Would you like to buy property in Thailand?
The word has gotten around about Thailand and it's almost unbelievable cost of living prices. Compare a condo for sale on the beach in Thailand to places like Hawaii, or California, the UK, or even Australia and you are looking at savings of 25 – 200 % in some cases for a comparable property. Buying real estate in the Kingdom is not always completely straight forward. Part of the reason houses and condos are so cheap to buy in Thailand is because of the restrictions on foreigners owning land. This singlehandedly keeps land prices down, which in turn positively impacts the prices of everything else in the Land of Smiles.
In California we would call the state of the current property market, especially in Pattaya a "Buyers Market", meaning prices are down, and inventory is up giving the power of negotiation to the buyer. Real Estate as an industry goes through cycles and right now is one of those times where good deals are abundant to the astute buyer. We here are Sisco Property Group would be delighted to assist you in your search for a house for sale, condo for sale, or land for sale in Pattaya or Thailand. If you are not quite ready to start looking we have put together a list of things to consider when you are contemplating buying property in Thailand.
There are three different types of ownership when buying real estate in Thailand.
The simplest and most straight forward type of ownership is Thai Ownership. This is available to all Thai nationals, and there are no limits or restrictions. Thai nationals get the best prices, as there ownership is sometimes literally in demand such as the cases with condo buildings needing to be at minimum 50% Thai owned.
The next ownership type can be broken down into two different types with Thai Company Ownership, and also Foreigner Company Ownership. In either case the piece of real estate is owned in the name of the business rather than any individual. If the business is dissolved the business owner has a limited time (usually six months) to convert the ownership type or sell the property.
The last type of ownership available in Thailand is foreign ownership. This is more straight forward in the fact that there is no extra paperwork, no business to run, and any foreigner is eligible for properties that are available in foreign ownership. The types of properties that are available for foreign ownership are restricted though as well.
What type of properties are available to who?
Thai owners can buy anything in Thailand, condos, houses, and land plots whether developed or not. They can own the land outright, and have the right to pass it to friends or relatives in the untimely event of their death.
Company ownership allows both foreign owned companies and Thai owned companies to own condos, houses, or even land. This is the one way where a foreign national can end up owning a house or piece of land without Thai involvement. The catch is the company must remain in operation and if it ceases the owner has six months to convert the ownership type or sell the property. In the even of the death of the owner it can not be passed to another foreign national, or another company.
Foreign ownership is available for condos only. It is not available for houses, or land. If a foreign national would like to own a condo they are welcome to it as long as the building has in excess of 51% owned by Thai nationals. Condos in Thai ownership, or Company ownership can be converted to Foreign ownership if there is ample room in the buildings totals to support another foreign owner. This can make condo shopping tricky, especially in buildings that are already completed and the unit has been owned before. Sometimes it is easier to get exactly what you want as a foreign buyer in a building that is not finished or off plan, however, that can introduce additional risks with the savings and the choices.
Buying a Condo
To buy a condo in Thailand is easy. Condo ownership is available to everyone, regardless of country of origin. There are basically condos for sale in Thailand in four different stages. Off Plan, Under Construction, Newly Built, and Second Owner and Beyond. Each has different things to consider, different pricing, and different risks associated with buying it.
Off Plan selling is something that happens in the Pattaya and Bangkok condo markets rather regularly. This is the normal way for developers, especially foreign developers to finance their projects. Rather than going to the bank for traditional financing options developers instead raise venture capital through the selling of their units off plan. This means that construction may not have even broken ground before sales begin. Off Plan may also be referred to as pre sale status, or pre construction pricing. The prices are the cheapest for buyers willing to buy off plan, and the risks are the highest. Buying off plan is not for the owner who plans to occupy the unit in the short term. Buying off plan is better for the investment client looking to outlay the least amount of capital up front and get a very good value in the long term, or it can be ideal for the owner who will occupy the unit eventually but wants a customized unit, or wants additional time to pay for it, as buying off plan allows for more payment options than other choices.
Condos that are under construction are now out of pre sale and have broken ground. The prices have begun to increase as the risk has lowered, however, prices for buildings under construction are typically less than finished buildings, as again the risk is higher, and the developers are motivated to be raising capital and are much more willing to sell at or sometimes below cost to keep the project on deadline. Buying in a building under construction but not finished can still give owners the ability to customize units, and still provides more savings that buying in a newly built building.
A newly built condo buildings has the least amount of risk with some of the highest prices for new buyers. The risk is low since the building is now a tangible object, it is harder to customize at this point, and the building should hopefully be over 80% sold by completion. There is less of a chance of getting the unit in the space that you want, and ownership types can begin to get restricted about this point. The building provides opportunity for immediate move in, and still will give buyers a much better value than buying in other countries. Many newly built condos come with gorgeous fixtures like granite counter tops, and marble tile simply because the materials and labor are so much cheaper in Thailand.
Second owner and beyond
Buying a condo from another owner can really get tricky. Sometimes ownership type can be changed, and sometimes not. If the ownership type is something that matters then this question should be addressed up front. There is nothing worse than finding the perfect condo, at the right price just to find out that it is not available to you because of the ownership type restrictions. Avoid this by asking the agent to check before you schedule a viewing. Good agents will ask this up front, however, it never hurts to be a savvy buyer.
Getting a good deal on a second hand condo can be possible if you are in the right place at the right time. For investment clients the Pattaya condo market is full of sellers that want to unload condos for various reasons and many times quick sales will happen at or below market value between agents and the property never gets fully listed. Establish a relationship with an agent sooner rather than later if you are an investment buyer. There are some really great deals to be had in a town that is transient, filled with retirees, and one that has attracted buyers from countries like Russia and China who have had big economic booms and busts in recent years.
Buying a House
Buying a house in Thailand is a bit different than buying a condo. No foreign ownership is available so one must either be Thai or have make the purchase in a company name. Houses come in either free standing or within villages. Either are available for sale new, used, or may be built custom.
Thailand has Moo Baans or villages that are reminiscent of gated communities found in the western world. These communities are typically walled off, that security at the gates will vary. The streets do not usually go through so once in a village there is usually only between 1 and 3 entrances. It is quite common for the villages to have communal facilities such as gyms, pools, parks, and gardens. As is common in Thailand one will also find small stores in restaurants, laundry service, and taxi or transport service without having to exit the village.
Prices in the villages tend to be a little bit more, and the variety in the houses is diminished. There are restrictions on color, style etc, and many of the houses inside villages are more like western style with Thai elements.
A free standing house, is not part of a village. It can be located anywhere else. The plot sizes will vary wildly, and the style and prices of homes are innumerable in a free standing house. Some feel more secure this way, some feel less, it is really up to the owner. As with homes in the village, the ownership type is restricted to Thai national or company ownership.
Buying land in Thailand is reserved for Thai Nationals only, with one exception. A foreign national can buy a plot of land for his lifetime only with a one time payment of 40,000,000 THB paid in addition to the price of the land. The foreigner can build anything he wants on it, but understands at the time of his death he can not pass the land on, so essentially there is not way for a foreigner to buy land in Thailand, short of being super rich and able to just literally throw the money away. It has happened in the past, and I'm sure it will happen again, however, this is not a viable option for most people.
Is a special visa required to buy a house or condo in Thailand?
There is no special visa required to buy real estate of any type in Thailand. Foreign nationals can buy property whether they are on a simple visa on arrival, a tourist visa, retirement visa, student visa, or non b working visa. It is even possible for owners to buy property from outside the kingdom so in essence a foreign buyer could buy within Thailand with no visa what so ever.
Is there financing available to purchase real estate in Thailand?
Financing is not quite as straight forward as in the western world. Thai banks typically will only loan up to 50% of the cost of real estate for a high interest rate with a short term, 15 years or less. Some developers are beginning to fill in this gap by providing developer lead financing, and some foreign nationals are able to secure financing in their home countries rather than using Thai banks at all. Rules for Thai nationals are more lenient, but not to what some westerners are used to.