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Buying in Thailand

[vc_row][vc_column][vc_column_text]Wanting to buy a villa or condo in Thailand but not certain as to how this is done.

Well here you will find the basic breakdown of what needs to be done and how to buy property or any real estate in Thailand.

Select A Property Agent

Since you will be looking for property in a foreign country you need expert local assistance. The agent knows how to communicate in Thai and they’re familiar with the geographical area. The agent will save you valuable time in selecting and showing you the property in your price range that meets your needs.

Purchasing directly from the developer isn’t going to save you money as compared to buying it from an agent. A quality property for sale in Thailand is generally offered at a fixed price by the Seller. The best benefit of using a property agent is that they will act as a liaison between you and the Seller. They will obtain a fair price for you and act on your behalf to represent your best interests throughout the entire process.

Legal Planning

Remember that you are spending part of your life savings to acquire this property and you must carefully plan your steps in the process. You need to know the correct legal process in Thailand for the foreigner to acquire property. Before you sign any deposit agreement or contract, you should sit down with a lawyer or solicitor to discuss the legal process.

Best Method Of Ownership

In Thailand, a foreigner may only own a condominium in his/her own name. If the foreigner wishes to acquire land and build a house, he/she should obtain a long term lease on the land (for a period not exceeding 30 years each term). Read more about “Leases in Thailand“.

The foreigner should apply for the construction permit to build the house in their own name. This way the foreigner owns the house and has a secured long term lease on the land.

The lease can be written with the option to reassign to another person (if you sell), ability to sublease and with a purchase option (should the law change in the future to allow freehold ownership by the foreigner). Therefore, a lease is the most common legal method for the foreigner to acquire property in Thailand.

Title Investigation

A comprehensive examination of title deed recorded at the Land Department should be done. You need to verify that the Seller has clear and legal title of the land before you enter into a contractual agreement.

The title search will trace the land to its first possession. It will reveal any registered interests on the land such as mortgage or liens. This investigation will also verify the right to access to your property; the residential zoning, environmental and planning codes applicable in the area It is a good idea to make sure that you can build a structure on the land.

Deposit

When you feel satisfied with the property, you will be asked to make a deposit to show your good faith to continue the process.

In return, the Seller will reserve the property for you and start the process by drafting the contracts for purchase. Unless you write specifically a “get-out” clause in the deposit agreement, for example “subject to clear title” or “subject to agreement on the contract terms,” the money deposited is non-refundable.

Review Of Contracts

The Seller will have the contracts prepared for you. Since the Seller will write the contracts, it is highly recommended that you have a lawyer or solicitor review the terms and conditions. You will want protection for your interests should there be a delay in the property being built. A proper remedy should be stated in the contract.

The contract will contain a clause for penalty if you are late with your payment. This should be fair and reasonable to both parties should the Seller default.

Your payment schedule and its ration should be reasonable and practical. Normally, a first payment is 25 percent. Thereafter payments are made on a progressive basis: 25 percent when the roof is on, 25 percent when the door and windows are secure; and 25 percent when the fixtures and fittings are completed for instance.

[/vc_column_text][/vc_column][/vc_row][vc_column][/vc_column][vc_toggle title=”Buying a Condo”]

Buying A Condominium In Thailand – 3 Steps

STEP 1: Finding Real Estate in Thailand

Real Estate in Thailand has taken off in the past decade with more foreigners’ wishing to retire in Thailand. You must consider the following:

  • Always make use of registered lawyers in Thailand
  • Always make use of reputable estate agents when taking advice on real estate in Thailand.
  • See the Thailand Real Estate Outlook, the glossary of Real Estate Terms and the Real Estate FAQs when you start your search for Real Estate in Thailand,
  • Be it in Bangkok, Pattaya or Hua Hin. Be aware that many of the problems that do arise from the purchase of a condo in Thailand can be avoided early on in the property search.
  • Do they allow animals in the condo?
  • You may also want to read up on Real Estate pitfalls in Thailand when going out on your search.
  • Ask the right questions to avoid costly litigation.

