only a few owned by the government are 30-year leasehold.
Q: Can foreign investors apply for a mortgage to buy Thailand/Bangkok property?
A: Typically, foreign investors could apply for a mortgage to buy Thailand property. Some of the developers might even offer mortgage plan specifically for foreign buyers.
Q: Do foreign investors need to go to Thailand/Bangkok to buy local properties?
A: Foreign investors do NOT need to go to Thailand to buy their property. You can complete the transaction outside Thailand, even signing the sales & purchase agreement.
Q: Can foreigners own Thailand/Bangkok property under their name?
A: Foriegners can own 49% of the apartment's total units under freehold. The freehold title will be registered under your name with the Thailand Land Department. If the quotas for foreigners are met, the rest of the units could be owned under leasehold. Foreigners could also buy house and land in Thailand but restricted to a maxium 30-year leasehold which is renewable.
Q: Will foreigner buyers obtain a title deed for their Thailand/Bangkok property?
A: The Thailand Land Department will issue a title deed to the foreign buyer after the transfer is complete.
Q: What are the procedures of buying a Thailand/Bangkok property?
1. After the seller and buyer agree on the selling price, the seller will confirm the payment schedule with the buyer and a deposit is payable to reserve the unit.
2. The buyer will then need to transfer the deposit. After the transfer, the buyer will have the receipt and declaration for the unit reserved.
3. Finally, the seller and buyer will sign a sales&purchase agreement.
Q: What language will the sales & purchase agreement be written? How do the foreign buyers sign the agreement?
A: The sales & purchase agreement of Thailand are mainly written in Thai or English. Most of the time, it is written in Thai. When the Thailand Land Department transfers the buyer's name to a land title, the buyer might need to transfer their passport and other necessary information to Thai. The sales & purchase agreement could either be signed in Thailand or outside Thailand by post.
Q: Which currency do foreign buyers use to buy a Thailand/Bangkok property? How is the bank charge calculated?
A: Foreigners could only use currencies other than THB to complete the transaction. The bank charges will be calculated based on the exchange rate of transaction date. A cross-country or cross-bank transfer fee might also be incurred.
Q: How much do we pay for Thailand/Bangkok's property management fee?
A: Normally, the management fee will be ranging from THB 35 - 50 /sq.m/month. Though, the management fee varies from different developers. It basically depends on the quality and quantity of the amenties.
Q: After we rent out our unit, who will be responsible for the management fee?
A: Management fee is bared by the property owner.
Q: Who are the major tenant in Thailand?
A: In Bangkok, most of the tenants are foreigners and Japanese. A Plenty of Japanese Company now establish their factory in Thaliand and that's why there are hugh rental demand from the employers.
Q: What is a Sinking Funds? Why do foreign buyers need to prepay the management fee?
A: Sinking Funds is used to maintain the property such as painting the exterior of the property. The foreign buyer must pay the Sinking Funds upon completion. The amount will be determined by the size of the apartment and quoted by square meter. Upon completion, most developers would require the buyer to pay 1-year management fee in advance. No additional management fee will be charged within that year. The management fee will be used for the property's daily operation (e.g. Seurity, reception, cleaning, swimming pool etc.)
Q: When shall foreign buyers apply for mortgage for off-plan Thailand/Bangkok property?
A: Normally, foreign buyers will apply for mortgage half year before completion for their Thailand/Bangkok property. You need to repay the mortgage based on the terms you agree with the bank and normally you will start repaying your mortgage a month after signing the contract. The interest varies from different banks.
Q: How does Thaliand's management company provide rental management service for their clients? What fee(s) do owners need to pay?
A: Most of the Thailand developers have their own property management company. They could provide rental management service under contract. Normally, the agents would charge 1-month rent in advance and the rental management fee will be 10% of the rent.
Q: Is there any fee/tax we need to pay when foreign investors sell/buy a Thailand/Bangkok property?
Transfer Fee - 2% of the selling price (1% from buyer and 1% from seller)
Special Business Tax - 3.3%(Sell within 5 years)
Stamp Duty - 0.5%(Own more than 5 years)
Withholding Tax - 5-35% of the Profits
Legal Fees and Admin - 0.5%