How to buy a property in Thailand: a detailed guide for investors
The number of real estate transactions in Thailand has increased in 2023 by almost 50% — for which objects has the demand increased especially noticeably? Read about the turnover of transactions, forms of ownership, the value of real estate in different Thai cities, as well as promising areas for investment in our large guide with analytics and expert commentary.
Forms of ownership in Thailand
In Thailand, foreigners can own real estate in two forms: Freehold (full ownership) and Leasehold (long-term lease). And there are nuances here: a foreigner can purchase an apartment in full ownership (Freehold) only in a condominium (in this case, each apartment has its own owner, but the common territory is jointly owned); if we are talking about buying an apartment in an apartment building, then only long-term Leasehold is available to foreigners.
If there is a goal to buy a villa with land, then a foreigner can fully own only the house (building). A land plot can be issued by a foreign individual only in the form of a long-term lease for an average period of up to 90 years.
To own land, you can create a company in Thailand, since in this case it is allowed to own plots. The share of foreign participation in the company should be 49% or less.
And one more option: Foreigners can invest at least 40 million baht (1,127,714 USD) in a project approved by the Investment Board. This will give them the right to purchase up to 1,600 square meters of land.
The number of transactions and the average cost of real estate in Thailand
According to the Bank of Thailand, in 2023 in Thailand, the cash turnover from real estate purchase and sale transactions amounted to 951,540.99 million baht ($26.6 billion), which is 20% more than the previous year. The maximum monetary turnover was recorded in the Central region of the country, and the largest growth occurred in the East — by 1.5 times.
During the same period, the number of transactions increased by 43% and exceeded 150,000. Residential real estate dominates in the structure of transactions — 93% of the total number of real estate transactions. However, it how to find a property in Thailand is worth noting the increased demand for commercial facilities — transactions with them were made 7.6 times more often than in 2022. The number of land transactions has also increased — by more than 2 times in a year.
The demand in the Thai real estate market is formed by Russians and investors from mainland China and Hong Kong. Also, major investors are immigrants from the United States, Singapore, Taiwan, Japan and the United Kingdom.
- on 03/15/2024
Source: Numbeo.
Buying real estate in Thailand by steps
Here’s what you need to do step by step to buy a property in Thailand:
1. Hire a real estate lawyer
Since this industry is still unregulated in the country, a lawyer will be able to provide you with more security than just a real estate agent.
2. Book an object
The reservation agreement contains detailed information about the parties to the transaction, important information about the object, as well as details of the parties and the payment dates.
The buyer pays 1% of the value of the object as a deposit to the seller, which leads to the temporary withdrawal of the object from sale. The deposit can be paid in cash or transferred to the seller’s account.
3. Check the legal reliability of the transaction
A certified lawyer will be especially useful to you here. He will check the following aspects: the developer, the condition of the object, the presence of encumbrances, arrests, liens and the rights of third parties.
4. Conclude a contract
Shortly after making a deposit, the moment comes to familiarize yourself with the purchase and sale agreement. It includes the following information: the terms of purchase of the object and the method of its registration, the costs associated with the transaction and subsequent maintenance of the object, penalties for violation of the terms of the contract.
5. Pay for the transaction
There are two ways to pay for a transaction in Thailand:
When buying a new building, payment can be made by transferring funds to the details of the developer specified in the contract. This can be done from an account in any country, provided that the account is registered in the name of the buyer. It is also possible to pay from the account of a legal entity where the buyer is the founder.
When buying on the secondary market, you need to open an account in one of the banks in Thailand and transfer money to it from your account in any other country. When registering real estate with the Land Department, the buyer sends the seller a check for the specified amount.
Important. When registering a property in full ownership (freehold), it is important that the funds come from abroad. This fact is verified by the Land Department when registering the transaction. In the case of registration of real estate in the form of a long-term lease (leasehold), the calculation can be made in any available way.
Also note that in In Thailand, you can legally buy a house even with cryptocurrency.
6. Register the ownership right
After making all payments under the contract, the registration of ownership or long-term lease rights is carried out at the Land Department. Representatives of the developer (seller) and the buyer must be present during the registration process.
Closing a deal usually takes 30 to 60 days.
Related expenses when buying real estate in Thailand
Among the additional costs that you will have to face:
The transfer fee is 0.01%-2.00% (paid by the buyer).
The real estate agent’s fee is 3%-5% (paid by the seller).
Withholding tax is 1% of the declared amount or the estimated value of the property, whichever is higher (paid by the seller). The rate may vary depending on the type of property and the circumstances of the sale.
The stamp duty is 0.50%. It is charged upon registration of the transaction and can be paid by both the buyer and the seller, depending on the terms of the contract.
A special business tax is about 3.30% of the value of the property. This tax applies if the property is sold less than 5 years after the acquisition. In addition, a municipal tax of 10% of the amount of the special tax is added to it.
The registration fee is 2% (usually paid by the buyer).
The cost of legal services is negotiable.
