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Property Investment for Expats in Thailand

Submitted: August 2014

Buying property in Thailand is generally not something expats in Thailand would consider. Instead, property investment outside Thailand is generally the preferred option. Overseas property investment is also permitted up to USD10m per year under the Thai exchange control regulations.

From a practical point of view, the buying process should involve a lawyer to help with the due diligence. Overall, the cost of buying and selling a property can be expected to be around 10%.

The good news is that property prices are fairly cheap, even in central Bangkok. So buying a flat in Bangkok is not necessarily something to be ruled out for expats in Thailand.

 

Foreign property investment in Thailand

Foreign nationals are not allowed to buy land in Thailand. Foreign ownership of a freehold flat is permitted, but the block of flats as a whole must be foreign-owned by no more than 40%.

Investment into leasehold property is permitted for foreign nationals. Typically, the tenure lasts for 30-year, renewable.

 

Real estate investment through a Thai company

While this may cost a bit more professional fees, expats may consider buying property in Thailand through a Thai company.

In order to satisfy the foreign investment rules, the company must be no more than 49% foreign-owned. Accordingly, this option is generally for expats with Thai family members.

 

Property rights in Thailand

Property rights tend to be poorly protected. There might be some uncertainty regarding title deeds, as the physical boundaries of a property might not be 100% clear. Asking your prospective neighbour about this might be helpful.

Furthermore, holding a title deed in Thailand will not necessarily give you the right to transfer or lease your property. This is therefore something to check before buying property in Thailand.

Finally, Thai landlords may find it a bit difficult to resolve their disputes with tenants. Evicting a tenant is an easy thing to do in the sense that landlords may do so by calling the police. i.e. without having to go to the court. However, other forms of dispute resolution through the court system tend to be a fairly long process.

 

Thai housing market generally

Thailand is a Bangkok-centred country. From a property market perspective, this means that the market in Bangkok is quite different from elsewhere in Thailand.

In central Bangkok, property prices are typically between USD3,000 and USD3,500 per sqm. This can dip down to USD2,000 per sqm in the suburban areas. Gross rental yields can be around 8%, which is quite attractive given that capital gains are likely over the long term.

Outside of Bangkok, it can be fairly hard to come across reliable housing market data.

 

Mortgaging

In general, Thai banks do not sell mortgages to foreign nationals. As a result, property investment must generally be 100% equity-financed.

If you have a Thai spouse, your spouse may apply for a mortgage for which you can be a guarantor. Check with your bank if this solution is available.

 

Property taxes

There are two main property taxes in Thailand:

  • The Local Development Tax, and
  • The House and Land Tax.

Higher land taxes mechanically shrink property values and rental yields. Prior to purchasing property, it is essential that you check how much land tax and municipal rates you can expect to pay.

 

Contribute

We value input from our readers. If you spot an error on this page or have any suggestions, please let us know.

 

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