Bangkok is a skyscraper city that never goes to sleep. It is one of the top destination cities for foreign tourists and a convenient hub for all transportations throughout the country and Southeast Asia region. The value of its real estate keeps going up and it gives a high rate of rental business and real estate investment. This also includes other big cities like Pattaya, Phuket and Chiangmai. One of the easiest ways to own a real estate for foreigners is to buy a condominium. If you are interested in owning a condo whether for living and enjoying a city for yourself and family or for investment reason, we are happy to help you out!
The main law that you need to know about buying a condo is the Condominium Act. But to keep you from the headache, we summarize all you need to know as below:
1. Qualifications
There are no restrictions on nationality – foreigners who enter Thailand legally (there are no visa-class requirements) may buy and own a condo unit as long as he personally qualifies for real estate ownership under section 19 of the Condominium as below:
- Aliens permitted to have residence in the Kingdom under the Immigration law;
- Aliens permitted to enter into the Kingdom under the investment promotion law;
- Juristic persons as provided in Section 97 and 98 of the Land Code and registered as juristic persons under Thai law;
- Juristic persons which are aliens under the Announcement of the National Executive Council No.281 dated November 24 (current section 4 Foreign Business Act), B.E. 2515 and have obtained promotion certificate under investment promotion law;
- Aliens or juristic persons regarded by law as aliens who have brought in foreign currency into the Kingdom or withdraw money from Thai baht account of the person who have residence outside the Kingdom or withdraw money from a foreign currency account.
2. 49% Foreign Ownership Quota
The law limits the ownership quota in one condo building. That means that within a condo building, not more than 49% of all units can be owned by foreigners, at least 51 % of the condo building must be Thai owned.
3. FET Form
FET stands for Foreign Exchange Transaction, previously known as "Thor Thor 3". The FET form is required by the Land Department Officer for the transfer process taken place at the Land Department. An authorized financial institution in Thailand dealing with the exchange of foreign currency exceeding $50,000 USD (or an equivalent in any other currency) is required to issue a FET form and report this transaction to the Bank of Thailand. For foreigners buying a condo, it is the proof of the compliance of section 19 of the Condominium Act as stated above.
For the exchange of a foreign currency less than $50,000 USD, the bank does not need to issue a FET form. In this case, foreigners can request a confirmation letter for the transfer of foreign currency and exchange into Thai Baht from the bank. This letter contains the same information as the FET form and can also be used for the transfer process at the Land Department.
4. Transfer Fees And Taxes
What else do you pay on the transfer date? Excluding the purchasing price of tondo, here are government fees and taxes you need to know:
- transfer fee (ownership registration fee) 2% of the evaluated price
- stamp duty 0.5% or special business tax 3.3% of the evaluated price or purchasing price, you will have to pay only stamp duty or special business tax depending on the numbers of the years the seller holds the condo
- withholding tax according to tax code which is the seller’s personal income tax
It is not specified by the law whether who is responsible for those costs, so it depends on what you agree on in the sale and purchase agreement and can vary from buyer pays it all to seller pays it all.
Due Diligent
Now you can see that there is some complex in the process, so it is important to take the right steps and make sure that you legally fully own the condo. This is why the due diligent by our expert is recommend. We can draft and review your purchasing agreement and translate to English. We can check if the deed is valid and up-to-date. We can check and request the letter of guarantee issued by the condominium juristic person that the condo unit falls within the 49% ownership quota of the condo building. This also includes no outstanding fees for the unit to the condominium juristic person. We can deal with the FET form and the bank. We can represent you at the Land Department so that you can avoid all the pain!
If you want more information, please do not hesitate to contact us.