Purchasing a resale property in Thailand offers numerous advantages, from owning a tangible asset to bypassing the uncertainties of off-plan developments. However, navigating Thailand’s property market as a foreigner requires a clear understanding of legalities, processes, and potential pitfalls.
This guide provides a detailed overview to help you make an informed decision while ensuring a seamless property transaction.
Can Foreigners Own Resale Property in Thailand?
While foreigners are prohibited from owning land outright in Thailand, there are legal pathways to property ownership:
- Condominiums: Foreigners can purchase a condo in their name under “Foreign Ownership” if at least 51% of the building’s total saleable area is owned by Thai nationals due to the ownership quota imposed by the Foreign Business Act of 1999. To complete the purchase, funds must be transferred from overseas, and a Foreign Exchange Certificate (FET) is required during registration.
- Houses: Foreigners can own a house but not the land it sits on. They can however, purchase a house through various legal structures such as :
- Leasing land in a Thai partner’s name and securing a 30-year lease with the option of renewing the lease.
- Establishing a Thai company ownership to hold the property (requires thorough legal advice).
Key Steps to Buying a Resale Property
1. Agreement of Terms & Conditions
Before any documents are signed, ensure all parties agree on the following:
- Purchase price: Clearly defined and mutually accepted.
- Reservation deposit: Typically 5-10% of the property price, securing the property and removing it from the market.
- Due diligence: Will the buyer conduct due diligence? Will the deposit be refundable under specific conditions?
- Inclusions: Confirm furniture, fittings, and other items included in the sale.
- Taxes and transfer fees: Decide how these costs will be shared between buyer and seller (usually split 50/50).
- Completion date: Set a clear timeline for the ownership transfer.
2. Due Diligence
Due diligence is critical to verify:
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- Ownership Verification: A title search confirms the seller’s legal ownership and identifies any existing mortgages or liens on the property.
- Property specifics: The property’s size, location, and registration details should match the title deed.
- Legal obligations: Ensure the property is free of debt and that all associated taxes have been paid.
- Chanote Title Deed: Aim for a property with a Chanote title deed (a true land ownership title deed), which offers the highest level of ownership security. If it’s a Nor Sor 3 or Nor Sor 3 Gor, understand the limitations and potential risks.
- House Book(Tabien Baan): The House Book verifies a property’s official residents, confirming the seller’s occupancy claims and revealing any unauthorized tenants.
- Building Permits and Inspections (for houses): Verify that the correct building permits were obtained and necessary inspections were conducted during construction.
- Infrastructure and Utilities: Assess the availability and condition of essential utilities like water, electricity, internet, and sewage.
- Environmental Due Diligence (optional): Consider an environmental assessment, especially for land or properties near industrial areas, to identify potential contamination issues
3. Reservation Agreement & Deposit
A Reservation Agreement outlines the purchase terms and timeline. The buyer then pays a reservation deposit (non-refundable unless otherwise agreed) to remove the property from the market. This deposit is held by the broker, lawyer, or seller.
4. Sales & Purchase Agreement (SPA)
Within 30 days of signing the Reservation Agreement, the buyer and seller finalize the Sales and Purchase Agreement (SPA). This document:
- Specifies the terms of the sale.
- Details the property’s legal description, purchase price, and tax responsibilities.
- Provides a framework for the transfer of ownership.
During this stage, buyers often appoint legal professionals to review the agreement and conduct further due diligence on the property.
5. Settlement & Ownership Transfer
The final step involves settling the balance of the purchase price and transferring ownership at the Land Department. Key actions include:
- Funds transfer: For foreigners, funds must come from an overseas bank account, and a Foreign Exchange Certificate (FET) is required.
- Documentation: The seller provides the original title deed and clearance letters from the condo’s Juristic Office or local authorities.
- Payment: Buyers can use telegraphic transfers or cashier’s cheques for secure payment.
Ownership is officially transferred, and any applicable taxes or transfer fees are paid.
6. Handover
Once ownership is transferred:
- The buyer receives keys and ownership documents.
- The buyer’s name is registered with the Provincial Electricity Authority (PEA) and the condo or project’s Juristic Office for billing and maintenance purposes.
Legal and Tax Considerations
When buying resale property, it’s crucial to understand associated taxes:
- Transfer fees: Usually 2% of the property value, shared equally by buyer and seller.
- Withholding tax: Calculated based on the appraised property value.
- Special business tax (SBT): Applies if the property is sold within five years of ownership.
- Stamp duty: Levied if the property is owned for more than five years.
- Lease Registration Fee (for leasehold properties): A fee is payable for registering the lease at the Land Department.
Engaging a legal professional ensures compliance with these regulations and minimizes risks.
Why Choose Resale Properties?
Resale properties offer distinct advantages over off-plan purchases:
- Physical Inspection: Buyers can visit the property to assess its condition and success.
- Established Infrastructure and Amenities: Resale properties are often located in established areas with existing infrastructure, amenities, and community facilities
- Potentially Lower Prices: Resale properties can sometimes be purchased at a lower price compared to newly built properties, especially in a buyer’s market.
- Immediate Availability: Avoid waiting for construction to be completed.
- Lower Risks: Established properties often carry fewer uncertainties than off-plan developments.
Conclusion
Purchasing a resale property in Thailand is an exciting opportunity but requires careful planning, due diligence, and understanding of legal requirements. Whether you’re buying for investment or personal use, ensuring a smooth transaction involves working with trusted professionals who can guide you through the process.
At Pattaya Prestige Properties, we specialize in assisting buyers with every aspect of purchasing resale properties, from finding the right property to completing legal formalities. Let us help you turn your dream into reality—contact us today to discuss your unique needs.
Frequently Asked Questions
1. Can foreigners own property in Thailand?
Yes, foreigners can own property in Thailand under specific conditions. They can purchase condominiums under “Foreign Ownership” as long as 51% of the building is Thai-owned. However, foreigners cannot own land directly but can explore options like leasing land or purchasing through a Thai company.
2. What documents are required to buy a resale property?
Key documents include:
- A copy of the buyer’s and seller’s passports or ID cards.
- The title deed (chanot).
- Foreign Exchange Certificate (FET) if the buyer is a foreigner.
- Sales & Purchase Agreement (SPA).
- Clearance letter or debt-free certification from the Juristic Office (for condos).
3. What are the typical costs associated with buying resale property in Thailand?
Costs may include:
- Transfer fees (2% of the appraised value, typically split 50/50).
- Withholding tax (based on the seller’s income tax status).
- Special Business Tax (SBT) for properties sold within 5 years.
- Stamp duty (if applicable, 0.5% of the appraised value).
- Legal fees (optional but recommended).
4. What is the role of a Foreign Exchange Certificate (FET)?
The FET proves that funds used to purchase the property were transferred from overseas. This document is mandatory for foreigners registering property ownership and is required by the Land Department during the transfer process.
5. What risks should I be aware of when buying resale property?
Key risks include:
- Properties with existing debts or liens.
- Disputes over ownership if due diligence is not conducted.
- Misunderstanding terms regarding taxes, fees, and inclusions.
- Non-compliance with Thai property laws for foreign buyers.
Working with a professional agent or lawyer can mitigate these risks and ensure a smooth transaction.