STEP 2: Consulting a Lawyer in Thailand

Buying any Real Estate in Thailand be it a house or a condo requires the services of a reputable law firm. Once you have decided which real estate you are going to purchase, always consult a lawyer before signing any documents. The following would be checked amongst other property services:

  • A title search over the property
  • Note the type of Title Deeds in Thailand
  • Review the contracts before signing

The considerations to bear in mind when you are buying a condo off plan:

  • You would need legal advice as to buying in pre construction projects.
  • There is also the cost of transfer or tax for your condominium.
  • Thailand property taxes. Use the property transfer calculator to check your fees payable.

See the compressed version on buying real estate and the common property problems in Thailand.

STEP 3: Mortgages in Thailand for Foreigners

Each year many people come here to enjoy their holidays in the comfort of a second home or their most treasured property investment in Thailand. See the excellent articles on Financing for Foreigners in Thailand.

Obtaining a mortgage to finance your purchase of property in Thailand is possible.

  • There are currently two banking institutions which provide mortgage bonds to foreigners. They are Bangkok Bank and United Overseas Bank (UOB). These mortgage bonds are concluded ‘off-shore’ at their Singapore branch.
  • The home loans they provide to foreigners are based in foreign currencies. Your home loan/mortgage bond would be provided in either Japanese Yen, Euro or US Dollar. The interest rates also vary with each currency. See the section on Mortgage Bond for Foreigners in Thailand by UOB and Home Loans for Foreigners by Bangkok Bank. Also check their conditions set for their loans as to how to obtain a mortgage bond in Thailand for yourself.

[/vc_toggle][vc_toggle title=”Re-selling Your Condo”]Selling and buying a condo in Thailand has already been explained. The resale of the condo is also easy if you follow the following basic steps with regards to property rights and the process of property sales in Thailand.

Title Search

Similar to a title search for a new condominium project, this step is essential for a purpose of verification of status of the land where a building is located. Normally, as a used condominium, a land shall not be under mortgage, or, if it is, the buyer would acknowledge his position over such land.

Sale Agreement

If you buy a condominium from an individual, a sales agreement normally is a ready-to-use contract (An agreement which is not especially drafted for the sale between buyer and seller).

Payment

A norm is that a buyer shall pay a full price of property to a seller upon a transfer of ownership at the Land Department.

Registration Of Ownership

To buy a condominium, a buyer (or a seller, or both parties, depending on an agreement between parties) shall be responsible for a registration fee, a stamp duty (in case of having owned the property for more than 5 years) or a special business tax (in case of having owned the property for less than 5%), and a withholding tax.

[/vc_toggle][vc_toggle title=”Buying a Villa or House”]Buying a house or a villa in Thailand always requires the use of a property lawyer who can guide you through the process. Property in Thailand is complex and for the better part unregulated.

Buying A Villa Or House In Thailand – 3 Steps

STEP 1: Finding a House in Thailand

Real Estate in Thailand has taken off in the past decade or so with more foreigners’ wishing to live here or make this country their second home. While many wish to own a house in Thailand, it is important that you consider the following when purchasing a house:

  • Always make use of registered lawyers in Thailand and reputable estate agents when taking advice on real estate in Thailand.
  • Do some research. See the Thailand Real Estate Outlook, the glossary of Real Estate Terms and the Real Estate FAQs when you start your search for Real Estate in Thailand.
  • Read through the Real Estate pitfalls in Thailand when going out on your search. Ask the right questions to avoid costly litigation.

Be aware that many of the problems that do arise when buying a house in Thailand can be avoided early on in the property search.

STEP 2: Setting up Your Thai Company

Once you have decided which house you are going to purchase, always consult a lawyer before signing any documents. Foreigners may not own a house in their name; however their Thai registered company may own the house. There are different forms of business entities in Thailand. The most commonly used is a Thai Limited Company. There are certain business registration criteria for the limited company. The Thailand Amity Treaty is also still in existence for Americans and there are also tax considerations so check Corporate Tax in Thailand if you are going to do more than own a house or need a Thai Work Permit.

