Buying property in Thailand as a foreigner in 2024
How to buy an apartment in Thailand as a foreigner? A foreign individual will actually need only an international passport to buy property in Thailand. There are several stages in the process of buying real estate in Thailand.
1. Choosing an object: what should you pay attention to?
Budget
Property prices in Thailand are relatively inexpensive compared to other famous resort destinations of the world. A small apartment in an apart-hotel or condominium in Phuket can be found for the price of 100,000–150,000 US dollars, while villa’s prices start from 350,000 US dollars. More accurate prices can be discussed with a real estate agent, who will provide examples of specific projects.
Purpose
The choice of location, type of property and form of ownership should always be based on the purpose of the purchase.
Foreigners who intend to relocate to Thailand usually do not choose tourist destinations. For example, in Phuket, expats choose the east or south coast for living: these are the areas with the most developed infrastructure; there are many schools, hospitals, service and retail companies here. However, tourists rarely choose to stay in these areas, so you can’t count on high profitability from renting out an apartment.
Foreigners who do not plan to move to Thailand permanently, but want to visit the country from time to time and stay in their second home in the resort, prefer private beaches and resorts without a large number of tourists. Of course, there should also be many convenient facilities in the area: shopping centres, clinics, restaurants and cafes. Many people find residences in large residential complexes with service infrastructure quite suitable for this purpose. It is possible to rent out such properties when the owner is out of the country, however one should not expect a lot of rental income. It is very difficult to agree on a rental schedule and find tenants for it; additionally, it will be hard to find a private management company and the field services of such a company will cost more than the services of a centralised management company.
Foreigners who wish to invest in Thailand real estate most often choose service apartments in condominiums, hotel rooms or villas in special complexes with organised rentals. Such facilities provide the highest occupancy and quality of management. In addition, developers’ management companies often provide owners with free accommodation in residential complexes under their management for several weeks a year under loyalty programmes.
From $1,127,000
Completion in: 2025.I 45 units in total
From $109,000
Completion in: 2026.I Total of 789 apartments
From $1,567,000
Built in 2023 51 units in total
From $179,000
Completion in: 2025.I Total of 400 apartments
From $171,000
Built in 2023 Total of 251 apartments
Freehold or leasehold?
Real estate law in Thailand was changed in 2020. The buying process for foreigners has been greatly simplified: they can now own apartments, condominiums, houses and villas. However, foreigners are still not allowed to own land in the country. Full ownership of land (freehold) can only be registered by a foreigner to a legal entity of the Kingdom of Thailand. Moreover, at least 51 percent of the company’s share must be owned by co-founders with Thai citizenship.
If the property is registered to a Thai company, additional documents must be produced: a copy of the permission to establish a company, an agreement on the establishment of a joint-stock company, a business registration certificate, a list of shareholders and a power of attorney (on request).
Foreign individuals can get the right of ownership (freehold) only on buildings or apartments, while land plots can only be acquired on the right of possession (leasehold), which is essentially a long-term lease for 90 years (read more about types of property ownership in Thailand). Allegedly, in 2023 wealthy foreigners will be allowed to register land ownership in Bangkok and Pattaya. This bill has been under government consideration since July 2022.
There are also quotas for foreigners to purchase housing in apartment buildings. Only 49 percent of the living space in the building can be registered as a freehold property by a foreigner. The remaining 51 percent can be owned by foreigners on a leasehold basis.
Investors more often choose the leasehold type of ownership. There are several reasons for that. Firstly, leasehold properties are generally cheaper than freehold properties by up to 10 percent, hence the yield is higher. Secondly, leaseholders pay fewer taxes than freehold owners. Thirdly, leasehold is essentially a lease, so property does not need to be declared. At the same time, leaseholders are not limited in any way in their rights to the property: they can sell it, donate, lease and inherit.
Guidance
There are many realtors in Thailand who speak foreign languages; however it is important to choose among them those who have experience in the real estate market of the region in which you are going to buy property in Thailand. Experienced agents will help you select suitable properties, provide reliable primary information and secure the deal, as they work in conjunction with lawyers.
Tranio has reliable partners in Phuket and Koh Samui.
The Phuket market, as well as the Koh Samui one, is rather tight. We work directly with all major developers, not just a select few; therefore, we have the opportunity to act in the interests of our clients and choose from the entire available market the most promising and lucrative projects that best meet the clients’ goals.
We can also agree on the maximum possible discounts and bonuses that the developer can provide. You will not find such discounts on the open market.
2. Reservation agreement: what should it contain?
The reservation agreement is a mandatory stage of the transaction, which protects both parties. A foreigner will need only an international passport to conclude the agreement.
The reservation agreement states the following:
- the final cost of the property, including the discount, if any;
- the information about the project: its address, apartment number, and cadastral information;
- the information about the stages of construction, if the project is under construction, as well as penalties for non-compliance with the deadlines for completion of construction;
- the reservation fee amount;
- the payment schedule. If the project is bought in instalments, then all payments will be specified in the reservation agreement. As a rule, they correspond to the construction stages;
- personal data of the buyer and seller;
- contact details of the buyer and seller for the exchange of documents and information.
