Phuket is located in the south of Thailand, surrounded by The Andaman sea with beautiful beaches, spectacular diving, first-class resorts, spas, golf courses, yacht marinas, fine restaurants, vibrant nightlife and excellent shopping. Phuket sees one of the fastest growing property markets in the world with a growing amount of quality projects by international real estate developers.
Phuket Property Buyer’s Tips
- Find a good Agent :: A good agent is essential when going through the process of purchasing property. Not only is there a cascade of rules and regulations, but a good agent will guide you to find the right property. Always be careful when consulting your investment options.
- Find a Lawyer :: An appropriate lawyer will assist in detailing to you all the relevant legalities and proceedings regarding your property. Keep in mind there are a lot of regulations concerning foreign investment, and you cannot always rely on the legal system. A lawyer often works alongside your agent, but you may want to get a separate lawyer.
- Valid Papers :: Make sure the developer has valid papers, such as the title deed that have been verified by the local official land office. Don’t put your faith strictly into an agent or lawyer, as they will not accept responsibility if something goes wrong.
- Location :: You heard it before, and you will hear it again. Make sure to take your time and familiarize yourself with the locations and the area you are interested in buying property. You may not wish to be living permanently among the crowds of tourists that arrive during the season, while other developments are also a little too remote.
- Areas of Tourism :: Make sure you do your research of the area when buying. Some areas are heavily touristic, which will fire the prices higher, and at the same time have disadvantages with exclusivity and privacy.
- Proximity vs Price :: Properties near the beach or with a sea view will often be much more expensive. This may also be the case for properties that are located close to central areas, with easy access to entertainment, services, dining and commerce.
- Houses or Villas :: When buying a new House or Villa, the best advice is to rely on the reputation of the developer, and their previous achievements. Many new unfinished housing projects are sold off plan, and some have yet to be completed.
- Condos and Apartment :: Generally speaking, condominiums have the highest demand of any sector, because they are easiest to own as a foreigner. Thai law forbids foreigners from owning land but has a structure allowing up to 49 percent of a condo building to be foreign owned. Therefore, it is often more practical and secure to buy a condo than going through the hassle of buying separate land. Condos also offer all sorts of shared amenities such as pools, services and fitness centers.
- Gated Communities :: Gated communities are a popular choice for foreign buyers, as they are generally secure, comfortable and may include on-site facilities such as pools, clubhouses and spas. However, such developments tend to be more expensive, as you pay for the prestige of joining the community.
- Property Survey :: Many development projects are built in haste, and the quality of construction both in terms of materials and craftsmanship can vary enormously. It might be wise to employ qualified surveyor services before signing any contracts.
- Positive image towards locals :: Maintaining a positive relationship and a good image with local people is pivotal when relocating. Keep in mind that you are moving into another culture and lifestyle that already exists. Remember that you are investing into the culture and lifestyle that has already been there for ages. This will benefit everyone in the long run. If you can’t handle the local culture, rituals and habits, then it is strongly recommended you search for a property within a gated community with western management.
Property and Land Ownership Rights
If you are considering buying property, the first thing you should know is that under Thai law, foreigners are not allowed to own land. However, foreign nationals do have the right to the ownership of buildings distinct from the land such as condominiums.
Foreign nationals may own:
- A unit in a registered Condominium.
- A building distinct from its land.
- A registered leasehold of up to 30 years for all types of titles land or buildings.
Foreign nationals may not own:
- Freehold land.
- More than 49% of the shares in a Thai company that owns freehold land.
Purchasing a Condominium
Under the Condominium Act (1979) foreigners can own the freehold of 49% of the total unit space in any legally registered condominium building. The purchaser must request a letter of guarantee from the condominium juristic person setting out the proportion of foreign ownership which must be submitted to the Land Department upon transfer of ownership.
Foreign Exchange Transaction Form
A foreign purchaser must bring in 100% of the funds from overseas in foreign currency and will need a Foreign Exchange Transaction Form (FETF) from the Thai bank in order to provide evidence of this to the Land Department. Due to strict money laundering regulations, a FETF is also necessary to avoid complications and remittance tax when repatriating funds should the foreigner sell the condominium at a later date.