STEP 3: Buying a House in Thailand

Once we registered your Thai Limited Company we do the following amongst other property services so consult our property lawyer today. They would do a title search and check the contracts before signing. Also note the type of Title Deeds in Thailand. If you are buying a house off plan, you would need legal advice as to buying in pre-construction projects. There is also the cost of transfer for your condominium and Thailand property taxes. Use the property transfer calculator to check your fees payable. Always consult a reputable firm of attorneys before you embark on the process of buying a house in Thailand. If you are looking at finance and obtaining a mortgage bond in Thailand then call us for more details.[/vc_toggle][vc_toggle title=”Buying Land”].

you are considering buying land in Thailand, consult us about the complex process of buying land in Thailand. Most expatriates place the land in the name of their Thai girlfriend or spouse without any legal protection in the event of a divorce or dispute happens.

Always ensure that your rights are protected in Thailand and that you do not lose your investment.

Buying Land In Thailand

Thailand Real Estate has taken off in the past decade or so with more and more foreigners wishing to live in Thailand and making Thailand their second home. Many wish to own land here but before taking this step it is important to inquire or engage the services of registered lawyers in Thailand and, secondly, reputable estate agents when buying land.

Preparations for Diligent Buyers

  • Be aware that many of the problems that do arise from buying land in Thailand can be avoided early on in the property search.
  • Thailand Real Estate Outlook – See the outlook for purchase and investment
  • Real Estate pitfalls – Top 10 Mistakes people make when buying property in Thailand
  • Glossary of Real Estate Terms and Real Estate FAQs – Familiarize yourself with terms and FAQs before diving into search for a specific property in Thailand be it a house, villa or condo in Bangkok, Pattaya, Phuket or Hua Hin.

Thailand does not use Western measurements for land. Use our online calculator to Convert Rai and Convert Rai to Square Meters

Option 1: Setting Up Your Thai Company

Once you have decided which land you are going to purchase, always consult a lawyer before signing any documents.

Foreigners may not own land in their name; however their Thai registered company may own the land. There are different forms of business entities in Thailand;

There are also tax considerations so check the Corporate Tax in Thailand if you are going to do more than own a house or need a Thai Work Permit.

Option 2: Leasehold Agreements

Buying Thai real estate under a leasehold interest is a very popular and preferred way for foreigners to acquire property in Thailand.

Why is it the favored alternative?

  • It is simple and straightforward.
  • Foreigners can obtain full interest on a lease in Thailand throughout the specified lease term.
  • This is preferred over purchasing through a limited company where you have several shareholders who may have interests that are different from yours.
  • You can transfer the leasehold interest or even sell it the same as you would for any other freehold title conveyance in Thailand.
  • The maximum lease term is 30 years.

An option to renew will not be automatic and an additional 30 year periods will depend on careful drafting and discretion of the Registrar at the Land Office.

Option 3: Marrying A Thai

A foreigner can buy land in Thailand if he is married to a Thai however there are limitations as follows:

  • As the non-Thai spouse, you need to state that you have no rights over the land; effectively waiving your rights to claim the property.
  • The property, though purchased by you, cannot be in your name but will have to be in the Thai spouse.
  • The married couple may be asked to sign declarations at the Land Department stating that the funds used are the separate property of the Thai spouse.
  • Problems may still arise during a divorce case. Proving that the land is marital property will be difficult.

There are basic guidelines that the law provides in the management of matrimonial assets and in this case, a skilfully drafted prenuptial agreement may help to minimize your risks as the non-Thai spouse.

Do Property Services

For purchasers, we would do a title search and review the contracts before you sign it. For sellers, we can draft your contract and negotiate with the purchaser.[/vc_toggle][vc_toggle title=”Buying a Villa or House”]Buying a house or a villa in Thailand always requires the use of a property lawyer who can guide you through the process. Property in Thailand is complex and for the better part unregulated.

