1.1 Buyers Checklist
1.1.1 Is Buying Right for Me?
In relocating here permanently there are several options available to you for your residence as follows:
- Purchase a condominium or house
- Long-term lease (5-plus years)
- Rent a condominium or house
- Rent or lease with purchase option
- Serviced apartment contract
1.1.2 Is Owning Property in Thailand Safe?
Property ownership is a safe investment for several reasons:
- Chain of ownership is clear & registered
- The market is maturing (30 years for foreigners)
- Consumer protection is being strengthened
- Condo Act Amendments (July, 2008)
- Escrow laws enacted (currently not mandated)
- Remember to do your homework and know who you are dealing with
1.1.3 Ownership Structures
Foreigners CAN own property, but not in all cases. Other structures are available if the property you really want is not available for foreign ownership.
- Up to 49% of livable space in a Condominium can be
owned by foreigners
- A foreigner can NOT own land in their name
- Thai Company structure is a common form of land & house ownership for foreigners here in Pattaya
- Leasehold structures of up to 30 years
- Sale/leaseback sometimes used with Thai spouses
1.1.4 The Purchasing Process
The purchasing process includes the following steps:
- Conduct your search using a good property agent
- After offer is accepted make earnest deposit (10-20%)
- Transfer “foreign” funds from your home country
- Negotiate & execute contract
- Conduct home inspection
- Seller obtains “free of debt” letter
- Pre-close inspection (final inventory)
- Pay balance and transfer property at Land Office
1.1.5 Considerations When Buying
- Does the property represent a good investment?
- What type of property do you prefer?
- What area is best for you? What is your lifestyle?
- What size/# of bed rooms do you require?
- What features & amenities do you expect?
- Is the home aesthetically pleasing to you?
- How will you get around?
- Establish a realistic budget; remember that a lower price docs not necessarily mean better value
1.1.6 Choose An Area/Building That Suits Your Lifestyle
Should I Buy a Condo or House?
- Are services and amenities nearby?
- Do you plan to have a car or motor bike, or will you relyon public transportation?
- Is the area more suitable to families or singles?
- Are you open to living in an older building?
- If you have children is there a suitable school?
1.1.7 Condominium Benefits
- Ownership in Foreign name possible
- Better security
- More & better amenities
- Building maintenance
- Stronger resale market
- Many condos located at or near beach
- Restricted privacy
- Rules & regulations (e.g. no pets)
- Generally higher price than house
1.1.8 House Benefits
- More value for the money
- Suits individual lifestyle
- Expanded rental market
- Opportunity to reduce tax upon resale
- Foreigner cannot own in their name
- Owner responsible for security & maintenance
- Generally far from beach/no sea views
1.1.9 Price Indicators for Different “Markets”
- Starter/entry 35,000 THB per sq.m.
- Budget 35,000 to 60,000 THB per sq.m
- Moderate 60,000 to 85,000 THB per sq.m
- High 85,000 to 125,000 THB per sq.m
- Exclusive 125,000 THB per sq.m and above
NOTE: these Indicators are for condos. House prices are generally at least 30% lower
1.1.10 Common Pitfalls of a Property
- Taking “advice” from a purported “expert”
- Buying outside of your budget or have no budget
- Over-paying and not understanding the market
- Not accounting for all of the acquisition costs
- Poor quality, too many repairs, structural defects
- Not enough research on neighborhood
- Poor due diligence, no inspection, etc.
1.1.11 Not using a good property agent
Remember to Budget for All Acquisition Costs
- Purchase price
- Transfer tax 2% of appraised value
- Specific business tax – 3.3% of purchase price (5 years)
- Stamp duty – 0.5% of purchase price (5 years)
- Lease registration – 1.1 % of leasehold value
- Sinking fund (new projects) & prepaid maintenance
- Legal fees (if required)
- Refurbishment, furniture, water & electric meters
1.1.12 Ongoing Costs of Owning
- Building maintenance and security for common areas
- Unit maintenance (garden, pool & pest control)
- Security if owning a house
- Water & electric – check to see if paid direct to utility
- Cable TV and internet service
- Condominium contents or home insurance
- Accounting costs if you own in Thai Company name
- Rental income is subject to a 12.5% tax annually
NOTE: Annual property taxes as we know them in the West currently do not exist. This is a huge benefit to owning property here in Thailand.
1.1.13 Why Should I Use a Property Agent?
- Extensive inventory of properties – not trying to sell only 1 property
- Market expertise & knowledge of area and buildings
- Assist in navigating legal, tax & financing questions
- Negotiate better terms & conditions and price
- A good agent will make sure you consider all costs
- Commissions normally paid by seller (unless buyer enters into a Buyer’s Agent Agreement)
- Assistance with “after-sales” services
1.1.14 Due Diligence for “Off Plan” Purchases
- Understand your personal risk tolerance
- Know the developer and ask the following:
- Copy of land title (Chanote) to verify ownership
- Copy of EIA approval and building permit
- What other projects have they done?
- What is the payment structure?
- Who pays taxes?
- How much for sinking fund & maintenance?
- Are there any additional costs?
- What construction firm is hired to build the condo / home’
- Obtain copy of the standard contract & review carefully
- Ensure the contract includes the following :
- Does the contract clearly indicate Foreign ownership?
- What happens if there are project delays?
- Any penalties?
- Do I have unrestricted rights to sell my contract?
- Contract language regarding size variation should allow for no more than +/- 5% as specified on the floor plan.
- Clarity with regards to what is “standard” in your unit -Construction specifications & floor plan.
- Communal areas should be specified in the contract.
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