Buying a home in Thailand for mortgages and installments
Until recently, Thai banks very rarely offered mortgage loans to foreigners, but now there is such an opportunity. It should be borne in mind that there will be much more chances if you meet the following criteria:
It is legal to work in Thailand is at least 1-2 years old before applying for a mortgage and have a stable income from 80,000 THB — 140,000 THB (€2153-3768).
Have dual citizenship, one of which is Thai. This may simplify the process of obtaining a mortgage, but is not a prerequisite for all banks.
A Thai residence permit will also be an advantage.
At the same time, the initial payment usually varies between 30% -40% of the value of the property, and the remaining 70%-60% can be taken as a loan from a bank.
The interest rate on a 20-year fixed-rate mortgage in Thailand is 5.41%. It may vary depending on the economic situation and the individual conditions of the borrower.
There is also an option to arrange an installment plan from the developer: during construction it will be interest-free, and then 3-5% per annum will go to the balance of the debt.
Promising areas in Thailand for investment
Alexander Chernokulsky, Director of the Zhilfond company He told us that against the background of the overheated island Thai market, investors are increasingly interested in real estate on the mainland.
— Thailand is interesting from the point of view of investments due to the stable growth in real estate prices — if you invest in a condo during the construction phase, you can get an average increase in value of up to 50% by the time the object is completed.
But also after the delivery of the object or when buying secondary real estate, investors can earn on rent. The rental market in Thailand is high-margin, albeit heterogeneous. So, the profitability of renting real estate on Phuket is high in the season, and low in the off—season. In large cities — Bangkok, Pattaya, Chiang Mai — seasonality is not so pronounced: in the season, you can rent an apartment for a long time for 20 thousand rubles. baht per month (about $560), and out of season — about 15 thousand. baht ($420), simply because more options are being released on the market.
According to the Global Property Guide study, in the fourth quarter of 2023, In Phuket, the yield from renting an apartment varies from 5.45 to 6.45%, depending on the location and size of the property, with an average of 5.87%. In Bangkok, the rental yield ranges from 2.19 to 9.52% (average — 4.88%), Pattaya — from 3.24 to 10.04% (average 6.25%), in Chiang Mai — from 5.5 to 7.28% (average 6.32%).
According to our forecasts, in 2024, the most popular destinations for investors will be cities, especially resorts like Pattaya — the city is actively developing, while the real estate market here is still significantly democratic in terms of prices.
In 2026, it is planned to complete the construction of an airport near Pattaya — a transport hub will appear, which will relieve Bangkok and increase the tourist flow in Pattaya. Also, a railway is being built between Pattaya and Bangkok, which is only 150 km away — it will allow you to get from city to city in just 30 minutes. This will certainly affect the cost of m2 in the future, which increases the investment attractiveness of real estate here.
The dynamics of the redistribution of demand from the island part of Thailand to the mainland was noticeable back in 2023. According to the Bank of Thailand, in the first 10 months of 2023, the total volume of transactions for the purchase of real estate in the central region (Bangkok, Ayutthaya, Kanchanaburi), which accounts for about 60% of demand, increased by 17.7% compared to the same period last year.
In the northeastern region (Amnat Charoen, Buriram), the volume of transactions increased by 25% over the same period; in the northern region (Chiang Mai, Lamphun, Lampang) — by 26.4%; southern region (Phuket, Koh Samui) — by 46.3%; eastern region (Chachengsau, Chonburi, Rayong) — by 63%.
“Pattaya is the most promising destination right now.” How investors can make money on investments in new buildings in Thailand — expert
FAQ about buying real estate in Thailand
What are the forms of real estate ownership in Thailand?
Foreigners can own real estate in Thailand in two forms: Freehold (full ownership of an apartment in a condominium) and Leasehold (long-term lease of land or an apartment in an apartment building).
What additional costs may arise when buying a property in Thailand?
Additional expenses include transfer fees, agent fees, registration fees, taxes (withheld, special, municipal), legal services.
What taxes do I have to pay when buying and owning Thai real estate?
Taxes on the purchase amount to about 2-3% of the cost for the buyer. When owning residential real estate over 10 million baht (~$274 thousand), 0.03% of its value is paid annually.
Is it possible to take out a mortgage or installment plan in Thailand to buy a home?
Yes, some Thai banks provide mortgage loans to foreigners subject to certain conditions (stable income, residence permit, etc.). The initial payment is usually 30-40%. As for the installment plan, it will be interest-free during construction, and after that it will be necessary to repay 3-5% per annum on the remaining debt.
What are the most promising areas for investment in real estate in Thailand?
According to experts, the most popular among investors in the coming years will be large cities and resort centers on the mainland — Pattaya, Chiang Mai, Bangkok, etc.
What is the profitability of renting out real estate in popular Thai cities?
According to research, the average rental yield in 2023 was: in Bangkok — 4.88%, in Pattaya — 6.25%, in Chiang Mai — 6.32%, on Phuket — 5.87%.
