Despite political turmoil and tight restrictions on foreign real estate investments, Thailand’s international real estate market is thriving. Foreign buyers looking to invest in Thailand’s real estate market should consider forming joint ventures with Thai entities, or the more hassle-free route of a long-term renewable lease. The following article from International Property Journal explains what you should know about buying real estate in Thailand.
Political turmoil remains the biggest challenge to buying in Thailand. Governments and policies change, adding a touch of uncertainty to the process. In recent years there has been movement to open the country up to more overseas investment, but that could change.
Traditionally there are tight restrictions on foreigners buying property. In most situations a non-Thai citizen can’t own land directly. Foreigners can buy condominiums, but only in buildings where foreigners own less than 40 percent of the total area of the units.
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That said, there is a thriving international business. The most common method to avoid the restrictions is to form a joint venture, Thai Limited Liability Company, with a Thai entity. Under Thai law, the Thai partner must be the majority owner, but the new entity can limit the power of the majority owner, providing a degree of security to the foreign partner. However, the government is reportedly increasing scrutiny on the joint ventures, making it a bit more difficult. (The company may cost $1,500 to set up and usually carries an administrative fee, maybe $50 to $100 a month.)
Rather than hassle with the corporation, many foreign buyers opt for a long-term, automatically-renewable lease. While not as secure as title ownership, the leases are common and relatively secure. The latest move calls for a lease to cover a 90-year period.
- Mortgages are still difficult to find, although some banks are opening up avenues for foreigners. Bangkok Bank and HSBC in Thailand are reportedly among banks now offering some sort of mortgage program. And many larger developments also have financing offers for up to 70 percent of the value of a property.
- Fees typically include a stamp fee and a transfer fee, which could be as high as 2 percent. But the fees are often changed and waived, as the government tries to boost the industry. In 2008, several fees, including the transfer fee, were slashed. But that could change. Double check the current policies.
- Traditionally, the capitals gains tax is very low, in the region of 1 percent to 3 percent, depending on various factors.
- In many cases, land titles may include only vague surveys. It’s important to hire an agent to ensure the boundaries are established.
This article has been republished from International Property Journal. You can also view this article at International Property Journal, an international property news and information site.