Thailand’s largest island has long been considered a paradise by countless tourists and expats. Dreamy beaches, bustling nightlife, and rapidly developing infrastructure are just a few reasons that many foreigners are seeking to buy property here. Reasons vary whether it’s to be a vacation home, investment, or permanent residence. However, as a foreigner navigating the process, there are complexities due to Thailand’s property ownership laws and a purchasing process that may differ from your home country’s. We’re providing this short guide that provides a basic outline of the steps, from understanding the legalities to finding the right property and completing the purchase.
Those seeking to buy a property in Thailand may consider simply hiring an agent and letting them handle everything. However, while it’s in the best interest of a property agent to have your best interests in mind, it is strongly recommended that you familiarize yourself with the laws and regulations that affect you. Thailand’s property laws strongly reflect those of the French and German systems, so it’s a good start if you’re familiar with those.
The first thing to know when considering buying property in Phuket is that Thai law restricts foreign ownership of land. Unlike in some other countries, where foreigners can freely purchase land, Thai law prohibits non-Thai nationals from owning land outright. However, there are alternatives that allow foreigners to own certain types of property, and understanding these options is key to making a successful purchase.
For foreigners, the path of least resistance to buying a property is purchasing a condominium. Thai law permits foreigners to own up to 49% of the total floor space of a condominium building. This makes condos a popular choice for expats, investors, and retirees. The condominium must be registered under the Condominium Act, and funds for the purchase must be transferred from abroad to and converted to Thai baht and deposited into a Thai bank account.
Perhaps you’re thinking that you’re not interested in a condo, but would rather purchase a villa or house. In this case, a leasehold arrangement might be a good option. Foreigners can lease land in Thailand for up to 30 years, with subsequent lease renewals built into the contract; often listed as 30+30+30 for example. In this arrangement, the foreigner owns the structure (the ownership book can be in a foreigner’s name) built on the land, while leasing the land from a Thai national or company.
Another option is to establish a Thai limited company, which can own land as a company asset. However, this company must be 51% Thai-owned, meaning that a majority of the shares must be held by Thai nationals. Beware, as there are rules in place to prevent foreigners from doing this purely to circumvent land ownership laws. It is of paramount importance to work with a qualified lawyer to legally protect yourself.
Now that we’ve discussed the basics of Thailand’s property legalities, let’s look at what types of property may suit your needs. There is a wide range of property options on the island from basic studio condos to sprawling luxury villas, and your budget and intentions will determine what will work best for you.
Condos make a lot of sense for foreigners due to the straightforward ownership process. They are also a great choice for investors who simply want to rent out their property, as Phuket has a steady flow of short-term renters. They also require less input in the form of maintenance as long as the building management is competent. Condos range from affordable studios to high-end luxury units with stunning ocean views.
As discussed in another article, the term “villa” in Thailand simply refers to a standalone house with a pool. For more space and privacy, villas are a popular choice in Phuket. Villas are a popular rental choice for holidaying families or expats. You’ll find that villas are often sold with a long-term lease on the land they sit on or with the company that owns it as an asset. Villas in Phuket often come with private pools and large outdoor areas, making them perfect for families looking for a bit of luxury on the holiday.
Choosing the right part of the island for your purposes is one of the most important aspects of the purchasing process. Deciding which is the right region of Phuket is subjective and is greatly influenced by what you intend to use the property for. If the purchase is purely for investment the west coast beaches are a popular choice, while many who live in their properties choose residential neighborhoods inland.
Hiring a professional real estate agent is key not only for finding the right property in Phuket but also for navigating the entire process. A good agent will help you explore the local market, provide insights into neighborhoods, and ensure that you find a property that meets your needs. A full-service agent with decades of experience like Home In Phuket is far better equipped with local knowledge and understanding of what buyers are looking for and where to find it. Since foreign ownership rules can be complex, an experienced agent will be able to guide you through the process and avoid potential pitfalls.
Before purchasing any property in Phuket, it’s essential to perform thorough due diligence to ensure that the property is free of legal issues and that the ownership structure is sound. The findings and interpretation of this research are the most crucial step in the purchase process.
One of the first steps carried out in the due diligence process (by your lawyer or agent) is to verify the property’s title deed. There are several types of land titles in Thailand, but most properties on the market have what’s called a chanote. While a couple of other land titles are fairly safe, a chanote is the most secure and reliable type of title, granting full ownership rights with land boundaries that have been surveyed and are officially accurate.
If buying a condominium, foreigners must transfer the funds from abroad in foreign currency for the entire purchase price of the condo. The receiving bank in Thailand will issue a Foreign Exchange Transaction Form (FETF or Tor Tor 3 in Thai), which is required for the Land Department to process the transfer of ownership. Without this form, you will not be able to register the condo in your name.
You will also need to hire a lawyer specializing in property law when buying property. They will review contracts, conduct the title search, and ensure that the transaction complies with all legal requirements. An experienced lawyer will be able to identify and provide advice on remedying any legal issues that may arise.
Once you’ve chosen a property, your lawyer will help you draft or review the sale and purchase agreement. It’s legally binding and outlines the terms of the sale, including the agreed-upon price, payment schedule, and any conditions that must be met before the sale is finalized.
At this stage, you can expect to pay a deposit to secure the property and remove it from the market. This deposit is practically always non-refundable so this will be the point of no return in the purchasing process.
The next step is the transfer of ownership which is carried out at the local land department. Both the buyer and seller (or their legal representatives) must be present to complete the transfer where you will make the final payment and take official ownership.
When buying property in Phuket, you will be responsible for several fees and taxes. They include: