15/07/2015
How a foreigner can buy real estate in Thailand
Yes indeed, foreigners can certainly invest in the Thai property market
Updated: 1st May 2014 (first posted: 10th Nov 2012)
- Neil McDonough's blog -
In my last blog I discussed how now is possibly one of the most opportune times to buy real estate in Bangkok in recent history. With the opening up of the ASEAN economies as the AEC due in 2015 and the ongoing and relatively enthusiastic expansion of both the MRT and BTS train systems around Bangkok, these two factors combined should lead to not only a boom in the Bangkok economy, but also an increase in property prices in Bangkok and also in other areas of Thailand.
However to take advantage of this, expats have to buy into the Thai real estate market. Therefore this blog reviews how foreigners have been investing in real estate in Bangkok - and many expat teachers have already started.
After posting the previous blog I had a few expats new to Thailand asking me how they can go about purchasing real estate in Thailand, so in order to answer those questions and to cover potential questions from other readers, I thought it best to write a blog devoted to the topic.
Buying a condominium in Thailand as a foreigner is the easiest and most straightforward method to invest in real estate. Due to the 1979 Thailand Condominium Act, foreigners can own condominiums anywhere in Thailand 100% outright, as long as the building has not already sold its 49% foreign quota. Each condominium in Thailand when registering with the land department designates 49% of its units for sale for potential purchase by a non-Thai buyer.
This way at least 51% of the building always remains in the hands of local Thai people, however individual units that make up the other 49% can be sold to foreigners outright. Therefore it is legal for a non-Thai, non-resident foreigner to own 100% of a freehold condominium in Thailand. And in fact 17% of condominiums owned in Bangkok are owned by foreign investors.
There are of course stipulations and these mainly concern finance. Thai banks in general will not want to lend to foreigners. In fact even foreigners with a history in Thailand i.e. employment history, work permits and marriage certificates can struggle to get financing from a Thai bank in order to purchase property, however it is not impossible and with perseverance some foreigners do succeed. If however you do not have history of the above then it would be more practical to borrow from a bank in your own country with which you have a record.
Whichever way you obtain financing, and whether it be for a townhouse, detached house or condo, if it is going to be in a foreigner's name the money needs to be brought in from overseas. Even if a mortgage can be obtained from a Thai bank, they will bring the money in from overseas and end up lending the money in a foreign currency such as US Dollars or Singapore Dollars. For more details on purchasing a condo in Thailand please read this info.
Some expat teachers however have already got married, settled down and started a small family, and often therefore require something larger than a condominium. By possibly sacrificing the communal swimming pool and other facilities such as a fitness area - often found in mid to high level condominiums in Thailand occupied by expats - some expat teachers opt to buy townhouses or detached houses. Of course these provide the buyer with often not only two or more levels, but more rooms and space. And in some cases the chance to have a garden or yard, suitable for young children and/or a pet. However this comes at a price.
Unlike condominiums, which of course are covered by the Thailand Condominium Act of 1979, townhouses and detached houses are ‘landed', they essentially contain an area of Thai land underneath them or around them. As it is not possible for foreigners to own Thai land, then an expat wishing to buy a townhouse or detached house has two options. And split across teachers I know that have bought a townhouse or detached house in Thailand, both options are appealing given individual circumstances.
The first option I will cover quickly and briefly as it is not really relevant to this article, but realistically it would be inappropriate not to mention it. This option is often taken up when the expat or foreign investor knows that he has a stable and solid relationship with their spouse or partner that they can trust. And therefore the property is bought 100% in the Thai person's name and of course this also opens up the options for finance from a Thai bank.
Option 2 however is the method chosen by foreign investors that feel they do not have the above luxury. They are open to start a company in Thailand in which they can own 49% of the shares. This may sound unappealing, but with the other shares split over 7 or more locals and more than often none of them having any voting rights or knowledge of each other, most foreign investors realize that the company is controlled by them. This means that the property purchased can be placed under the umbrella of the company and therefore controlled by the foreign director.
As unusual as a lot of the above sounds to the first time reader, and as ‘fishy' some of the details come across on the initial read, the systems do in fact work and the savvy expat or foreign investor can and regularly does successfully buy and sell real estate in Thailand. Foreigners have been buying real estate in Thailand regularly for the last three decades and more and more invest in Thai real estate each year. This would not be possible if foreigners were being consistently ‘cheated' out of their money by the laws of the land.
