Thailand is one of those countries that is often misunderstood, due mainly to a lack of real promotion by the authorities. While there was a coup in 2006 and some confusion and concern after the operation, the situation seems to have calmed down. The military generals are in contact with the likes of the US, with many people confident that “normal” life can soon be restored to the country. For some time, Thailand has been the most popular destination for tourists to the Far East, with many visitors returning to make the country their permanent base. Many have been attracted by the relatively cheap property, low cost of living as well as the potential for the future. The locals have always welcomed foreign visitors and this has reflected well on the country as a whole. The property market obviously suffered from the backlash of the 2006 coup. However for many this has offered the opportunity for Expats in Thailand to pick up some prime property at very good prices. One of the areas of the property market that is showing great signs of development is the condominium market. The main drawback though is the lack of finances and may end up limiting the possible growth of the overall property market. The country is highly dependent on exports and as yet there has been no real effect on trade with the outside world. Contents: Property Market Performance in Thailand | Property Costs in Thailand
Property Market Performance in Thailand
While the property market did stall a little after the coup and the Asian Financial Crisis, as you would expect there are various hot spots that have recovered quicker than others. Demand is currently patchy, and while interest rates are on the way down, and various taxes have been cut to the very minimum, many are awaiting news on planned elections. The majority of observers expect a sharp rebound in the property market as and when elections are confirmed, although the country is in something of a vacuum at the moment. Historically Thai property laws have been rather liberal with no restrictions imposed on new builds. This has affected the secondary market with many investors looking to acquire new properties (of which there are many) rather than acquire a second hand property. In order to boost this area of the property market the government will at some point need to introduce a quota system. Thailand has the largest city in the world in Bangkok, and this has dominated the property market for years. In effect there are really two property markets, Bangkok and the rest of the country. Most foreign nationals are attracted to the area of Bangkok because of the services available, the standard of living, employment and the direct transport links. Another great market in the country is in its rental developments and advise on navigating the vagaries of this system was made at the post at the Thailand Expat Forum last September 2009: Renting a condo in Bangkok is a worthy goal, but you are going about it all wrong. Why is that? Advice #1: Most rentals in Bangkok never show up on the Internet. None of the good bargains ever show up on the Internet. If you use the Internet to find a rental, you will pay double (or more than double), compared to what you would pay if you go in person to similar properties. Thais don’t use the Internet very much. Okay, I know, property owners are often Thai-Chinese or Thai-Indian, but they don’t advertise on the Internet either. So don’t depend on the Internet; go in person. Advice #2: Never give anyone in Thailand money in advance for anything, not if you can help it. Paying 6 months in advance is only asking for trouble. What kind of trouble, I can not predict, but once a landlord here has your money, you are the loser. Advice #3: Christmas is the worst time of year to rent. It is high season in Bangkok. Okay, due to the world-wide depression, this year high season won’t be very high, but, still, landlords will think they can get high-season rates at that time of year. Even though the ruling military have promised to consider elections in due course, there has to be a degree of concern that if a coup occurred in 2006, what is to say this may not happen again in the future. It is doubts like this which are holding the country back from even further economic growth. Once the situation has been resolved the property market should receive a useful boost, but when this will happen is still uncertain.
Property Costs in Thailand
There are two ways to buy a property in Thailand, either through a Thai Limited Liability Company (which will cost £1,000 to set-up, and £50 a month to administer) or through a leasehold agreement This system was echoed in a post at the Thailand Expat Forum last August 10, 2009: I think the authorities are mainly targeting foreign interests that are using ‘loopholes’ to make mass land/property purchases. Doubt they are interested in expats who’ve set up a Thai company just to buy a single house… but TIT – This Is Thailand. Take nothing for granted. I’ve not bought using this method (49% of Thai company) because I am not convinced that the law will not change in the future. Once married to a Thai national I would buy, as under Thai law divorcees split the estate, so the loss would not be so great. (I’m not that much of a pessimist… honest ) But that is a situation that does not apply to everyone. Personally I would either only buy a condo (accepting that on expiry of a limited leasehold I would lose the investment), or would rent. Rental costs are a bargain, and I’ve certainly not regretted only renting over the past few years. Especially as prices have considerably depreciated in the meantime in many areas… The term of the lease needs to be at least 90 years in length. Both are safe ways to buy property, having been tried and tested for a number of years. Other costs will include :
- A local lawyer specialising in property law – fees can be negotiated.
- A Property agent – who is normally paid on results.
- Reservation Fee (for new builds). Once you have agreed to purchase a new build the developer will request a 10% deposit which will be deducted from the final price.
- Stamp Fee. Historically in the region of 0.5%, this fee has effectively been waived for the short term as the authorities try to breath some life back into the market.
- Transfer Fee. Historically about 2% but under review in the short term.
- Structural usage tax. This is based on the assessed rental value of a property, and equates to 12.5% of forecast rental value per year.
- Capitals Gains tax is very low, in the region of 1% and 3%, depending on your level of income.