How to buy a home in Thailand

After having spent a beautiful holiday on the pristine beaches of Thailand, you have now decided to relocate yourself or buy property as an investment in Thailand. But before you go ahead and jump heads in, there are various points you should consider to assure you cover all aspects of shopping for property in Thailand.

How can foreigners buy property in Thailand

As a foreign national you will be limited to certain restrictions protecting Thailand from overselling to foreigners. The majority of the Thai population does not have the financial means to purchase property and thus limiting foreign acquisition has protected Thailand over the years. However, there are several ways to purchase property in Thailand and it has to do with the type of property and how it is purchased.?

Property types in Thailand

The two most popular residential properties for foreigners are condominiums and houses / villas. Both of them are regulated differently.

Buying a Condominium

By law foreigners can own a total of 49% of the total saleable area of a condominium, whereas 51% therefore needs to be owned by Thai nationals. This allows foreign nationals to buy units in their name within the foreign quota and hold their own title deed. When buying a new or used condominium it is crucial for foreign nationals to understand if the unit is under foreign or local quota. If under foreign quota, there stands nothing in the way of a purchase. If under Thai name, also known as local quota, there is another option, as described further below, to open a Thai company.

Buying a House

Buying a house in most cases means buying a plot of land with a property sitting on it. In Thailand owning land has been impossible for foreign nationals until recently when Thailand passed a new law in 2022 allowing a certain category of foreigners to own land. However, if you do not fulfill the strict requirements to own land as a foreigner, or wish to own more than what is allowed by law, you may find your options limited. Yet, there is one, let a company own the land.?

Buying under a Thai company

Since owning land by foreigners has been impossible until 2022 and remains impossible for the largest share of expats in Thailand, owning your home through a company has been a very popular option. Here is how it works.

A local lawyer would offer incorporation of a Thai company at around THB 30,000 and handle all affairs. Foreigners are only allowed to own 49% of a company, unless it is registered under the more regulated Board of Investment (BoI), which is rarely used for acquiring property as a primary residence. This will mean the lawyer will set up directors and shareholders either as per your instruction or use his network to do so. Generally, if you ask your lawyer to nominate shareholders and directors, you may be required to pay an annual fee. Once your company is formed you can purchase land through that company. It does however come with the risk that foreigners are only able to hold 49% of the voting power and thus before nominating the 51% of shares to anyone, it is important to give it considerable thought. In most cases shares are distributed among individuals who do not know each other to prevent them from taking the company away under your feet.?

Check all documents prior making any commitment

As Thailand is relatively unregulated with real estate, you have to assure yourself that all documents of the seller are in order before you go ahead and pay a deposit. This could be a very tricky undertaking unless you are familiar with Thai real estate and read Thai. In most cases a real estate agent would handle these affairs and assure everything is in order. If you appoint a real estate agent you will not only assure documents are in order, but in most cases prevent loss of time and capital. To verify a property, following checks are recommended:

• Title deed (chanote)? is free of debt and able to transfer
• Title deed is in the name of the Seller
• For a house on land assure a building permit is available
• If a company transfers shareholders (as means of changing owners), the property must be listed on the annual balance sheet submitted to the revenue department.?

Appoint a real estate agent

Since Thailand is relatively tricky when it comes to buying and selling of property, a real estate agent is used in almost all cases. It is therefore recommended to appoint an appropriate agent to handle your affairs. However, beware Thailand does not require agents to hold an agent license and thus in many cases are freelancers or inexperienced individuals who wish to earn a juicy paycheck. Verified Agents on deehiy.com have all been vetted and fulfill a set of quality requirements.?

Sales commission

Real estate agents or agencies charge anywhere between 3% to 8% depending on the location of the property. It is generally acceptable to pay 5% in Pattaya whereas in Bangkok 3% is more likely. Sales commissions in Thailand are always paid by the Seller and thus there is no burden from the buyer’s side.?

Payment conditions to buy property

Payment conditions between seller and buyer are negotiated by both parties and once agreed upon a draft Sale / Purchase Agreement is set up either by the real estate agent or the lawyer of the seller. This agreement will include details about both the buyer and the seller as well as payment terms. The generally accepted process is as follows:

1. The buyer will either provide a Letter of Intent to the seller or pay a deposit immediately. In either way the deposit is generally around 10% of the total sales price.
2. Post deposit, a Sales / Purchase Agreement will be drafted for signature of both parties including payment terms. Such may be negotiated, however generally accepted terms would be:
3. 40% upon signing of the contract
4. 50% upon transfer of the property at the Land Office. Once proof has been provided that the full amount is paid, the property is transferred to the new owner.?

Taxes & costs for resale property

When buying property in Thailand, as in most other parts of the World, it does not stop at the asking price. There are additional fees and taxes involved to be paid. Following is a breakdown of these fees:

Transfer fee

The transfer fee is 2% of the appraised value. However, in practice this does not mean that the house will have to be appraised by an official. In most cases no appraiser would ever set foot on a property. Instead, an officer at the Land Office, on the date of transfer, will appraise the value based on the assumed land value of the area, plus the estimated value of the house based on the registered building permit. Even if a building may have been adapted over the years and the building permit is still the original, it would be estimated on the original building.?

Business tax

The business tax is 3.3% of the registered sales price or registered value, whichever is higher. In most Land Offices, but not all, a Purchase / Sale Agreement must be provided as evidence of the sales price, which serves as the basis to calculate the business tax. This tax consists of 3% business tax (based on sales price) plus 10% municipal tax based on the business tax, totalling 3.3%. There are some notes to this tax as follows:

• If the seller is an individual (not a company) the Business tax does not have to be paid if:

1. The seller has possessed the property more than five years before the transfer (the transferred real property has been used as the principal place of residence, and the seller’s name appeared in the house register for not less than one year from the date of acquiring such property).
2. The seller transfers the real property to the legal heir or an heir by a will.
3. The seller transfers the real property to a legitimate child, but not including an adopted child.
4. The seller transfers the real property without consideration to government agencies.
5. The seller transfers the real property without consideration to temples, churches or mosques.

Stamp duty

The Stamp duty is paid directly at the Land Office and is 0.5% of the registered sales price. The Stamp duty is exempt if a Business tax is paid.?

Who pays what tax

Unless you buy directly from a developer, there is no written rule of who pays what tax. In fact it is much more part of the negotiation process to come to terms as to which party pays for what. It is entirely left between the parties to come to terms and finalize such in the Purchase / Sale Agreement signed by both parties prior to a transfer. In a private transaction of property the following division of fees and taxes is recommended:

Business tax: paid by seller

Stamp duty: paid by seller

Transfer fee: shared equally by both parties

Withholding tax: paid by seller

However, it may also happen that the seller has a deal with his agent to negotiate a fixed net amount excluding all taxes and fees. In this case it is the responsibility to assure all fees are covered with the difference from the sales price paid by the buyer and the net price to the seller.?

Taxes & costs for property bought on primary market

When buying property directly from a developer, the buyer may only pay half of the transfer fee, totaling 1%, to the buyer. Under consumer protection laws the developer is responsible in full for specific business tax and income withholding tax and at least half of the 2% transfer fees charged by the land office for ownership registration.