Buying A Villa Or House In Thailand – 3 Steps

STEP 1: Finding a House in Thailand

Real Estate in Thailand has taken off in the past decade or so with more foreigners’ wishing to live here or make this country their second home. While many wish to own a house in Thailand, it is important that you consider the following when purchasing a house:

  • Always make use of registered lawyers in Thailand and reputable estate agents when taking advice on real estate in Thailand.
  • Do some research. See the Thailand Real Estate Outlook, the glossary of Real Estate Terms and the Real Estate FAQs when you start your search for Real Estate in Thailand.
  • Read through the Real Estate pitfalls in Thailand when going out on your search. Ask the right questions to avoid costly litigation.

Be aware that many of the problems that do arise when buying a house in Thailand can be avoided early on in the property search.

STEP 2: Setting up Your Thai Company

Once you have decided which house you are going to purchase, always consult a lawyer before signing any documents. Foreigners may not own a house in their name; however their Thai registered company may own the house. There are different forms of business entities in Thailand. The most commonly used is a Thai Limited Company. There are certain business registration criteria for the limited company. The Thailand Amity Treaty is also still in existence for Americans and there are also tax considerations so check Corporate Tax in Thailand if you are going to do more than own a house or need a Thai Work Permit.

STEP 3: Buying a House in Thailand

Once we registered your Thai Limited Company we do the following amongst other property services so consult our property lawyer today. They would do a title search and check the contracts before signing. Also note the type of Title Deeds in Thailand. If you are buying a house off plan, you would need legal advice as to buying in pre-construction projects. There is also the cost of transfer for your condominium and Thailand property taxes. Use the property transfer calculator to check your fees payable. Always consult a reputable firm of attorneys before you embark on the process of buying a house in Thailand. If you are looking at finance and obtaining a mortgage bond in Thailand then call us for more details.[/vc_toggle][vc_toggle title=”About Condominiums”]

Property Rights In Thailand For Foreigners

Thailand Condo

  • Beware of development companies who appoint their own managers as this might create problems later as everything might not be transparent.
  • Also be aware of the Condominium Act in Thailand which sets down certain rules and regulations for condominiums. Check your rights in the Property Rights in Thailand section of this website.

Selling Your Condominium

Selling your Condo

  • A number of things can go wrong in a sale of your condominium, the worst being the failure of your buyer to complete. See our section on selling your condo in Thailand.
  • There is an easy 4 step plan listed to guide you through the steps on selling your condo, called Condo Resale. A number of things can go wrong in a sale of your condominium.

Renting A Condo In Thailand

Renting Property

  • Many were smart enough to have anticipated the immense benefits of property investments in Thailand perhaps in their first or second visit in the country.
  • Ensure that you know your condominium rights in Thailand. There are no tenant protection schemes in Thailand like they would have in the UK.

Re-Selling Your Condo In Thailand

Reselling Property

  • Drafting your sale agreement is also important as one of the many pitfalls is that at times buyers do not complete the transaction.
  • Things to also consider are the viability of using an estate agent, the costs of a non performing buyer and any potential financial losses in a worst case scenario. See also re-selling your condo in Thailand.

Your Property Rights

Condominium Rights

  • In you are considering or have already purchased a condominium unit in Thailand, consider what rights you have and which laws are applicable to you.
  • Know your condominium rights in Thailand. If you wish you can either download the publication or view it online. See also the property rights in Thailand article.

Buying Off-Plan In Thailand

Buying OffplanIt is always best to contact a reputable attorney in Thailand when wanting to buy into a pre-construction project so that the attorneys can provide you with legal advice and direction as to the development. See the article on buying off-plan in Thailand.

Thailand Your Second Home

Thailand Second HomeMake sound investments in Thailand in the form of property and quickly reap rewards. This kind of investment acquires property for the purpose of affording you the same convenience that your first home provides but during a vacation or for retirement a home. Thinking about property investment in Thailand today.