If the property is purchased online, the buyer receives an electronic reservation agreement by email for approval and signs it, if there are no contradictions with the preliminary agreement, or proposes to change the conditions. As soon as the contract is agreed upon and signed, the seller, in particular the developer, removes the project from sale and issues an invoice to the buyer for the reservation fee payment. As a rule, the amount of this fee is 100,000–200,000 Thai baht (3,000–6,000 US dollars). This invoice can be paid at any bank that makes international SWIFT payments.
After the seller confirms the receipt of payment to his account, the process of drawing up the main contract begins.
3. Contract of sale (freehold) or transfer of possession for a long time (leasehold)
Up to four co-owners can be included in the contract: for example, family members or partners. If there are several new owners, then it will be necessary to translate and certify the passports of all owners specified in the contract.
At the stage of drawing up the contract, you need to choose the heirs. You can add them to the contract later, but this will cost 50,000–100,000 Thai baht (1,400–2,800 US dollars) for the services of a lawyer and for changing the contract.
Immediately after signing the contract, the seller issues an invoice for payment of the entire project’s cost or for the first instalment according to the payment schedule, minus the reservation fee.
4. Due diligence: measure twice, cut once
After concluding the reservation agreement, a foreigner should check the property and contract itself with the help of a lawyer who is well versed in local laws. Often such a service can be provided by a real estate agency.
Before the buyer signs the contract of sale, the lawyer will check that all documents for the property are in order. The legal service of checking a contract of sale in the primary real estate market costs about 20,000 Thai baht (550 US dollars).
The lawyer will check:
- a copy and original of the title deed provided by the seller;
- the encumbrance on the object, if any;
- technical plan and cadastral information;
- court cases directly or indirectly related to the property and the seller, if any;
- the appraised value of the apartment (some taxes are calculated based on this value);
- the compliance with foreign property quotas in the condominium;
- residents registered in the property, if any.
Usually our clients don’t need to do due diligence when buying properties on the primary market with our help, as we offer proven projects from our partner developers. However, this check should always be done when buying on the secondary market.
5. Payment
It usually takes up to 30 days after the reservation fee payment until the first payment under the main contract. If the property is purchased as a freehold one, then payment must be made by the international SWIFT transfer according to the contract and invoice. The invoice should be in the buyer’s name.
Leasehold purchases can be paid for in almost any way, including cash. You can even pay with cryptocurrency using a QR code from the seller. Since 2018, crypto exchanges in Thailand have been licensed by the state under the Digital Assets Decree, so the legitimacy of a transaction with cryptocurrency payment is guaranteed. The seller withdraws the received cryptocurrency to his current account in Thai baht and provides the buyer with a payment receipt.
6. Taxes and fees
Before registering the deal with the Land Department of Thailand, the buyer and seller must pay taxes, fees and commissions. The buyer pays transfer fee (freehold) or lease registration fee (leasehold). These fees are often divided between the buyer and the seller in different proportions, depending on the arrangement.
Tax | Leasehold | Freehold | Liability to tax |
|---|---|---|---|
Transfer fee | — | 2% | Buyer/Seller |
Lease registration fee | 1% | — | Buyer/Seller |
Stamp duty | 0.1% | 0.5% or not applicable | Seller |
Specific business tax | — | 3.3% | Seller (in the case of owning the property for less than 5 years) |
Withholding tax | — | 1% (individuals) or 5–35% (legal entities) | Seller |
The stamp duty on the sale of freehold property in Thailand is 0.5 percent of the appraised value or contract price of the apartment, whichever is higher. When acquiring land on a leasehold basis, the stamp duty is paid at a rate of 0.1 percent.
If the freehold property is sold within 5 years of purchase, a specific business tax is paid instead of stamp duty. This tax is 3.3 percent of the appraised value or contract price of the apartment, whichever is higher.
The seller also pays tax on the sale of real estate, which is 1 percent of the appraised value or contract price of the building and land, whichever is higher (if the seller is a company), or at an income tax rate of up to 35 percent on the increase in value (if the seller is an individual person, which mainly concerns resale properties). Read more about property taxes in Thailand in our article.
The real estate agent’s commission of 3 to 10 percent is usually paid by the seller.
7. Deal registration
After paying for the property and paying taxes, the deal is registered with the Land Department of the Kingdom of Thailand. The new owner receives a document in Thai confirming the right of ownership (freehold) or the right of possession (leasehold).
If the property is bought on the primary market, then the deal registration in the Land Department is usually handled by the developer’s representative. The buyer receives a package of documents, including a state-certified contract of sale or a long-term lease agreement (the copy of this contract will be kept in the Land Department) and a house book. This book is also called the blue book in Thailand (or yellow book if the owner is a foreigner) and contains the address of the property, as well as information about registered residents.
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