An exciting opportunity or a legal minefield? In fact it is both. Many foreigners take a chance.
The Thai property market is a closed one. Prices are low and many have bought despite the risks. Property in Thailand may yet be a canny move.
Compared to western values, property prices in Thailand are very low. This is due to the level of economic development, a catastrophic depression that hit Thailand in 1997 but, most importantly the country’s land laws which radically limit foreign ownership of Thai property. Nevertheless, there are some exciting property investment opportunities in areas such as Bangkok, Pattaya and Phuket, where land and property prices are increasing nicely despite the global downturn. Condominiums in Bangkok and holiday properties in key centres frequented by foreigners have good rental potential. If you are a foreigner and thinking of retirement in Thailand, then the prospect of a beautiful property at a fraction of the price in an exotic climate can be simply irresistible.
Caution is the watchword with Thai property and not just financial
Familiarise yourself with the property market and Thai laws governing foreign ownership of property and investment in Thailand, and then think it over more before deciding to proceed with a property investment. The old property rule that ‘the day you buy is the day you sell’ also certainly applies in Thailand. Be careful of whatever property investment you might be proposing to get yourself into. Thailand’s foreign ownership laws in particular Thai regulations regarding property ownership drive the market. One can describe the property laws in Thailand as designed to protect Thailand from being ‘bought out’ by foreign interests.
Hire an independent lawyer to handle your Thai property investment
Certainly never buy property in Thailand unless you have the services of an independent lawyer. Independent means that your lawyer is not linked to those selling the property. All Thai property transactions are in Thai and you are truly at the mercy of your advisors in any transaction. We would also warn all foreigners about entering into a property investment without first doing the homework. This includes, but is not limited to, taking 2-3 legal opinions before hiring a lawyer to handle property investment. In addition to checking out the title to your property, you should also make sure that your site map of the property is correct and that this corresponds with local government files.
Two ways to deal with ownership restrictions on property in Thailand
Firstly, foreigners can purchase condominiums and apartments subject to a restriction on the percentage ownership of each scheme. Aside from this, there are two popular ways which foreigners in Thailand have used to buy land and property. One is to set up a company to purchase the land or a property. This can be a house as well as a commercial property and land. Foreigners cannot own more than 49% with the largest shareholding possible being 39%. However, Thai shareholders can hold shares but these may be non-voting giving control to the foreigners.
30 year lease on your Thai property with an option
The second option is to enter into a 30 year lease on the property with the option to renew for another 30 years. Foreigners can enter into such leases and it is also possible to combine this with option one in a hybrid approach. There are property taxes and legal requirements also to be considered. Any prospective foreign purchaser of a Thai property should talk this through in detail with his/her lawyer in Thailand and allow for the legal costs involved in addition to the price of the property. These routes have been successful up to now in Thailand but the Thai government, in recent times, has been looking closely at foreign ownership of companies and property with a keen eye to reform of the law so that abuses do not occur.
One way not to buy a property in Thailand
One of the other methods of purchasing a house in has led to countless horrors stories from foreigners all over Thailand and elsewhere. It is to buy the property in the name of your Thai wife or Thai girlfriend. Obviously, the horror stories develop when the relationships break down. Foreigners who purchased property in this fashion and who failed to secure their position through a lease or contract have been known to be evicted.
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