Mortgage Bonds In Thailand

Mortgage Bonds in ThailandThere are other options for obtaining local financing from domestic banks in Thailand but they are not usually available to non-residents and therefore are often more difficult to obtain. Consult our property lawyers about mortgage bonds in Thailand and who issues them.

Property Investments

Thailand Property InvestmentsThai property can potentially yield strong rental returns particularly in main cities such as Bangkok or Chiang Mai and in well developed tourist destinations such as Hua Hin, Phuket and Pattaya. Consult our property lawyers about investing in property in Thailand today.

Escrows In Thailand

Escrows in Thailand

  • An escrow is designed particularly with consumer protection in mind safeguarding your rights should anything go wrong before the transfer of the property.
  • Nevertheless, an escrow system does offer equal protection to all parties involved. Consult our property lawyers about Escrows in Thailand and its uses.

Under-Declaring Your Property

Under-declaring PropertyA day before the transaction with the seller, your estate agent gives you a call and tells you that the money for the stamp duties and registration, which you are paying in equal shares with the seller, are just one-tenth of what you thought they were. Under-declaring your property has problems in its own right.

[/vc_toggle][vc_column width=”1/2″][vc_toggle title=”Thailand Villas”]

What Are Thailand Villas?

Although they may be categorized as houses, villas are different in that they connote a sense of exclusivity and class. Villas are usually located in a gated complex and on a separate plot of their own; whereas houses are not.

Foreign Ownership Of Immovable Property In Thailand

Under Thai law, foreigners cannot own land in Thailand. However, they are allowed to lease land under a land lease agreement registered with the Land Department and consequently build a structure or own a house on the leased land.

To expand their rights as land lessees, foreigners must acquire the correct legal ownership of the structure. The term of the land lease for foreigners invariably relates to the ownership by possession or the right given to them to use and possess the land. This could be established by obtaining either of the following from the local land office:

  • A building permit, issued under the foreigner’s name
  • The Thai script sale agreement

Foreign ownership of the villa must also be made in writing and must be registered by the local land office. This is in accordance to the Civil Code Section 456 under the Thai Contract Law.

See Leases in Thailand for more information on property leases in Thailand.

Transfer Of Ownership Process

The process of transferring the ownership of a villa to a foreigner involves the following:

  • Announcement of the sale. This requires the presence of both the foreigner and the seller at the local land office.
  • Issuance of notification form for the sale. This is a 30-day public notice by the local land office to see if anyone will contest ownership of the villa structure.
  • Completion of the sale by the local land office.

Documents required for the transferring of ownership are as follows:

  • Building permit or sale agreement
  • Ta Bian Baan
  • Passport
  • Tor-Dor 21 or power of attorney form from the local land office (if applicable)

When a Thai villa sale agreement is offered, transfer fees and taxes are charged to the foreigner in the process as described above. Factors that determine the rates for property transfer fees and taxes include the actual sale price and the government appraised value of the house.[/vc_toggle][vc_toggle title=”Superficies in Legal Terms”]

What Is Superficies?

Superficies is “a right to build upon another’s land or in essence to register a house separate from the relevant land therefore permitting the building of a structure or a plantation”.

Similar to a Usufruct, if a right of superficies is intended, it must be noted that once granted, the “superficiary”, or the one who benefits from the right of superficies, must keep the land intact and remain in good condition.

Once the right of superficies has expired, the land must be returned in the same condition as it was before the right was granted.

Upon expiration of the Superficies, if the the owner of the land wishes to buy the building at a market price the superficiary has to sell it.

The right of superficies may be granted for the lifetime of either party or for a period of up to 30 years and during that period any taxes on the land must be paid by the superficiary. The right does not extinguish even if there is complete destruction of the building or structure.

