Thailand – Is It Risky for a Foreigner to Buy Real Estate Here?

Thailand – Is It Risky for a Foreigner to Buy Real Estate Here?

You’ve been in Thailand for a while now and finally made the decision to stay. We understand: we also love the soft white sand, the tropical climate, the laid-back lifestyle, and the delectable cuisine, and made that decision 15 years ago ourselves.

We can help with the transition, the visas, and purchasing your new home as well – so before you plop down your life savings on your dream house, please contact us, because there are some pitfalls involved in buying property in Thailand, some of which you can just sail through, and others that can really derail the train.

Working with our partner law firm, Phoenix Barrister, we’ll conduct a thorough examination of title deed recorded at the Land Department to assure that the seller has clear and legal title to the property he’s selling you, and check for any encumbrances such as liens, leases or mortgages before you make a deposit or sign a reservation agreement.

We’ll also verify zoning, environmental and planning codes in the area: there have been a number of cases where foreign buyers have purchased property only to discover later that there are height restrictions, rendering the land worthless. This is especially true in beach resorts like Pattaya where there are height limitations closer to the beach. Because all this takes just a few days, we strongly advise against skipping such a crucial step.

We’ll also conduct the due diligence required to assure that your purchase is a sound investment, checking with other buyers to see if they are satisfied with the quality and progress of the construction, and inspecting the land itself, as well as building permits and court records.

Remember: while there are many trusted developers, their priority is to sell – this is the case everywhere in the world, and even those with good intentions can present a minefield here in Thailand. Let us keep you up to date on building quality, construction timelines, what’s new on the market, stalled projects, and general property news that will make you a more informed and savvy buyer.

 

Your Lawyer

It is possible to do a lot of things without a lawyer, but when it comes to purchasing a property in Thailand, it is not recommended, which is why we work with a top international firm with a long presence here. Contracts in Thailand do not always adhere to the international standards that we are used to back home, which is why we recommend taking the time to sit down and discuss the entire purchase process with our legal team. Your lawyer needs to be familiar with the legal process in Thailand – your lawyer back home may be able to advise you on contracts and agreements but will lack the crucial experience dealing with the way things are done here.

Your lawyer will also advise you on when to put your deposit down, which is normally 10-15% of the purchase price and should be deducted from it if the contract is properly executed by both parties. However, should you decide not to go through with the purchase, it is the seller’s right to retain the reservation deposit, while if the seller defaults, it is usually refundable. A clear agreement regarding the reservation deposit is important, as sellers and agents sometimes keep this fee for the ‘opportunity cost’ involved while the property was reserved, which is why you need an ‘exit clause’ in the deposit agreement like ‘subject to a clear title’ or ‘subject to agreement on contract terms’.

 

Your Estate Agent

AD ASIA Consulting also has long experience acting as estate agent for our clients in Thailand. Back home, you wouldn’t invest in an area that you are unfamiliar with, so why would you here? Property is affected by so many variables that it is crucial to have a local expert who is experienced in real estate transactions in the area where you intend to buy. Your agent speaks Thai, knows the lay of the land, and can show you numerous quality properties that suit your personal requirements, skipping the poor quality units and developers with a history of problems. You agent will always act on your behalf and keep your best interests in mind – including negotiating a fair price for you.

There is another issue here, and one that your estate agent can help you avoid: if your property is in a popular development, the chances are high that the developer will be eager to repeat their success and start a Phase II next door, which requires thoughtful plot selection. Your agent will also be thoroughly familiar with the surrounding area and the potential for view-blockage blockage from other buildings, as occurred in the high-profile case of Tulip group’s massive Waterfront condominium project in Pattaya that was ordered halted by the city after complaints from area residents.

Many of Thailand’s thriving resort areas have seen a surge in new property developers, big and small, experienced and inexperienced. The latter group often lacks the necessary know-how to manage a project through to completion, resulting in numerous well publicized delays and other problems. On the other hand, these developers do offer much better prices and can be very flexible.

Conversely, the big established developers, many of which are listed on the SET, have the resources, experience and expertise to not only complete a project, but to complete it on time. They are not inexpensive, nor flexible, but the risks are far lower.

 

Thailand Property Law

Thai law prohibits foreigners from owning land or property, however there are alternatives to outright ownership of property here. Buying leasehold, for example,

gives you the right to remain in your home for a set period that can generally be extended without too many problems. We recommend a lease with a term of up to 30 years with renewal terms that can extend it to 90 years.

‘But so many of my mates own property here,’ you say, ‘how are they doing it?’

Well, they have probably put their house in the name of a company, which is simple, but can be perilous as well. You won’t have any trouble finding an accountant who will furnish the necessary paperwork, but the Thai government frequently announces ‘crackdowns’ on paper companies. Because there are so many, one would assume that such a crackdown would amount to the government shooting itself in the foot with the loss of such a huge number of big-spending expats, but the current government might not be concerned about that. In any case, before you proceed, learn to speak Thai, or find a partner who can, like us.

Another solution, one however that has also prompted numerous high-profile news stories, is giving ownership of the land and home to your Thai partner, or someone you trust extremely well, because if things don’t work out, you’ll be the one who’s homeless.

Why not keep it simple and buy a condo? Foreigners here can own condos freehold, provided Thais own the majority of other units. This is the easiest transaction, though one that still shouldn’t be conducted alone, particularly if you are relatively new to Thailand. Call us and let us show you how to become a happy homeowner in your retirement years, or make a satisfactory return on your property investment here in Thailand.

Categories: Real Estate

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