If you are a foreigner and have been entering the Kingdom of Thailand multiple times, you must be thinking of just owning a property rather than book hotels for you to stay, right? But the problem is that Thailand has so many restrictions on foreigners in owning a property. Some might think it is impossible to buy a property in Thailand but there are ways to make it possible.
There are 3 rules for you to bear in mind in owning a property in Thailand if you are a foreigner:
- Foreigners cannot own land directly in Thailand.
- Foreigners can, however, own a building or a structure located on a plot of land.
- Foreigners can own condominiums freehold titles.
Yes, you cannot own a land, but you can, however, own a building, and a condominium.
Before we proceed, know that this article will discuss how one can own a condo. So, are you considering or interested in buying a condo in Thailand?
Condominium and its Ownership Quota
What is a condominium? A condominium, sometimes abbreviated as a condo, is a type of real estate that is divided into numerous units, each of which is individually owned and is surrounded by common facilities or areas that are jointly owned. Common areas like hallways, pools, gyms. Areas in the building that are not your unit or room can be owned by other condos or unit owners.
Though a condo is located inside a building, it is still like other normal communities which have rules to follow to achieve peace considering that it is not only you who is in the building. There are rules to follow, rules within the building, and rules in protection over people purchasing condominiums for dwelling purposes, the Thailand Condominium Act. The Condominium Act lays out the procedures and requirements for a multi-unit apartment structure to become a condominium. The most recent Condominium Act was passed in 2008.
What is its Ownership Quota? According to the Condominium Act of Thailand, it means that the ownership of some people in a condominium is only limited. For foreigners, they only have a 49% ownership quota. It means that within a condo building not more than 49% of all units can be sold to foreigners, at least 51 % of the condo building must be owned by Thais.
Eligibility for Ownership of a Condo
Good thing is that there are no restrictions on what nationalities can buy a condo in Thailand. Anyone who enters the country can own a condo unit as long as he is eligible for ownership under the basis of Section 19 of The Condominium Act.
Section 19. Aliens (foreigners) and juristic persons regarded by law as aliens (foreign) may hold ownership of an apartment if they are the following:
- Aliens are permitted to have a residence in the Kingdom of Thailand under the Immigration Law.
- Aliens are permitted to enter the Kingdom of Thailand under the investment promotion law.
- Juristic persons are registered as juristic persons under the Thai Law.
- Juristic persons which are aliens under the announcement of the National Executive Council and have obtained promotion certificates under investment promotion law.
- Aliens or juristic persons are regarded by law as aliens who have brought in foreign currency into the Kingdom of Thailand or withdraw money from the Thai Bank account of the person who has a residence outside the Kingdom or withdraw money from a foreign currency account.
Process of Buying a Condo
Buying and owning a condo is not as easy as 1, 2, 3. One goes through long, slow processes before one can finally own one. So, prolong your patience and let us discuss how you can own a condo.
Locating Preferred Condo. Before even beginning to process a condo, one must find the right condo for you. Find yourself a condo that best fits your own standard. Consider the price, the location, the views, and everything else that you think is to be considered in purchasing and owning one. One can locate online, or offline with the help of real estate agents.
Seek Help from a Lawyer. It is not required to seek a property lawyer or any professional but one must know that having one helps you understand more of the legalities of buying a condo and they can even help you with running background checks to the seller, or the building. Everything will be more understood if there is guidance from experienced professionals (Siam Legal).
Buying and Transfer of Ownership. Once you have chosen your preferred condo and sought help and guidance from a professional, in this part of the process you will undergo a lot of paper works. Listed below are some of the paper works you will run through.
- Foreign Exchange Transaction (FET)What is FET? Well, FET is a form required document for the registration of the ownership at the Land Department as this is the proof of the compliance by the foreigners. An original copy of this form with the name of its sender or receiver of the foreign currency is required.Under BOI banking laws, every authorized financial institution in Thailand dealing with the exchange of foreign currency of more than $50,000, must complete a FET form and report the transaction to the Bank of Thailand.
In terms of the exchange of a foreign currency less than $50,000, it does not need the FET form. A confirmation letter for the transfer of foreign currency and exchange into Thai Baht from the bank will be enough. The said confirmation letter contains the same information as the FET form and it can also be used to register at the Land Department.
- Sales Purchase and Agreement This will specify the details of the duties and responsibilities of both buyer and the seller of the condo. This paper will cover the:
- Agreed Price
- Payment Schedule
- Transfer Date
- Details of the Condo
- Matters relating to Due Diligence
- Responsibilities for the Transfer Fees and Taxes
- Transfer Fees and Taxes When transferring a condo property in Thailand, there are a number of taxes and fees. Here are some of those to consider:
- Transfer Fee (or Ownership Registration Fee)
- Stamp Duty
- Withholding Tax
- Specific Business Tax
In a condo resale, how these costs are split between the buyer and seller is determined by the terms of the sale and purchase agreement, which can range from buyer pays it all to seller pays it all.
In a condo in development, due to consumer protection legislation, the seller (developer) can only pass on half of the 2% ownership registration cost to the buyer.
Consider the paper works above for the transfer of ownership. The transfer will take place at a provincial or local Land Department branch office. And, a 2nd official Thai script land office sale agreement will be completed at the time of the transfer, as well as transfer fees and taxes.
Owning the Title Deed. After the ownership has been registered, the new owner will receive a condo unit title deed. The Land Department issues the ownership title deed to each apartment unit in a condo complex. The title deed will contain the following information:
- Position and location of the land and area of the land of the condominium
- Plan of the condo unit showing location, width, length, and height
- The ratio of ownership of common property and owner’s voting rights percentage
- Name and surname of the person having the ownership of the apartment
- Index for the registration of rights and juristic acts
- Signature of the competent official
- Position seal of the competent official
Take note that the issuance of the title deed will also take place at the Land Department.
Here are the required documents that you need to have upon buying a condo:
- When buying an existing or resale condo, the seller must provide you a letter from the condominium juristic person stating that the condo is within the condo’s 49% foreign ownership quota, as well as a document stating that there are no outstanding fees for the unit.
- FET Form
- ID Cards or Passports
- Marriage or Divorce certificates (if there is any)
- Land office power of attorney (if one does not present at the land department office yourself for the transfer of ownership.