Buyers Guide & FAQ

Yes, foreigners can own property in Thailand in their own name and below we have listed the most common available ownership options.

Condominium units have freehold title deeds which are registered at the Land Department. Foreigners are entitled to own up to 49% of the total area of a condominium development under a freehold basis. Villas can also be owned Freehold in a foreigners name but for the land the villa is built on, it will be a leasehold structure with the land owning company or via a Thai registered company. Freehold ownership means there is no time limit on the time of ownership.

Leasehold ownership can be registered for up to 30 years at a time at the land department but usually developers offer a renewal clause for two additional periods of 30 years. (30+30+30 years) A common misconception is that Thai law only allows for a maximum of 90 years in total for a leasehold, but there is in fact no time limit on how many times a lease can be extended from once the first 30 year period have expired. But currently the standard offered by developers is usually for 3 periods of 30 years each.

This means all the owners collectively own the company that owns the land the property is built on, and each owner leases his plot from that company. One common structure is that a dedicated British Virgin Island (BVI) Company is the majority owner by preferred shares in the Thai registered land owning company and each owner in the development receives shares in the BVI Company. This way the owners have the possibility to extend their leases indefinitely.

A Thai registered company can own a property on a Freehold basis and the property then becomes an asset in the company. By Thai law a foreigner will need to have Thai nationals as shareholders in the company.

This is the same type of ownership as Foreign Freehold but for Thai nationals only. Thai nationals can own both the Condominium unit/Villa and also its land which the property is built on under a freehold basis.

This will depend on what type of property you are buying. For Freehold ownership property, the tax payable is as follows:

Transfer fee: 2% of the registered value of the property

Stamp Duty: 0,5% of the registered value of the property

Withholding tax: 1% of the appraisal value or the registered sales value (whichever is higher)

Specific business tax: 3,3% of the appraisal value or the registered sales value.

Note: Specific business tax is only payable if the property being sold has been under the current ownership for less than 5 years. Over 5 years, this tax is waived.

For Leasehold property, the tax payable is less and is currently charged at 1,1% of the appraisal value or the registered sales value (whichever is higher) this is called Lease Transfer fee.

The same tax calculations apply when selling a property in Thailand and who shall be paying it, the buyer or the seller is usually part of the price negotiations on the property but often it is split on an equal basis between buyer and seller. The land departments own guidelines are:

Transfer Fee: Buyer

Stamp duty: Seller

Withholding Tax: Seller

Specific Business Tax: Seller

For off plan/Under construction projects when buying from a developer they usually offered a deferred payment plan that stretches over the construction period. Payment plans varies but could look like this:

Reserve your unit: 100,000-200,000:- THB down payment.

Contract signing: 20% of the purchase price of the property

2^nd installment when foundation completed: 20%

3^rd installment when structure is completed: 20%

4^th installment when the roof is completed: 20%

5^th installment on handover and ownership transfer: 10%

For re-sales or 2^nd hand properties, the typical payment structure is 10% of the purchase price payable upon reservation of the unit and the final 90% payable on transfer of ownership date. This is when the property is being registered in your name as the new owner.

In general, the property market in Phuket for foreign buyers is very much a cash market. However, there are some options for financing available. The first one is called developer financing. This applies only when you purchase a new property from a developer and the developer then offers financing to pay the purchase price of over a set period of years. Usually a down payment is required and interest will more often than not be applied to the financed amount. The second option is a mortgage through a Thai or International bank. The banks that currently offer loans to foreigners in Thailand are: Bangkok Bank, Standard Chartered, UOB Singapore, MBK Guarantee Co Ltd, Krungsri Bank. The requirements for obtaining a loan varies between the above banks but usually a down payment is required of between 30-50% of the property purchase price, the loan period varies between 1-10 years and the interest rates is generally high, between to 6-8% which is one reason many property buyers prefers to purchase the property in cash if that is an option.  If you are interested in buying property via a financing option, please contact us so we can assist in recommend the best suitable option based on your circumstances.

There are benefits to both options of buying a completed versus under construction property. Starting with buying under construction, getting in at an early stage will give you:

The option to choose from many different apartments in a building, you can cherry pick the best floor, unit location as well as the views.