The three popular ways for foreigners to purchase land in Thailand:
Registered leaseholds are secure and relatively basic. Furthermore, long term leasehold can be structured to be tantamount to freehold ownership. Normally, the land is leased for a period of 30 years, and renewable a further two times giving a total of 90 years. Security of the possession of land is assured by the fact that you are the legal owner of the buildings which occupy the land. Therefore, the lessor cannot take possession of the property upon expiration of the lease as the property is separate from the land and will not be a component part under the Civil Law.
Limited Liability Company
If you are not comfortable with leasehold, an option is to set up a Thai company that you control, and which can legally purchase land. Put simply, as a foreigner, you are allowed to own 49% of the shares in a Thai company. The rest of the shares must be held by Thai juristic persons (which can be arranged by a lawyer), who will sign over control of their shares to you. The land will be owned by the company. However, as director of the company, you control the voting of the other shares, and therefore you have control over the ownership of the land. Recently the Thai government announced that it will begin investigating the source of money used by the Thai shareholders who own 51% of the shares in the company to determine if they are nominees. The use of nominee Thai shareholders is prohibited under the Foreign Business Act (1999).
Thai Women married to Foreigners
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 women married to foreigners the right to purchase land, but the Thai spouse must prove that the funds used in the purchase of freehold land are legally theirs with no foreign claim. 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.
Thailand Land Titles
There are different grades of land title in Thailand and buyers must ensure that the development in which they intend to buy owns the property through effective title, and that the land they wish to acquire may be developed. There are various levels of title in Thailand enjoying differing levels of security
As a foreigner buying land in Thailand, you should only consider land that comes with a Chanote, Nor Sor 3 or Nor Sor 3 Gor. These can be sold, leased and used as mortgage collateral and are the only titles over which a registrable right of ownership or lease can exist. More importantly, you cannot apply for or obtain approval to build on such land without one of the aforementioned titles. In any event, make sure you have a good lawyer and look over the paperwork before you commit to anything.
True land title deeds are officially called Nor Sor 4 Jor or more commonly Chanote. This is a certificate for the ownership of land and can be used as evidence confirming the right to government authorities. It is issued by the Phuket Provincial Land Office using GPS to accurately plot and survey the boundaries of the land. This is the most secure type of land title, but land with a Chanote can often be hard to find.
Nor Sor 3
The Nor Sor 3 is a document certifying the use of land issued and maintained by the District Land Office to the proprietor of the land but is not a possessory title. That is to say the person holding the Nor Sor 3 has the legal right to possess the land in question and can use it as a legal document. Nor Sor 3 is a floating map with no parcel points issued for a specific plot of land and not connected to other land plots, but its boundaries are recorded according to its neighboring plots. Therefore, it may cause some problems in verifying boundaries due to lack of accurate surveys. Any change in ownership of the land must be publicized for 30 days before it can be registered.
Nor Sor 3 Gor
The Nor Sor 3 Gor has the same legal basis as the Nor Sor 3, with the difference being that in general Nor Sor 3 Gor has parcel points on the map of the land area set by using an aerial survey with a scale of 1:5000. It is a more accurately surveyed title as each plot is crossed referenced to a master survey of the land area and a corresponding aerial photograph. Therefore, it is possible to verify the boundaries of the land. However, it is still less accurately surveyed compared to a Chanote.
A condominium title is a title to a part of a building or buildings with multiple owners, a fractional interest in the land, other common assets (such as a swimming pool) and common parts of the building (such as the stairwell or lobby). The title will state the floor area of the private apartment, the ground area of the common land and the percentage interest, in which that apartment has in the common property. This percentage also represents the voting interest in the condominium company or owners association.