Use Of Superficies To Foreigners

  • Section 1410 of the Civil and Commercial code allows foreigners a right to register a right of superficies under if granted pursuant to an agreement between the parties.
  • Generally, there is no fee for registration at the Land Department; however, there needs to be a mere consideration that has a monetary value of not more than 1,000 baht. However, this may vary between parties as well as Land Departments.
  • The right of superficies can be terminated at any time so long as there is no particular fixed registration period upon reasonable notice by either party. However, if rent is to be paid for the superficies, at least one year notice must be given by either party to terminate or one year rent is to be paid.

The Transfer Of Superficies

Superficies may be transferred to a third party as well as through inheritance. However, it must be noted that any destruction or damage to the land will become the responsibility of the third party. In that case, they and can directly sue the initial superficiary for the damage of the property.

If the superficies is inherited, the same conditions shall apply to the heir of superficies.

Superficies In Thailand Now

Superficies in Thailand are not as commonly used as much if compared to leases. Although the registrations of superficies in Thailand are not against the law, the land department will view the circumstances and it is upon their discretion whether the right of a superficies is granted or not.[/vc_toggle][vc_toggle title=”Usufructs in Thailand”]

What Is Usufructs?

A usufruct, in Thai language, called “Sidhi-kep-kin”, provides temporary ownership rights for use and enjoyment of the property along with an advantage of being able to reap the profits from property belonging to another as long as the property is not damaged or altered in any way.

Use Of Usufructs

Although the law does not prevent Foreigners from being able to apply to register a usufruct on a land, however, this is still subject to the discretion of the Land Officer.

The person who enters into a contractual agreement with the owner for this right is called the “usufructuary”. A usufruct will be registered in a similar manner to a lease of up to 30 years or for the life of the usufructuary.

Once registered, it will have effects as a servitude on the title. The owner of the land cannot sell or transfer the land until the servitude has been terminated.

The usufructuary must also keep the property intact and returned in the same position that it was when the usufruct was granted.

The usufructuary is responsible for the expenses for the management of the property, paying taxes and duties, and being responsible for interests payable on debts charged to it.

If required by the owner, the usufructuary is bound to insure the property against loss for the benefit of the owner. They must pay the insurance premiums for the duration of their usufruct and your right is also registered on the title deed.

A usufruct interest expires upon the death of the holder of the usufruct and therefore cannot be inherited.

The Transfer Of Usufructs

Transfer to a Third Party

The beneficiary in a usufruct scenario may also transfer his rights to the usufruct to a third party according to the Civil and Commercial Code of section 1422.

The grantor of the usufruct however will still claim for damages caused by the third party directly against the usufructuary.

An interesting feature of usufruct is that the usufructuary can enter into a 30-year lease with a third party. So if the usufructuary signed a 30-year lease contract before his death, the lessee (tenant) will maintain the rights of the lease until its expiration.

Case Study: The Supreme Court ruling 2297/1998 states that the lessor (landlord) does not have to be the owner of the property. Therefore the usufructuary can rent out the land. Although in the event of death of the usufructuary within the lease term, only the usufruct will be terminated but not the lease.

Transfer Through Inheritance

The usufructuary could transfer the right of using the land through inheritance.

However, it remains to be seen if the Land Department officials would allow a transfer of the rights to the land. There is no annual tax levied on the property compared with the 12.5 percent of the assessed or market rate rental value in the case of a registered lease.

Registering A Usufruct

There is nothing there is stated that restricts the grants of such usufructs. However, like all other rights in relation to property, it must be noted once again that the registration of such a right is upon the discretion of the Land Officer at the Land Department and may vary between locations. It is advisable that you contact a Lawyer or Solicitor to discuss your options in regards to you specific circumstances.[/vc_toggle][vc_toggle title=”Servitudes in Thailand”]

Servitudes In Thailand Law

Servitudes in Thailand are governed by the Thai Civil Law and Commercial Code sections 1387 to 1401. Section 1387 of the Thai Civil and Commercial Code states that “An immovable property may be subjected to a servitude by virtue of which the owner of such property is bound, for the benefit of another, to suffer certain acts affecting his property or to refrain from exercising certain rights inherent in his ownership”.

