Country Guides Country Guide: Thailand

Date Published:

24/06/2008

Before investing in your slice of paradise, there are certain restrictions on foreigners buying property in Thailand that need to be considered first.

"Foreigners are not permitted to own land in Thailand," says Jay Walker for the developers at The Village Coconut Island. "There are, however, two main ways to purchase property in Thailand, firstly through a company. They are easy to set up and cost approximately £1,000; there are also tax benefits to owning property in a company when it comes to selling."

Secondly, you can buy through a leasehold agreement totalling 90 years. You register for the standard leasehold and then extend it by 30 years at a time. That costs around 100,000 Baht (£1,500). This is the way in which overseas buyers will purchase at The Village. Any reputable agent will be able to guide you through this process.

As with any property purchase, you need to organise how to finance your chosen property. Mortgages in Thailand are available from the Bangkok Bank that has recently opened a branch in Singapore. They offer a 70% loan-to-value mortgage over 10 years for property purchases and competitive interest rates. HSBC are another lender with a presence in Thailand who can offer finance for a property purchase.

The majority of British purchasers however choose to raise the finance in the UK and then transfer to a Thai bank account for the purchase. Developments such as The Village offer a deferred payment plan over five years, offering the buyers more choice in their finance options. The owner would pay half the cost up front and then pay off the balance quarterly over five years interest free. Development property payment plans vary. At The Village once the reservation agreement has been signed, the purchaser pays a refundable deposit of 150,000 Baht (£2,300) and 25% of the property purchase price. This acts as the mobilisation fee and is also used to purchase the leasehold on behalf of the owner (in the owner’s name)- some developments ask for a fee for membership in an owners club that includes maintenance charges.

Subsequent stage payments occur at the four main build stages in the following percentages: foundations complete (25%), superstructure complete (25%), finishing work completion (15%) and then finally the handover (10%).

When budgeting for the property purchase, consider the fees and taxes involved. Overall, in Thailand the total fees and taxes amount to approximately 3% of the property purchase price. The transfer fee and solicitors costs work out at about 2% and stamp duty is only 0.5%. A very positive point is that there is no capital gains tax in Thailand- although you may have to pay in the UK depending on your tax status. As with all property purchases in any country it is essential to use an independent solicitor to assess all documentation and, where required, to translate agreements into English, just as you would if purchasing a property in the UK.