Reservations
Email: reservations@luxuryvillasandhomes.com
Koh Samui, Tel: +66 81 787 1707
Reservations
Email: reservations@luxuryvillasandhomes.com
Koh Samui, Tel: +66 81 787 1707
We strongly recommend the use of a lawyer on all and any property dealings in Thailand. Please see below a list of Lawyers (with links to their homepages) recommended by Samui Villas & Homes.
McEvily and Collins
Johnson Stokes and Masters
Buying a condominium is perhaps the simplest and easiest option available to foreigners. The only restrictions on purchasing a condominium, are that the percentage of units sold to foreigners cannot exceed forty nine percent (49% - although this has varied at times) of the total number of units in the condominium block; and that the funds used to buy the condominium have been remitted from abroad and correctly recorded as such by a Thai Bank on a Tor Tor Sam. Purchases of condominiums by foreign individuals come under the jurisdiction of the CONDOMINIUM ACT (No. 3) B.E. 2542 (1999).
The owner of each condominium is issued with a certificate of unit ownership. The certificate also has a statement saying exactly what percentage of rights over the common areas of the building each owner has.
Ownership of land is governed by the Land Code BE 2497 (1954), the Civil and Commercial Code, Land Reform for Agriculture Act BE 2518 (1975) and the regulations set forth by the Ministry of the Interior.
Under Thai law, any person can register any type of building in their own name, therefore a foreigner can own a structure (for example a house) erected on the land and may register such ownership (with proof) at the Amphur (local district) Land Office. Certainty of possession of land and house is assured by being the owner of the house. If arranged in this manner, then the house will be separate from the land, and will not be a component part under Civil Law.
Ownership of land by foreigners, on the other hand, is a totally different story, and is highly restricted in the Kingdom of Thailand . Having said that, it isn't impossible for a foreigner to own freehold land, provided they abide by strict rules and fall within certain conditions, such as:
This results in the foreign ownership of the company being limited at 39%, but with changes to the Articles of Association, the use of two tiered stocks (ie. Ordinary Shares and Preferred Shares with different voting rights), plus the foreigner being the only director of the company who can commit or bind the company in any contractual dealings - it is possible to effectively give the minority shareholder control over the company.
When purchasing property in Thailand , it is important to abide by the rules and regulations in order to protect the interests of both the Buyer and Seller. It is highly advisable to use Escrow Agreements when buying or selling property in Thailand - an Escrow Agreement will offer protection and assurance to both the Buyer and Seller.
There are broadly four types of Land Title in Thailand that are used as common evidence of land ownership, possessory rights an other interests in land:
Ask to see a copy of the front and back of the land or condo title deed. A faithful translation of this will show you who the current owner is; if the property has any endorsements or liens; the shape, area and orientation of the property and border to a public property (such as a road, stream or the ocean).
Foreigners generally cannot mortgage properties in Thailand , however, most of the financial institutions in Thailand provide loans for real estate purchasing to Thais and Thai companies. It is common for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in installments from 10 to 24 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan which is financed from a financial institution. The financial institution requires you to mortgage the property with it as collateral against the loan.
Finding the exact appraisal price for land is difficult, since there are generally three different appraisal rates; the government rate, the appraisal company's rate and the rate which is considered to be fair market value of the land. Over the last few years all of these rates have begun to come closer together.
Whether you are considering renting, leasing or purchasing property there are several infrastructure and other considerations which must be taken into account:
Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand . She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners the right to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim.
There are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the west, however, the most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purpose.
Whenever a property in Thailand is bought and sold, there are four taxes that need to be taken into account (many buyers, especially foreigners, fail to take these into account).
Unfortunately, in December 2003 the Cabinet issued a resolution relating to tax issues, and from 1 January 2004 onwards, specific business tax, which is imposed on the sale of immovable property, has returned to the original 3.3 percent rate as a result of the recovery of the property sector. In 2001, the government reduced the property tax to 0.11 percent to stimulate the property sector. Similarly, the transfer fee has also returned to the normal rate of 2 percent instead of the reduced rate of .01 percent
Because of the local system of taxing property on an arbitrary assessed value as determined by the Land Department, rather than true market value, these taxes could amount to a considerable percentage of the purchase price.
Therefore, if you haven't determined during the negotiations that the seller will pay the taxes upon transfer, you could get a nasty shock when a tax bill arrives - often some two or three months after the sale is completed. As in all business transactions anywhere, caveat emptor (let the buyer beware) rules. There are no set rules on who pays for which taxes and it is just another part of the bargaining process - make sure you discuss it with the agent and your own lawyer.
We strongly recommend that you discuss these issues and any queries you may have with a reputable lawyer, (and ensure they carry out due diligence) before proceeding with any property transactions in Thailand . Foreigners do not have equal rights with Thais and always remember the age old doctrine of “caveat emptor” - let the buyer beware.