Thailand Real Estate Pitfalls. Purchasing property in Thailand has been very popular in the past, especially as it offered non-Thais a way to acquire freehold land. Although plans for the future are loosening up, it’s important to weigh the pros and cons carefully before making a purchase.
Using an experienced real estate lawyer will help with due diligence checks. They can help uncover issues that might have otherwise been missed.
1. Developers
While there are a few large property developers in Thailand that have an established reputation and several projects completed to high standards, you will find many developers that build condos and villas without any quality control. These developers tend to have a hands-off approach, and they are eager to move units as quickly as possible in order to maximise profits.
They often offer properties off-plan, which is a great deal cheaper than buying the same property on the resale market. However, there are a lot of things that can go wrong before construction is finished, and these problems typically result in penalties for buyers that can be financially devastating. This makes purchasing off-plan a risky investment for foreigners. Having a professional inspector look at the property after construction is finished is vital.
2. Contracts
A contract is a juristic act that creates, modifies, transfers, preserves or extinguishes rights and obligations between two or more parties. In Thailand contracts are governed by the Commercial and Civil Code (CCC).
There are different fees and taxes that must be paid when buying property in Thailand; these include transfer fee, stamp duty and withholding tax (personal or corporate) depending on the purchase type. How these are split between buyer and seller is defined in the sale and purchase agreement.
It is also advisable to hire a professional inspector before purchasing any condo in Thailand, especially during a pre-sale phase. A thorough inspection can uncover issues that may be costly to resolve. A good Phuket real estate agent should be able to arrange this for you.
3. Deposits
Buying property in Thailand is often the biggest investment you will ever make. So, it makes sense to have a trusted real estate agent that will help you navigate the complicated property market and legal system – and get the best deal possible.
Some rogue property development companies, real estate agents and sellers are hiding in plain sight, dressed in good looks and extra friendly personalities. They will have glossy property portfolios, websites and sales records to lure you in.
Sense Property Group helps expats buy, rent and invest in condos, houses, townhouses, offices, land and other commercial properties in Bangkok and surrounding areas. They also offer relocation services, administrative & legal support and more. Founded in 2000, they’re not your typical real estate agency.
4. Inheritance
A lot of real estate agents in Thailand will say anything to get you to buy property from them. The problem is that they are not regulated and can’t be held accountable for their actions.
Succession of lease rights in Thailand is a tricky subject. Generally, lease (hire of property) contracts are not inherited as they terminate upon the death of the lessee. A correctly structured lease can be inherited but this must be pre-approved by the land owner.
Similarly, foreigners cannot normally inherit land in Thailand without special permission from the ministry. However, a surviving spouse has statutory inheritance rights under Thai law (read more). Foreigners may also own freehold condominiums. Inheriting these involves a range of fees and taxes including transfer fee, stamp duty, withholding tax (personal or corporate), and specific business tax.
5. Travel restrictions
When it comes to buying property as a foreigner in Thailand, there are plenty of risks. However, those who have done it successfully have reaped significant financial rewards.
The country has strong property ownership laws and a secure title system. In addition, the economy is diversified with a growing middle class flexing its purchasing power.
Foreigners are permitted to own freehold condominiums but it is illegal for them to rent them out on a commercial basis (repeated short term rentals). As such, many condominiums include this restriction in their internal rules and regulations. Moreover, it is against the law for a condominium to allow its units to be used as a hotel without registering with the government.
