What's the current economic climate like there?
Over the last 20 years the infrastructure has improved ten fold, Koh Samui is now recognized as a fully fledged tourist destination, this tiny island has international hotels, hospitals, schools lots of pubs & restaurants. As this paradise island grows up from being a tropical resort to a fully serviced community, it is now feasible to become a long term foreign resident.
There are various routes to becoming a resident in Thailand, the requirements change all the time but normally involve, work permit & visa, bank investments or business ownership.
Retirement visas are an option but these are of course based on age and the individual will need to demonstrate a deposit of pension income being brought into Thailand on a regular basis.
Can I Own a Condominium in Thailand?
A: 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%) 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 B.E. 2535 (1992).
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.
What is a Tor Tor Sam?
A Tor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Tor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Tor Tor Sam must specify that the remittance is solely for the purpose of purchasing a property - Code 5.22.
Do they have Title Deeds in Thailand?
A Title Deed is the purest form of evidence that an individual owns a piece of land. Title Deeds are given only for areas of Thailand which are surveyed. For areas which are not surveyed, there are other documents for land possession such as evidence of the possession of the right to utilise the land or other interests in the land. These documents are called "Nor Sor Sam (3) and Nor Sor Sam (3) Kor". Unlike the Title Deeds, these Nor Sor documents are issued to show the possessors' exploitation of the land. Though these documents do not provide ownership rights, as do Title deeds, they can still be registered for transfer of the lands for which they are issued.
Can I Get a Mortgage Loan?
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.
Land Appraisals and Valuations
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. With the East Coast team's wealth of experience in Thailand, they are well placed to assist you in valuing various properties proposals.
What Should I Look for in a Property?
Whether you are considering renting, leasing or purchasing property there are several infrastructure and other considerations which must be taken into account:
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Location - Roads, proximity and access to business, shops, hospitals and etc.
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Telephones - Access to direct lines and IDD facilities
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Water - Mains water and supplementary storage facilities.
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Electricity - Mains connection, and backup generators for condominium blocks
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Security - 24 hour security service, door and window locks
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Cable or Satellite TV connection
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Pest Control - localised spraying and flywire screens on windows
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Hot water facilities - nearly all in Thailand are instant and not storage
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Air Conditioning - a necessity in Thailand
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White Goods - Refrigerators and Washing Machines
My Wife is a Thai National, Can She Own Land?
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.
Are There Property Taxes in Thailand?
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.
What Taxes or Costs are Applicable?
On all purchase/sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 0.01%, a business tax of 0.11% levied against an owner who has been in registered possession of the property less than 5 years, and Income Tax. There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 1.0 - 3.0%) on property is the comparable replacement. There are no set rules on who pays the income tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership.
How is the price of any plot of land determined?
Prime beach land in areas like, Maenam, Bophut, Chaweng and Lamai can cost up to forty times that of a plot that's situated inland. Another factor that you should take into consideration is if there is any infrastructure in place or due to be installed soon. Plots that come with full infrastructure i.e. Water, Electricity and a Road will generate a higher price than those that don't have the infrastructure in place. A public owned road is by far sought after most.
Measurements in Thailand follow the metric system. Land prices are quoted in Baht per Rai or for smaller plots of land the prices will be quoted in, Baht per Wah or Square Metre
Can a Foreigner own land?
No id the real answer. But a foreigner can set up a Thai company but will only be allowed to have a 49% stake in that said company. A Foreigner can however, own a building that is separate from the land, which when coupled with a renewable and registered 30 year leasehold is regarded by many as being as good as owning the freehold.
With any of the information supplied here it is meant as a guide, you should ALWAYS seek legal advice.
Freehold vs. Leasehold?
Since a foreigner cannot own the land outright, registered leaseholds with appropriate extensions are the same equivalent to freehold. Registered Leaseholds are very safe, not complicated and very easy and simple to set up.
Control of Freehold
The Land Code and the Foreign Business Act does not prohibit foreign control of a Thai majority owned company that owns any land in Thailand.
It is very important that there is a proper legal structure taken on-board to retain effective control over a Thai majority company. Seek professional help.
You could set up a Thai company in order to control the freehold land which you as an individual then in turn lease from the company you own.
You should be fully aware that there are legal responsibilities and tax liabilities when you own and run a Thai company.
What about Property Taxation?
There are 2 types of Tax levied on property in Thailand:
Land Tax Land Tax is a very small tax levied on land ownership it amounts to just a few Baht per Rai per year.
Structures Usage Tax Structures Usage tax is set at the rate of 12.5% on the actual gross value of the property
How do Land Title Deeds work?
Land title deeds are called Nor Sor 4 Jor or you may here the word Chanote these are issued by the Surat Thani Provincial Land Office.
When looking around expect to find many land documents in the form of Nor Sor 3 or Nor Sor 3 Gor these are certificates of land utilization.
All of these are equivalent to land title deeds because in effect they allow the land to be sold, leased or even mortgaged in the same way as land held under a Chanote Title.
A Nor Sor 3 certificate is less accurately surveyed than a Chanote.
The newer Nor Sor 3 Gor is a much more accurately surveyed plot as it is crossed referenced to a master survey of the area and referenced to a corresponding aerial photograph.
We recommend that any foreigner seriously wanting to purchase land should only consider land that is held under a Chanote or Nor Sor 3 Gor. Remember the golden rule, if in doubt, please consult a professional.
How do I Measure land In Thailand?
Land in Thailand is measured in Rai, Ngan and Wah.
1 Rai = 1600 Square Metres
1 Ngan = 400 Square Metres
1 Wah = 4 Square Metress
In order to relate this to Europe sizes
1 Acre = 2.5 Rai approx.
1 Hectare = 6.25 Rai approx.
What do I do next?
If you are happy about taking the next step in making a property investment on Samui then call us for a confidential chat.
