Chiang Mai Dream Home Property | Advice to Buyers

 Why Use a Property Agent

The main benefit of using a property agent is that we act as a liaison between buyer and seller. We will obtain a fair price for you and act on your behalf to represent your best interests throughout the entire process. Our commission is paid by the seller so there is no cost to the buyer. Purchasing directly from a developer isn’t going to save money. Quality property in Thailand is generally offered at a fixed price by the seller.

 

The Buying Process

 Always employ a lawyer early in the process. If you do not have a lawyer we can recommend one to you.

 When you agree to buy a property you have to pay a “reservation fee” or “earnest deposit”. This is 10 – 15% of the purchase price. Deposits are non-refundable if the buyer later withdraws from the agreement to buy.

 Closing usually takes 30 to 60 days. This includes the exchange of contracts and settlement of the remaining balance. The title deeds will then be submitted to the Land Department for registration and payment of government duties. The rates for these are calculated as a percentage of the selling price. The rates are :

 Registration fee     -     2%

 Withholding tax     -     1%

 Stamp Duty (if the property has been owned for more than 5 years)     -     0.5%

 Specific Business Tax (if ownership was for less than 5 years)    -     3.3%

 Who pays these transfer of ownership costs is part of the negotiation to buy process, although in many cases both parties agree to share the cost on a 50/50 basis.

 

Thai Property Law pertaining to Foreigners

 Thai law stipulates that foreigners cannot personally own land in Thailand but are able to own the freehold in a building. This means that they can buy a house but not the land under it and around it. However, the Condominium Act of 1979 allowed foreigners to own 49% of the units in a condominium freehold. Buying an apartment in a condominium is now the easiest way for a foreigner to own property. However, be aware that most condominium rules do not allow pets.

 Thai law requires that the funds used by a foreigner to buy property must have been remitted from abroad and correctly recorded as such by a Thai bank. The easiest way to achieve this is to transfer funds into Thailand in a foreign currency and to convert into Thai baht in the receiving bank. The Thai bank will then issue a foreign exchange transaction form. This should be kept in a safe place as it will be needed if you decide to repatriate your money.

 

Foreigners buying a House

 There are three ways for a foreigner to acquire a house (or land). These are :

  1. Long term lease

  2. Buy it in the name of a trusted Thai spouse or partner

  3. Set up a Thai Limited Liability Company to buy it.

 

 House Purchase with a Long Term Lease

 Land can be acquired on a 30 year long term lease, with an option to extend the lease for a further two periods of 30 years each (i.e. 90 years in total). Thus a foreigner can own a house and lease the underlying land. A legal purchase option to buy the land is normally included, which could be exercised if Thai law changed to permit foreign ownership. This is the least favoured method.

 

 House Purchase in the name of a trusted Thai Spouse or Partner

 This is a very common practice. It has the advantage of being straight forward but there is the risk that a break up of a relationship could mean the house being forfeited.

 

 House Purchased via a Thai Limited Liability Company (LLC)

 This again is common practice in Thailand and is an effective and time-tested route. It is essential you use a lawyer who has been recommended to for this purpose. We can help you with this if required. You set up a majority Thai owned LLC, in which you own 49% and the other 51% is owned by Thai nominees. However, you control the company. This can be achieved in various ways and your lawyer will advise on the way that best suits your circumstances. The company is legally able to buy land and hold a mortgage, the same as a Thai individual.

 The downside of this method is the additional costs you incur. There are the legal costs to set the company up and for the company registration fee.  There are also annual costs to file accounts and tax returns.

 

 Land Titles

 There are many types of land title in Thailand. Some are less secure than others. The most secure and preferred title is a Chanote title. Chiang Mai Dream Home Properties only deal in land and houses which have a full Chanote title deed.

 

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