The process of Purchasing a villa (house) in Thailand may consist of several transactions. Since houses are considered as a structure based upon the land, and property law dictates that foreigners are not permitted to own land, generally, a lease of the land is provided for buyers to enter into, and this is where you'll need Juslaws & Consult. Purchasing a villa in Thailand can be transferred separately from the land where it is built since, in Thailand, the Land and the Villa can have different owners at the same time through a lease agreement (long-term). The transfer of ownership of the Villa must be registered with the Land Department or Provincial Office where the land and villa are situated, you may relate such transfer as the right of usufruct under sections 1417 - 1428 of the Civil and Commercial Code of Thailand.
Villas are often exclusive and private and can only be found in specific boundaries within gated complexes. The villas within such a complex often have a similar theme. Buying a villa is very appealing as this offers truly exclusive homeownership within a gated complex, and some even offer excellent facilities within the area. It is to be noted that developers who obtain their license to build these villas must dedicate themselves to building within these specific boundaries. There are many advantages that are offered to general homeowners within the gated complex of villas, such as facilities. Since this home is not located on its own, it generally has property management in that a specific company is dedicated to serving the homeowners' facilities and maintenance such as gardening, electricity, water, and even garbage disposal. These services are usually paid for as maintenance fees on a monthly basis creating less hassle for the homeowner as an individual. With a property manager in place, they may also provide homeowners living in the community of the gated complex with general bylaws to abide by. These are not uncommon and are beneficial to all homeowners.
The process of purchasing a villa in Thailand may get a little complex and may consist of several transactions. Thailand's property law states that houses are considered as a structure based upon the land, since foreigners are not permitted to own land, generally, a lease of the land is provided for buyers to enter into. This will consist of the maximum period of 30 years which would then, once entered into, be registered at the relevant land department located in the area. A separate sales and purchase agreement will also be in place for the purchase of the villa as a separate structure. This will then be attached to the land title deed located at the land department. However, depending upon which area you are purchasing in, this may not always be the case. The other transaction that may be entered into is a lease contract entered into for the maximum period of 30 years for the lease of the land from the developer, and subsequently, the individual building permit of the villa itself will be transferred to the buyer by the developer. This involves the holder of the permit providing a statutory notice at the land department 30-day notice issued by the Land Office to transfer the house in which the developer or seller has to produce to the land office the construction or building permit, the Tor Ror 900, and the House Registration booklet to the land office. Once the 30-day period has expired, the house then transfers to the buyer, and the lease is registered at this time.
Step 1: Find a Property in Thailand
The Real Estate market in Thailand has grown substantially over the past ten years as foreign ownership has steadily continued to increase. If you do plan on purchasing property in Thailand, then you should be wary of the following:
- Whenever you are buying property in Thailand, you must make use of a property lawyer and estate agent. They can help to protect your interests in acquiring real estate.
- Research is essential.
Before commencing your property search, familiarize yourself with pertinent laws and relevant regulations.
Step 2: Setting up Your Thai Company
This step is somewhat outdated in the newer market, but since only a Thai company may own land and not the foreigner buying real estate themselves, some people still find it useful to embark on a property purchase this way. In order to help you make this decision, always consult with a Thai property lawyer before making any serious decisions.
There are different business entities that may own property in Thailand, such as a Thai limited company, so when you decide on a Thai registered company, it is best to know for sure which kind of company you are going to register. If you do end up selecting this option for buying property in Thailand, then you will have to perform legitimate business practices as the company must remain active. You will thus also be liable to business tax according to Thai law, even if the business does not have majority Thai ownership or Thai shareholders in its own right.
Buying a Villa in Thailand
When your Thai Limited Company is registered, then some actions are taken, including consultation with a property lawyer. This lawyer will complete the title search before contracts and title deeds and checked and signed. This step is extremely important because the buyer must be certain that the person selling is the rightful owner of the subject property and is, therefore, the person who is entitled to sell it. Thai real estate has been a target industry for fraud against foreigners in the past. There are several different types of title deeds in Thailand:
-A possessory right title deed is not generally recommended because there has been no substantiation from the Land Department; the only substantiation exists through tax payments made to the Local Administrative Office.
- The standard Nor Sor 3, where the title has been measured by the Land Department yet, so no precise boundaries exist on the land.
- The Nor Sor 3 Gor where the land can be mortgaged, transferred, or sold in the same manner as land that has a freehold title deed. This is land awaiting full title deed.
- A Freehold title deed which grants the holder full rights over the land in question.
If you intend to buy pre-construction projects instead then you should also consult with a lawyer. You will also require guidance on Thailand property taxes and the transfer fee for your villa. It might be a good idea to use a property transfer calculator that allows for foreign currency calculations in order to get some idea of what you are looking at. For further information on foreign ownership and buying property in Thailand, then contact us today for the latest information related to the Thai property market.
The ownership transfer of the villa is done at the land office, but remember that the Land Code and some other Thai laws like the Condominium Act have been replaced with newer legislation. However, the only government authority in Thailand that can perform this administrative task is the land office.
When buying property in Thailand, the following documents are required to transfer the property:
- Building permit;
- Tabien Baan (house book);
- title deed;
- Passport/ID card of the person buying property in Thailand and the individual who legally owned the property and is now selling; and
- Thai home and official documents related to real estate.
These documents are presented to the Thai Government Land Department's branch near you. This kind of transfer of ownership corresponds with immovable property laws and is subject to income withholding (corporate income in the case of a corporate holding), stamp duty, transfer fees, tax, and other specific business tax that is calculated over the appraised value or registered sale value.
Remember that buying a condominium unit is not the same as the question of land ownership for foreign investors in Thailand. A condominium unit is not built on land the same way that a villa is, so it is easier to acquire property through a condominium project in your own name.
Regardless of whether you choose to buy a villa or any other type of property it is suggested that you contact a lawyer or solicitor in order to ensure the correct purchase procedure. It is a must for Juslaws & Consult that you make any transaction following the correct procedure since it is a great inconvenience and headache when you face a problem related to properties in Thailand as a foreigner.
If you want more information on buying land in Thailand, buying a condominium in Thailand, or on real estate due diligence please do not hesitate to contact Juslaws & Consult at our Bangkok or Phuket office to learn more.
