How to Buy Real Estate in Thailand

Thailand is increasingly becoming a destination of choice amongst international retirees as well as business travelers doing business in the jurisdictions comprising the Association of Southeast Asian Nations (ASEAN). As a consequence, it appears that there is continuing demand for condos in Thailand. Keeping this in mind the reader ought to be aware of the fact that the differences between the pricing and accommodations provided by condominiums of differing quality varies across a wide spectrum of the Thai real estate market. Thus buyers ought to be cautious about making condominium purchases and only make irrevocable decisions regarding the purchase of property in Thailand pursuant to appropriate due diligence and sound legal advice.

One of the important aspects of Thai real estate purchasing for an alien buyer in Thailand is chanote title. Such title implies freehold ownership of the underlying real estate. Thus, in order to completely secure one’s rights in a parcel of real estate within the jurisdiction of the Kingdom of Thailand it may prove necessary to obtain a chanote title deed.

Some individuals exploring their real estate options in Thailand opt to take a long term lease on a piece of Thai property. In some cases, such a lease could have a duration of as much as 30 years under normal circumstances and under special circumstances it might be possible to secure a leasehold in Thai property for a longer period of time, but it should be noted that such instances are rare.

Another commonly utilized instrument by alien nationals wishing to enjoy property in Thailand is the usufruct. In the jurisprudence of many of the United States the usufruct would be somewhat akin to the future interest commonly referred to as a “life estate”. The person in possession of a usufruct can use the appurtenances of the real estate for a period of time agreed upon by the parties. In the Kingdom of Thailand, lifetime usufructs are not altogether uncommon, but such entitlements may be more difficult to secure in comparison to those granted pursuant to a leasehold agreement in Thailand.

Thailand Signals Expectations of Better Real Estate Times

With overall sales growth of 7% in 2009, there is ample reason to believe that the worst is over. One business resource predicts that there will also be a sustained 7%/year growth over the next five years in Thailand building and construction. It is estimated that 500 semi-completed building projects are coming back online. Thai laws relating to foreign ownership of real estate are complex, so a real estate experienced attorney should be consulted. Condominiums are the most popular purchases, but regular homes can be found, and some even work with construction companies to build a home. This allows taking advantage of bargain labor and material costs.

While bargain purchases can be found in Thailand, mortgage financing is likely to be problematic, with 50% financing a common number when a mortgage can be found. Some foreign buyers are getting funding in their home countries and transferring the funds to Thailand for their real estate purchase. Taxes and fees vary from 3% to 5% or more in a transaction. It’s a beautiful country, and these challenges are not deterrents to foreign buyers. The expectation is for more foreign buyer activity in the future.

The expiration of the tax and fee incentives will result in price increases as builders and developers pass on their increased costs. The extra cost will be around 4% for builders and developers. How much is passed along will likely be influenced by competition in the market. There is a great deal of new activity, so analysts expect that some builders will absorb some or all of the cost increases in order to better compete in the marketplace. The Thailand real estate market is in a rebound, and it’s not likely that tax changes of this magnitude will have an appreciable negative impact on the brighter future ahead.