Buildings other than condominiums do not have any form of title document, but their sale or long lease may be registered at the District Land Office. Proof of ownership must be established either from proof of construction or a document showing sale and purchase. Do not confuse this with the House License document, which is only a registration of the house occupants. Transfer of a building, as distinct from its land, requires the posting of 30 days public notice, to see if anyone wishes to contest the ownership. Foreigners may own a building distinct from its land and register such transfer of ownership into their names at the Local District Office or Amphoe.
Thailand Property and Land Taxes
Taxes and fees are usually equally between buyer and seller. Whenever a property in Thailand is purchased or sold there are four potential fees/taxes to be paid. Which of these fees/taxes are applicable depends on the details of the transaction, the seller and the duration of the seller’s ownership. It is also significant to note that most of the fees are calculated relative to the government’s tax assessment value of the property and this value is usually well below the market value.
|Category||Sale of Freehold Land & Property||Transfer of Leasehold Land||Sale of Building||Liability to Tax|
|Lease Registration Fee||N/A||1%||N/A||Lessor/Lessee|
|Specific Business Tax||3.3% or N/A||N/A||3.3% or N/A||Seller|
|Stamp Duty||0.5% or N/A||0.1%||0.5% or N/A||Seller|
|Withholding Tax||1% or 5 – 37%||N/A||1% or 5 – 37%||Seller|
This is based on the appraised value of the property and is normally shared equally between both seller and buyer, although this would need to be agreed by both parties.
Lease Registration Fee
This is based on the total rent payable over the lease term, and is normally shared equally between the lessor and lessee, although this would need to be agreed by both parties.
Specific Business Tax
Specific Business Tax (SBT) is payable by individuals and companies who have owned the property for less than five years. It is based on the official appraised value or the contracted price, whichever is highest. An individual may be exempt from SBT if they have used the property as their principal residence and have had their name in the household registration certificate for at least one year.
Stamp Duty is only paid when SBT is not applicable and is based on whichever is higher of the official appraised value or the contracted price.
Withholding Tax (WHT)
If the seller is a company, the WHT on the sale of the property is calculated at 1% of the official appraised value or the contracted price, whichever is higher. If the seller is an individual, the WHT is based on the individual’s marginal tax rate (except that the first 100,000 baht is taxed at 5% rather than falling under the tax-free threshold) after deducting from the official appraisal price a standard deduction based on the number of years of ownership.
Once you have acquired the property, there are 2 types of tax levied on property in Thailand that you need to be aware of:
This is an annual tax levied on land ownership equivalent a few Baht per Rai. The amount is often so small that in practice the body charged to collect it, seldom bothers to do so. When they do collect it, it is usually after several years when the amount has accumulated.
Structures Usage Tax
This only applies to properties used for commercial purposes. This is applied at the rate of 12.5% on the actual or assessed gross rental value of the property. However, this notional value is well below the commercial market rental value.
If you wish to purchase property in Thailand using Thai Baht, ensure that your funds are transferred to Thailand in foreign currency and converted to Thai Baht in Thailand. The receiving bank will issue a Foreign Exchange Transaction Form confirming the transaction for individual inward transfers exceeding 20,000 US$, which is one of the documents you may need in the future if you wish to repatriate funds without incurring tax penalties.
Thailand Land Measurement
Thailand has its own units of measurements when dealing with land. The units you will come across most often are Ta-lang-wah and Rai. Ta-lang means squared, so one Ta-lang mett is 1 Sq.m. Metric units are used when dealing with buildings in Thailand.
Thai to Metric
- 1 Wah = 2 m.
- 1 Ta-lang-Wah = 4 Sq.m.
- 1 Rai = 1600 Sq.m.
- 1 Rai = 400 Ta-lang-Wah
- 1 Rai = 0.40 Acre (approx.)
- 1 Rai = 0.16 Hectare
- 1 Ngan = 100 Ta-lang-Wah
Metric to Thai
- 1 m. = 0.5 Wah
- 1 Sq.m. = 0.25 Ta-lang-Wah
- 1 Acre = 2.53 Rai
- 1 Hectare = 6.25 Rai