Servitudes are generally not difficult to register but are not a common occurrence.

Servitudes can put several kinds of burdens or restrictions on a neighboring property, such as usage of a neighboring water well, or defining restrictions on private structures.

If there is refusal to register such by the Registrar at the Land title office, it may be necessary to make an application in court. Be sure to contact a lawyer or solicitor if a situation as such arises so as to be aware of what options you have available to you.[/vc_toggle][vc_toggle title=”Property Lease in Thailand”]

As foreigners cannot claim ownership over land as freehold, the preferred method of acquiring land is through leasehold.

A foreigner can safely acquire the right to use the land and register the right for a maximum lease term of 30-year lease at the Land Department.

Lease term – A lease agreement will usually guarantee the initial 30-year lease term.

Renewal Of Lease

Renewal of lease in Thailand is not in Perpetuity. There is no automatic right to renewal and parties must take an active step to renew the lease towards the end of the initial term.

It is difficult but possible and success will depend upon careful drafting of the clause regarding the intention to renew and there it will still subject to the Registrar’s discretion.

Renewal periods thereafter the initial period must not exceed 30 years.

Have your lawyer advise you on renewal clauses.

Lease Agreements And Registration

Drafting of the Lease

The lease contract is usually drafted in the Thai language, however we do provide English versions if needed.

It is recommended to include family members such as young adults as co-lessees in the contract. In the uneventful demise of the parents, the children can carry on the full term of the lease period.

Registration

Leases for more than 3 years are able to be registered at the Land Office, which will then further protect your interest in the house, as it becomes an encumbrance.

Upon registration, the title deed will then contain your name and particulars as to the lease. The lease contract is then attached to the title deed and maintained at the Land Department.

The foreigner can construct a house on the land if the lease agreement permits. The construction permit must be applied for in the name of the foreigner and subsequently the foreigner will own the structure in his/her own name.

Most importantly, leases are valid even upon the demise of the lessor, or in the event that the land is sold. However, leases are only transferable to third parties in the event that the guarantor of the lease permits it.

The advantage of leasehold is a lower registration fee. The registration fee for registering such a lease is 1.1% of the rental value.[/vc_toggle][vc_toggle title=”Property Mortgages”]

The law of Thailand provides for mortgage contracts under Book 3, Title 12 of the Civil and Commercial Code. The nature of the mortgage contract is that it is one in which a debtor assigns property to a creditor in order to secure repayment of a debt.

Below are the following points you might need to know about property mortgages in Thailand:

  • Foreigners must consult with a lawyer before taking out a mortgage in order to purchase any type of real estate in Thailand. This is particularly true in the case of both condominium units or houses.
  • In regards to condominium units, the Condominium Act of 1979 and a Land Department regulation issued in 2004 require that non-resident foreigners (i.e. any foreigners without permanent resident status) must transfer foreign currency into Thailand and convert it into Thai baht in an amount no less than the purchase price of the condominium unit.
  • The preceding rule (Condominium Act of 1979 and a Land Department regulation) presents difficulties for foreigners who wish to apply for a mortgage in order to finance their purchase of a condominium. Any foreign nationals interested in obtaining financing may have to contact a local Thai bank who is able to assist in providing a loan issued in foreign currency which is transferred from overseas.
  • As for financing such properties as houses or villas, an important legal issue is presented due to the fact that the foreigner may not actually own the land underneath the structure and therefore cannot offer such land as collateral for the mortgage.

Furthermore, foreigners may face difficulty in obtaining approval for a mortgage from a Thai bank since they are not resident in Thailand and do not have a permanent domicile here.

Those who are interested in obtaining a mortgage in order to finance the construction of a house or villa on leased property should seek proper legal consultation before proceeding.[/vc_toggle][vc_toggle title=”Guaranteed returns: All you need to know”]

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Looking at both sides of the debate it’s clear that rental guarantee could be important for some investors who need reassurance; however the guarantee is only as good as the strength of the company offering it.

