When buying property in Bangkok, foreigners should be well-informed about the legal landscape to ensure a smooth and secure transaction. Here’s a detailed guide on what to consider:
1. Legal Restrictions on Land Ownership
– Land Code Act: Foreigners are generally prohibited from owning land directly. However, they can lease land for up to 30 years, with the possibility of renewing the lease for two additional 30-year terms.
2. Due Diligence
– Property Title Verification: Verify the title deed (Chanote) to ensure the seller has clear ownership and the property is free from encumbrances.
– Developer Reputation: If buying off-plan, research the developer’s track record and financial stability.
3. Sales and Purchase Agreement
– Contract Review: Engage a lawyer to review the sales and purchase agreement to ensure it includes essential terms such as payment schedules, completion dates, and penalties for delays.
– Deposit: Typically, a deposit of 10-30% of the purchase price is required to secure the property.
4. Payment and Transfer of Funds
– Foreign Exchange Transaction Form (FETF): Obtain this form from the receiving Thai bank, which proves that the funds were remitted from abroad for the purpose of purchasing a property.
5. Transfer of Ownership
– Land Department Registration: Both the buyer and the seller must visit the Land Department to register the transfer of ownership. Required documents typically include:
– Original and a copy of the condominium’s title deed.
– Signed sales and purchase agreement.
– Foreign Exchange Transaction Form.
– Copies of both parties’ identification documents.
– Transfer Fees and Taxes: Be prepared to pay the applicable transfer fees (2% of the appraised value) and taxes (such as withholding tax and specific business tax).
6. Legal and Financial Considerations
– Legal Advice: Hire a reputable lawyer experienced in Thai property law to guide you through the process.
– Mortgage and Financing: If you need financing, check with local banks about mortgage options available to foreigners.
7. Taxes and Fees
– Transfer Fee: Typically 2% of the appraised value.
– Withholding Tax: For individuals, this is calculated on a progressive rate based on the appraised value.
– Specific Business Tax: 3.3% of the appraised value if the property is sold within five years of purchase.
– Stamp Duty: 0.5% of the appraised value (if specific business tax is not applicable).
8. Ownership Registration
– Title Deed: After the transaction is completed and registered, you will receive the title deed (Chanote) with your name as the owner. (This is only available for Condominium ownership)
9. Ongoing Obligations
– Maintenance Fees: Be aware of any ongoing maintenance fees or service charges associated with the property.
– Property Management: Consider hiring a property management company if you do not reside in Thailand full-time.
10. Investment Visa
– Elite Visa: Consider applying for a Thai Elite Visa, which offers long-term residency options and other benefits for property investors.
Buying land and a house in Bangkok as a foreigner involves navigating complex legal regulations and requires careful planning. Here’s a comprehensive guide to help you through the process:
1. Understanding Legal Restrictions
Foreigners cannot directly own land in Thailand. However, there are several methods to legally acquire land and property:
– Through a Thai Limited Company: Set up a Thai company where you can hold up to 49% of the shares, while the remaining 51% must be owned by Thai nationals.
– Leasehold Agreements: Lease the land for up to 30 years, with the possibility of renewing the lease.
– BOI Projects: Some investments approved by the Board of Investment may allow land ownership under specific conditions.
Investment in Projects with Board of Investment (BOI) Approval:
– Foreign investors in certain BOI-approved projects might be eligible for land ownership, subject to conditions and approval.
2. Setting Up a Thai Company
If you choose to purchase through a Thai limited company:
– Company Registration: Register the company with the Department of Business Development.
– Shareholding Structure: Ensure the shareholding structure complies with Thai law, with Thai nationals holding at least 51%.
– Nominee Shareholders: Be cautious of using nominee shareholders, as this can violate Thai law.
– Legal Assistance: Hire a reputable lawyer to help set up the company and ensure compliance with all regulations.
Land and House through a Thai Company:
– A common but complex method where foreigners set up a Thai company to purchase land and houses.
– The foreigner can hold a maximum of 49% of the shares, while Thai nationals hold the remaining 51%.
– Must adhere to strict legal requirements to avoid violating the Land Code Act.
Read more about it here: Legal Blog : Buying a property through Setting Up a Thai Company
3. Leasehold Agreements
If opting for a leasehold:
– Lease Agreement: Draft a comprehensive lease agreement specifying the lease term, renewal options, and conditions.
– Registration: Register the lease agreement with the Land Department.
– Legal Review: Have the lease agreement reviewed by a lawyer to protect your interests.
Leasehold Properties:
– Foreigners can lease land or property for up to 30 years, with the option to renew for additional terms.
– Leasehold agreements can sometimes be for longer periods, such as 90 years, depending on the terms negotiated.
For more information about Leaseholds read our blog here: Legal Blog : Leasehold agreement in Bangkok
4. Property Search and Due Diligence
– Find a Reliable Real Estate Agent: Work with agents experienced in dealing with foreign buyers.
– Location and Property Type: Decide on the location and type of property (e.g., single house, townhouse).
– Title Deed Check: Ensure the property has a clear and legitimate title deed (Chanote).
– Land Department Check: Verify the property details with the Land Department.
5. Financing and Payments
– Funds Transfer: Transfer funds from abroad in foreign currency and obtain a Foreign Exchange Transaction Form (FETF) from the receiving bank in Thailand.
– Bank Account: Open a Thai bank account for the transaction.
– Payment Plan: Agree on a payment plan with the seller or developer.
Read about it here: Legal Blog: Financing and Payment Methods
6. Legal Assistance
– Hire a Lawyer: Engage a lawyer to handle all legal aspects, including drafting and reviewing contracts.
– Contract Review: Ensure all contracts are thoroughly reviewed and understood before signing.
7. Closing the Deal
– Sales Agreement: Sign a sales agreement detailing the terms and conditions of the sale.
– Transfer Ownership: Complete the transfer of ownership at the Land Department. Both buyer and seller (or their representatives) must be present.
– Taxes and Fees: Pay all applicable taxes and fees, including transfer fees, stamp duty, and withholding tax.
8. Post-Purchase Considerations
– Property Management: Arrange for property management if you do not reside in the property full-time.
– Maintenance: Ensure regular maintenance of the property to keep it in good condition.
– Utilities and Services: Set up utilities and services (water, electricity, internet).
Additional Tips
– Long-term Planning: Consider long-term plans, such as the potential for selling the property or transferring it to heirs.
– Networking: Connect with expat communities for advice and support.
By following this guide and working with experienced professionals, you can navigate the complexities of buying land and a house in Bangkok as a foreigner.
Key Considerations:
– Legal Advice: It is crucial to seek legal advice from a reputable law firm familiar with Thai property laws to navigate the complexities of property ownership.
– Due Diligence: Conduct thorough due diligence on the property, including title checks and verification of the developer’s reputation.
– Finance: Foreigners must transfer funds from abroad to purchase property, and it’s advisable to keep records of these transactions.
Read about it here: Legal Blog: Financing and Payment Methods
– Maintenance Fees: Be aware of ongoing maintenance fees and other associated costs with owning property.
By considering these factors and working with experienced professionals, foreigners can successfully purchase and own property in Bangkok within the legal framework.
Summary
When buying property in Bangkok, it’s crucial for foreigners to understand the legal restrictions, conduct thorough due diligence, engage legal assistance, and ensure all transactions are properly documented and registered. This will help safeguard your investment and ensure a legally compliant property purchase.