Pre-sale prices. Developers more often than not offer pre-sale prices which will gradually increase during the construction period.

Deferred payment plan. You don’t need to pay the full price of the property at once as the payment plan will follow the construction timeline.

Customizing to your taste. Often you will be able to choose between different types of materials such as tiles and finishes to get the look of the property you desire.

Getting a brand new property that will be modern throughout with all new fixtures and fittings.

Benefits of buying a completed property will be:

You can move in right away or start to rent out your property and earn a return on your investment from day one.

See what you are getting exactly. When buying completed you can see and touch the property you are buying.

Price negotiations. When buying a re-sale property, you are more likely to get a better discount from the advertised price if the seller is motivated to achieve a sale rather than buying from a developer.

Established property.  Many properties have over the years built up a good name, lovely grown out garden areas and often have returning rental guests coming back to rent at the development year after year for their holidays.

Fully furnished. Since the vast majority of Phuket re-sale properties are sold as fully furnished, this can give you a nicely completely furnished unit directly on purchase.

CAM fee stands for Common Area Maintenance fee. This is the fee you need to pay toward the buildings maintenance and jointly used facilities and services.  This is usually billed quarterly or bi annual to the co-owners. The average CAM fee on Phuket Island for resort style properties is approximately 63 THB per Sqm.

A sinking fund is usually only payable upon the purchase of a new property although there may be the need for additional sinking fund top up’s during the life span of a property as it gets older. The sinking fund is a reserve fund used to finance major repairs to a development which is not covered by the ongoing CAM fee payments.  A normal one time sinking fund contribution for a new property would be approximately 500-600:- THB per Sqm.

Utilities charges such as electricity and water is always good to ask for when you are buying a property as the charges are not the same for every development. Electricity charges can vary between 4 -8 THB per unit and water is usually between 50-75 THB per cubic. Some developments may actually have free water if their ground water supply is plentiful, in these cases you would only pay a minor fee for the extraction of water.  Generally the water bill will be very low regardless per month and electricity will depend a lot on how much air condition is used, but as a benchmark, a typical 2 bedroom unit would have water costs of approximately 200-300 THB per month and electricity bill between 1000-3000 THB depending on usage and the rate charged at the building.

Most buildings will have insurance in place for the building and its common area assets. The insurance is usually paid for via the ongoing Common Area Fee’s payable to the management. But the building insurance generally only cover damages to the apartment or villa that are arising from a common area problem such as a water leak coming from the common roof, but it does not cover everything that could happen to the inside of your apartment and your furnishings so it’s always a good idea to check what insurances are in place for the building you are purchasing in and contemplate if you require additional insurance such as Content insurance for the furniture.

Guaranteed rental returns is something that is being offered frequently by developers to its customers in newly built properties. This means the developer is offering contractually a 6-7% or higher return on your purchase price for a set period of time, usually 3-5 years, and they rent your unit out for you. This can be a convenient hassle free way of earning a guaranteed rental income. When purchasing a property under this set up, it’s important to check what fees are being deducted from the net income if anything and also how much private usage is allowed and if there are any blackout periods when owners cannot use the unit by themselves.

When purchasing a property through Resava Real Estate Company you will always have the option to rent your property out to earn a healthy return on your investment with Resava Group. Currently Resava manage the rentals for approximately 500 Condominium and Villa units on the island. Our rental program is completely transparent so you as the owner can log into our system at any given time to see past, present and future rental bookings, at what rates the unit is rented out for and what the net rental income is. Resava will administrate all necessary rental income taxes and other fees on your behalf which makes for a very hassle free and comfortable rental operation.  Our rental management program is flexible so you as the owner can block any periods you may wish to use the apartment or villa by yourself or for your friends.  If you are interested in Resava Groups rental management, please contact us for a full introduction.

Once you have found the perfect property to purchase in Phuket, one important aspect to consider is how is the building going to or are currently being managed? You would want the developer to have a clear plan for this once the construction is completed if you are purchasing off plan. Quality property management safeguards your investment in the long run and ensures the development has a good maintenance scheme in place for the building which will not only ensure the common assets are being kept after properly, it will also help with the resale value of a property. There are several multinational property management companies as well as local companies operating on Phuket Island.