Buying a condominium is possibly the best investment possible for a foreigner in Thailand, as you can own it outright. But before you buy, make sure you understand exactly how to go about it. A good rule of thumb to follow when looking for a condo: It is better to buy the worst condo in a quality building, than the best condo in a poorly maintained building.
Buying a condominium in Thailand is actually a very straightforward process. However, there are a few things you need to be aware of before you start.
The Thai government has changed the rules governing condominium ownership. Previously, foreigners were only allowed to buy up to 40% stake in any condo building. This was recently increased to 49%. This means that more condo units are now available on the market.
If you find a condo you would like to buy and the foreign ownership quota has already been filled, there are still ways to become an owner. The most common one is to form a company conforming to Thai law. Your lawyer will be able to help you with this. It’s not a good idea to try and set up a company on your own without sound legal advice, as you are sure to run into trouble, and you may even lose the deal as a result. It may cost you some money (on average 30,000 to 50,000 Baht) to retain a good lawyer, but this is always money well spent.
What steps do you take on the road to buying a condo?
First, and most importantly, make sure you retain an experienced and ethical agent to take you around and show you the range of condos. Once you have found a unit you like, ask these questions:
1. How old is the building? If it is more than 10 years be careful and if you are buying for a long term investment, or you plan on living there, anything over 20 years old may be to risky to buy into.It may not be adequately maintained. It could be scheduled for demolishing sometime in the near future. Anything could happen, so consider carefully before making a buying decision. Ask the owner/management of the condo what their future plans for the building are. Having said that, buying into a slightly older building can actually be beneficial. Management will have a proven track record which you can check with existing tenants. And you can see how well it has been maintained. Like any purchasing decision, you need to be armed with all the facts before committing yourself.
2. How much will you be required to pay for the maintenance contract each year?
3. Has the condo management set up a sinking fund? This is often a one time payment made upon transferring ownership and it ensure that the condo will be well maintained. Some condos require a sinking fund payment each year, and others require it ‘on demand’. Make sure you know in advance what their policy i and how much it will cost you.
4. Has the condo management set up an annual insurance premium, and how much is it?
5. How much is the booking fee?
6. How soon do you have to pay the full price after paying your deposit?
7. How long has the condo management team been looking after the building?
8. Who pays the transfer fees? In most cases, the owner should pay them all. But some owners will ask you to share the costs 50/50, or pay them all yourself. You should ensure you understand who is required to pay, and calculate how much the fee will be before you sign up to buy. If in any doubt, ask your lawyer to present you with a full schedule of the fees, including any income taxes outstanding on the property. At the moment, in Bangkok and Pattaya, the transfer fee is 3,3% of the purchase price. However, this is subject to charge, so make sure you check before agreeing to pay any transfer fees.
9. You will need to bring all purchasing funds from overseas. The minimum amount set by the Thai government is $US 10,000.
10. Make sure you know whether you are buying leasehold or freehold. Your lawyer will check this for you. Leasehold means you will never own the property. You will merely lease it from the landowner. Freehold gives you full ownership rights. Obviously, freehold is much better.
11. If you plan to rent the unit out after you have bought it, and you will not remain in Thailand, you will need to appoint an agent to manage the unit for you. Make sure the agent has a clearly written contract that spells out the conditions of management, including the percentage they will charge you, their responsibilities, the amount they will spend on advertising, etc. For example, an agent may be willing to spend up to 1 or 2 months of potential commission income on advertising, and then the owner will be expected to pay for any further advertising if needed. The amount of commission you pay the agent from the rental will also determine how much the agent will spend on advertising. Make sure you check before signing any agreement.
When you have made a decision to buy a condo, the purchase steps are very simple:
1. Make an appointment with the seller to meet you at your lawyer’s office and describe the purchase terms and conditions to the lawyer. He will ask the right questions (or your agent will) to ensure you know exactly what will go into the Sales & Purchase Agreement. Take your passport and bank account details with you.
2. The seller will give the lawyer a copy of the land title deed. End of first meeting.
3. The lawyer will send someone to the land office to check that the title deeds belongs to the true owner, and that there are no outstanding debts, liens, or encumbrances on the deed.
4. The lawyer will inform you if all is well. You then meet once again at the lawyer’s office to sign the Sales & Purchase Agreement and hand over the deposit. The deposit is usually given direct to the seller, but you can ask the seller to allow the lawyer to hold the deposit in escrow if you wish. The deposit is considered part of the full price and the lawyer will ensure that it is credited to the full price for you when he accompanies you to the bank in the next step.
5. The lawyer will prepare the sales documents. This usually takes from 3 to 5 days – time enough for you to bring the rest of the payment to your bank from overseas. When everything is ready the lawyer will advise you and send a lawyer to accompany to your bank to get a cashier’s cheque and a T.T.3 form certifying that the money is to be use to purchase a condo.
6. You return to the lawyer’s office, sign all the papers and hand over the cheque. The deal is finished now except for the change of ownership procedure. This can be done within a few hours at the land office, although it can sometimes take up to a week to complete, depending on the circumstances.
That’s it. It’s a very straightforward procedure.
You can own property in Thailand. But to ensure you are getting the best deal that is to your advantage, aways employ professionals with plenty of experience in the business to help you with your property search.