“Guaranteed rental incomes are indeed a very good selling point for potential investors who wish to own a property, as this gives the investors the assurance of a minimum a guaranteed return on their investment.”“In Our luxury developments in different parts of the world, we are offering purchasers guaranteed rental incomes of eight per cent for the first three years. This has proven to be extremely popular with international investors who plan to use their property as a second home, as they have the peace of mind that their home is safe and looked after throughout the year and they also receive a return on their investment straight away.”“They don’t add anything to the price; they just allow the buyer to feel comfortable that he is not going to have to search for a tenant, have any void periods and, most of all, it fixes his income and investment which is what he is looking for.”“Looking behind the guarantees should be a combination of legal, financial and commercial due diligence in order to assess the true value of the guarantee. If a guarantee is to be treated as a financial instrument, with a fixed return on a capital investment, then the substance of the company providing the guarantee should be checked as the return should not be reliant on the commercial success of the project as that involves risk. A guarantee should have only very limited risk. “There are some good deals out there, and some good properties with potentially very good yields, but even in such cases, the style and planning of asset management should also be vetted.”“If you are too much nervous or stressed as to how to believe in guaranteed returns claim by many of the developers then just don’t be bothered to invest in their projects, but remember if you have the right developer who has a proven track record to back his Guaranteed Return Claims than just go for it. . . .”

CHECKLIST FOR PROPERTY BUYERS

4  points to check when considering buying a property with rental guarantees.

1. What is actually underwriting the guarantee? It is a paper promise or is there an actual contract in place where there is a legal recourse should the income not be generated? If not, then this should be a cause for concern for the investor.

2. Is the rental income figure realistic and achievable in the current market where the property is located? If not, the investor will see reduction in yields and returns once the rental guarantee period ends. Many unscrupulous developers will inflate the rental guarantee figures to create a good impression.

3. Does the developer have the ability to manage the property properly to ensure the income is generated? If not, many developers will inflate the price of the property to factor in the rental guarantee as a “cost” of selling the property.

4. Is the Rental Guarantee being paid to the existing clients who invested with such a Developer?

Personally  we here at RBS would approach with caution  opt for a Developer who has been offering Rental Guarantees for more than 5 to 6 years such as New Nordic Group in Thailand which has been offering 10% Guaranteed Rentals for almost 8 Years along with a “Buy Back” Guarantee. This is a very strong group with about 75 projects across Asia which includes projects in Thailand, Vietnam as well as in Cambodia

The law of Thailand provides for mortgage contracts under Book 3, Title 12 of the Civil and Commercial Code. The nature of the mortgage contract is that it is one in which a debtor assigns property to a creditor in order to secure repayment of a debt.

Below are the following points you might need to know about property mortgages in Thailand:

  • Foreigners must consult with a lawyer before taking out a mortgage in order to purchase any type of real estate in Thailand. This is particularly true in the case of both condominium units or houses.
  • In regards to condominium units, the Condominium Act of 1979 and a Land Department regulation issued in 2004 require that non-resident foreigners (i.e. any foreigners without permanent resident status) must transfer foreign currency into Thailand and convert it into Thai baht in an amount no less than the purchase price of the condominium unit.
  • The preceding rule (Condominium Act of 1979 and a Land Department regulation) presents difficulties for foreigners who wish to apply for a mortgage in order to finance their purchase of a condominium. Any foreign nationals interested in obtaining financing may have to contact a local Thai bank who is able to assist in providing a loan issued in foreign currency which is transferred from overseas.
  • As for financing such properties as houses or villas, an important legal issue is presented due to the fact that the foreigner may not actually own the land underneath the structure and therefore cannot offer such land as collateral for the mortgage.

Furthermore, foreigners may face difficulty in obtaining approval for a mortgage from a Thai bank since they are not resident in Thailand and do not have a permanent domicile here.

Those who are interested in obtaining a mortgage in order to finance the construction of a house or villa on leased property should seek proper legal consultation before proceeding.[/vc_toggle][/vc_column][vc_row][/vc_row]