How Buying A Condo In Thailand Works: Before we get to condos I must mention that you can buy a house but your ownership only lasts 30 years because that’s the legal limit of land leases (the ‘recurring’ lease is legally vulnerable) but that didn’t deter Chris, who skipped the condo stage and went straight for a house. Here’s his story:
Chris Buys a House. “Well to start with, purchasing property in Thailand has really only one restriction, foreigners cannot own land. So ways around this are for companies (registered in Thailand) to buy and own land and then develop it … condos, houses, gated communities etc. This works out well for those coming to Thailand and wish to purchase or rent without having to deal with issues regarding the land itself. One leases the land from the owner. More about that later …
“My Case: I came to Thailand under the aegis of Godfree’s business. I had a short term hotel room while I was put onto Godfree’s pet real estate agent (the energizer bunny with no kickbacks!) who led me around heaps of places to rent for what I wished – I took a condo for a period of 6 months. You can do shorter if you know where you want to live. I spent this time looking around Thailand looking for a place to settle. The place has changed sooo much over the years I thought it best to take the time to revisit old stamping grounds.
Found myself a beachside town with most of the expected facilities in place and proceeded to search the net for suitable places to rent. Most rentals ran from 16,000 thb per month on up, averaging around 25,000 thb per month. This seemed a bit rich for me so I switched to looking for a place to buy. Again using the same property search websites I was using for rentals. Looked at a few until I found a place that suited, got in touch with the sales person who had the listing and then agreed to buy it.
“Buying is no different to how you would go about looking for a place in the US. Use the Internet, go look at heaps of places until you finally find what you want. Here in Thailand you will firstly need a bank account (Godfree will assist you there – usually on the second day after arrival – assuming you are coming to Chiang Mai to start your journey).Then the sale of the property will require a deposit of 10% of the sale price. (bank transfer)
“The sales person will then introduce you to the lawyers who will conduct all the necessary stuff to ensure transfer of the property into your name. This of course will incur a fee (not small – mine was 3.25% of the sale price). Settlement will take place some thirty days later. You will get the keys and you will also get what is known as a Blue Book. This identifies you as the person who owns the property. You will then need to go to Immigration and have them put you on their data base using this Blue Book. Immigration here in the land of smiles run a very tight ship. They will always want to know where you are at – mainly because of the millions crossing in and out of their borders each month.
Anyway back to the main story: because you cannot own the land the house is on you will need to lease it from the owner – in my case it is for 30 years recurring – for a onetime fee included in the lawyer’s charges. Finally a bit of advice – rent for 3 to 6 months to make sure that where you want to be is exactly that. Like I said earlier, the places I loved in earlier days have change immensely and mostly not for the better.
Rules of the Game
Since farangs cannot legally own land, buying a condo in Thailand is the way to go. Buying a condo in Thailand is cheap and easy because condo-building is booming [see these videos]. ‘Cookie cutter’ houses in moobaan (gated communities) are hard to sell: the developer will always offer to build a new, customer-specific house for the same price as the ‘old’ one. There are several other reasons for this:
- Thais hate old houses.
- Farangs cannot own land
- Farings can buy a condo in Thailand and ownership will be in their own name;
- Condos come with a title deed;
- Condo owners can use the title deed as collateral;
- Maintenance fees are low as $10/mo;
- Condo resale is faster and easier than houses.
I’ve just been through a condo-buying extravaganza with two clients and picked up some tips that you might find useful when buying an apartment in Thailand. We may love Thailand’s loosey-goosey attitude to everything but, in major financial transactions, it can be dangerous for folks unfamiliar with local conditions. Here are some precautions:
- Use only a registered, licenced REAL ESTATE lawyer. Thai lawyers specialize narrowly and most Thai lawyers – though they’ll gladly take you as a client – are ignorant of Thai real estate law and practices. (As a special bonus, if you hire a scammy lawyer you can expect him to stop answering your calls as soon as the money is in his possession).
- Study up on Thai real estate scams: In 2006 on Koh Samui, thousands of plots of land were issued title deeds illegally. The ‘titled’ area exceeded the total land on the entire island! Elsewhere, beautiful land that borders national parks and mountainous areas has been developed and sold – without legal titles. It’s fairly common for scammy developers to deliver a valid title when you’re signing the contract – but the title you’re getting is to property that’s not the property you thought you were buying. You should visit your chosen property again with title in hand to be sure that the description on the title matches the location of the condo. Otherwise you could end up living behind the parking lot! Skipping promised features and amenities promised by the developer in his prospectus is another reason to do multiple inspections.
- Get lots of advice when you are buying a condo before completion (“off plan”). Talk to others who have done it and make sure that the developer is sound and has a good track record.
- There is a transfer tax on your condo. I’ll cover that in next month’s newsletter.
- It’s possible for farangs to get mortgages in Thailand. Both my bank, Bangkok Bank, and United Overseas Bank (UOB) issue mortgage bonds denominated in foreign currencies (Yen, Euro, USD) from their Singapore branches. Their interest rates vary with the currency.
- Thai real estate agents are unlicensed, untrained, and uninterested in your well-being. They mark up the asking price of properties to suit themselves: all farangs are rich so, as soon as you walk into their office they’ll add hundreds of thousands of baht to their prices. Try using a Thai friend as a front, to get prices first (or after your inspection). Try avoiding real estate agents and talk to your local banker (he finances most of the properties and knows what’s going on).
In short, talk to as many people as possible before buying a condo in Thailand. If you don’t know many people just ask your local expats club and you’ll be overwhelmed with help and, generally, good advice.
Buying a condo in Thailand can be fun and easy. Or it can be the other thing. It’s up to you.
More reading on how to buy a condo in Thailand can be found here: 8 Questions You Must Ask Yourself Before Buying A Condo … – If you’re thinking about buying a condo in Thailand then read this essential checklist of questions before you part with your money. And this video gives you an idea of Chiang Mai’s skyline and visits a Chiang Mai condo building: