Thai Law put restrictions on foreigners upon acquiring immovable properties in Thailand. There is one form of real estate property in Thailand where foreigners are able to hold ownership: Buying condominium units. Condominium units are permitted to be sold to foreigners outright.
Condominium Ownership brings a lot of issues, especially to a foreigner who secures property investment in a foreign land. Here are the things that you need to remember if you are buying a Condo in Thailand:
1. Condo Units are subjected to 49% foreign ownership ratio restriction
According to the Condominium Act B.E 1979, a foreigner can acquire up to, but not exceeding 49% freehold of condo. It means that 51% of the total number of condo units must be held by Thai national, while the remaining 49% is the maximum ratio a foreigner could own.
What happens if the quota of 49% is already used?
If the foreign ownership ratio restriction of 49% is already used, a foreigner can set up a Thai company to purchase condominium without restrictions.
2. Buying “Off-plan” condo units
Buying “off-plan” is when you buy a condo unit from a developer before the property is finished. Buying condo in a new development which is not complete yet, subjects the consumer to risk. At the time of paying the deposit, the project is still in the concept stage, design process, or currently under construction. This can take years before the completion date, and many times little or no building work may have even started. Buying a property “off-plan” is cheaper and you have to pay your deposit to the developer earlier than people buying in the 2nd or 3rd releases. There is a risk here that the developer could fail and the building has either not started at all or it is standing in a state of partial completion. In this case, there is nothing you can do to recover the deposit. To avoid this, you have to research the developer of the property you might buy. It is recommended to buy only from a credible developer; or buy in a completed condo building; or buy only a resale unit in a well-maintained and well-managed building.
3. Condominium Inheritance
Can the ownership of the condo be inherited at the death of the foreigner who qualified for ownership under the Condominium Act ?
Foreign freehold ownership of a condominium is not automatically transferable by inheritance to another foreigner. The Condo Act deals with inheritance of a condominium unit by foreign nationals in section 19/5 (under 1) and section 19/7 of the Condominium Act. Only foreigners who qualify under section 19 of the Condominium Act are eligible and allowed to register ownership of the inherited condominium apartment unit within the 49% foreign ownership quota of the condominium (as specified in section 19/2 (bis) of the Condominium Act B.E.2522).
4. Contract of Sales
A sales contract binds you and the vendor to the sale of the property at a specific price in accordance to a specific schedule. Aside from the Rules and Regulations of the Condominium, each buyer must check the following restrictions before signing a sales contract: Restrictions on pets; On age of children who can use the pool or other facilities; On parking any vehicles or boats; On types of floor-covering materials, drapes or window hangings, screenings or closing in of open balconies; Limitations on use of recreational facilities in the common areas; Sound or noise restrictions.
In the event that either of the party has breached the contract, it will typically set up penalties for default of either party. It is recommended to do a Contract Review before signing any agreement to make sure it protects the right of the consumer.
5. Proper calculation of property taxes
A contract includes clauses to cover who will pay the legal fees, transfer fees and taxes (there is often a business tax and always an income tax assessment made at the point of sale) as well as an understanding of the value at which the sale will be declared – this is typically (for tax reasons) at or close to the government minimum assessed value. Make sure that an accurate cost has been computed with regards to transfer of title and property taxes.