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Buying a house in Hua Hin

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Owning house, land and condominium in Hua Hin

NOTICE: Thai law regarding foreign property ownership changes frequently therefore some of the information on this page maybe dated and innacurate.

We advise asking questions on the property section of our forum if you are unsure of anything and seeking the advice of a Bangkok based lawyer.

Also take a look at the Hua Hin property buyers guide for more information.

Thai law prohibits any foreign national from owning land. There are ways in which you can structure the purchase so that you are the de-facto owner of the land. The following ways can be used in order to fully comply with Thai law at the time of writing:

Limited Liability Company
This is the most popular route getting your dream home as the Articles of Association can be structured to afford the foreign investor greater protection. Thai law stipulates that the majority of shareholders in a company must be Thai. Any company where over 40% of the shareholding is foreign and the business of the company is land purchase would be investigated by the Central Land Office. This is to ensure that there has been no attempt to get around the ban on foreign ownership. Therefore you are in practice limited to 39%. With a restructured Articles of Association, the foreign shareholder can be the only director of the company and the only officer who can undertake contractual dealings on the company's behalf. This, in effect gives the foreign investor control over the company.

Nominee with Lease and Option to Buy
You can use a Thai Nominee to purchase the house/land and have a 30 year lease from the nominee. In order to be enforceable, any lease for a period of longer than three years must be registered, which involves payment of a registration fee and stamp duty based on a percentage of the rental fee for the whole lease term. The original registered lease remains in force and effect even if the property is sold. The drawbacks to a lease include the fact that the parties can contractually agree to renewals, but this right cannot be registered and is not effective against a purchaser of the property, and that the lessee cannot (without the lessor's consent) sublease, sell or transfer his or her interest.

What is the difference between a Leasehold and Freehold?
When you rent an apartment, you sign a Lease. Typically, a lease is for a minimum 12 months in Thailand, although some landlords may consider a shorter or longer term. When you sign a lease, you are required to pay a 2 month deposit which is refundable when you move out, less any charges for damage to the property.

There are 2 types of Land Title Deed: Freehold and Leasehold. Leasehold means that the buyer is only leasing the property from the land owner for a pre-determined period of time. Thai law stipulates that a property sold with a Leasehold title deed is only valid for up to 30 years. Renewal for a further 30 years only is at the discretion of the lease holder (land owner). Property owned by the Crown Property Bureau is always Leasehold. Some private property owners may also sell their property with a leasehold title deed. These are the conditions in operation today (2006), but they may change at any time in the future. Obviously, buying leasehold property has its drawbacks.

A Freehold Land Title Deed, on the other hand, gives full ownership rights to purchasers, including the right to buy, sell, or lease the property, pass it on to their heirs, and to develop the property within the guidelines under Thai law. Foreigners may own a condominium freehold; with full rights of ownership.You should always consult a qualified real estate lawyer before signing any purchase agreement.

Nominee with Mortgage
You can use a Nominee to purchase the house/land and have a mortgage (registered with the appropriate land department office) on the property in your favour. However, in some circumstances the Thai courts have ruled that this was not a bona fide mortgage, but rather it was a mortgage contrived to circumvent the existing laws of Thailand prohibiting foreign ownership of land. It is important to note that only the owner of the land is entitled to mortgage the land; the lessee of land does not have the same privilege.

Usufruct Interest (Sidhi-kep-kin)
Gives you temporary ownership rights to things on or arising from the land. In practice, a usufruct is limited to a 30 year maximum period; like leases, the agreement can be successively renewed. In contrast to a lease, a usufructury interest can be sold or transferred, although it expires upon the death of the holder of the usufruct and therefore cannot be inherited.

Owning a condominium in Hua Hin

Buying a condominium is perhaps the simplest and easiest option available to most foreign nationals.

There are restrictions on purchasing a condo:
The percentage of units in a building sold to foreigners cannot exceed forty nine percent (49%) of the total number of units in the condominium block.
The funds used to buy the condominium have been remitted from abroad and correctly recorded as such by a Thai Bank on a Tor Tor Sam . (Purchases of condominiums by foreign individuals are governed by the Condominium Act B.E. 2535/1992.)
The owner of each condominium is issued with a certificate of unit ownership. The certificate also has a statement saying exactly what percentage of rights over the common areas of the building each owner has.

Thai national property purchases

Prior to 1998, any Thai woman who married a foreigner would lose her right to purchase land in Thailand. She could, however, still retain land that she owned prior to marrying the foreigner. However, the recent (1999) Ministerial regulation now allows Thai national's married to foreigners to purchase land, but the Thai spouse must prove that the money used in the purchase of freehold land is legally solely theirs with no foreign claim to it. This is usually achieved by the foreign spouse signing a declaration stating that the funds used for the purchase of property belonged to the Thai spouse prior to the marriage and are beyond his claim.

Financial regulations

What is a tor tor sam (3) ?
A Tor Tor Sam (3) is an official bank document issued by the receiving bank upon the receipt of foreign currency into your bank account in Thailand. You must request a Tor Tor Sam from your bank when you are remitting funds to Thailand for the purpose of purchasing a condominium, and the Tor Tor Sam must specify that the remittance is solely for the purpose of purchasing a property - Code 5.22.

Title deeds in Thailand
A title deed (chanote) is the purest form of evidence that an individual owns a piece of land. Title Deeds are given only for areas of Thailand which are surveyed. For areas which are not surveyed, there are other documents for land possession such as evidence of the possession of the right to utilise the land or other interests in the land. These documents are called "Nor Sor Sam (3) and Nor Sor Sam (3) Kor". Unlike the Title Deeds, these Nor Sor documents are issued to show the possessors' exploitation of the land. Though these documents do not provide ownership rights, as do Title deeds, they can still be registered for transfer of the lands for which they are issued.

Foreigners generally cannot mortgage properties in Thailand, however, most of the financial institutions in Thailand provide loans for real estate purchasing to Thais and Thai companies. It is common for a real estate developer to arrange for his customers to have a financing package from a financial institution. In most real estate development projects, a down payment can be made in installments from 10 to 24 months. After the down payment has been paid, the sale contract will be made and the balance amount is paid through the loan which is financed from a financial institution. The financial institution requires you to mortgage the property with it as collateral against the loan.

Property taxes

There are no property taxes as such in Thailand that are exactly equivalent to the property taxes in the west, however, the most comparable taxes on properties in Thailand are the Land Tax and the Structures Usage Tax. The Land Tax levied on land is so miniscule, that in practice the body charged to collect it, rarely bothers to do so, and if they do, they usually wait several years until the amount accumulates. The second tax, the Structures Usage Tax, relates to buildings, is collected by the municipal office or district office, and is only applied to properties used for commercial purpose.

Taxes and other costs
On all purchase/sale of property in Thailand there is a stamp Duty of 0.5%, a transfer fee of 0.01%, a business tax of 0.11% levied against an owner who has been in registered possession of the property less than 5 years, and Income Tax. There is no Capital Gains Tax in Thailand, unlike many countries, and Income Tax (usually between 1.0 - 3.0%) on property is the comparable replacement. There are no set rules on who pays the income tax, and it is just another part of the bargaining process, as with all the other costs of the transfer of ownership.

What should I look for in a property?

Whether you are considering renting, leasing or purchasing property there are several infrastructure and other considerations which must be taken in to account:

1. Location: Roads, proximity and access to business, shops, hospitals and etc.

2. Telephone: Access to direct lines, IDD facilities, and Internet connection.

3. Water: Mains water and supplementary storage facilities.

4. Electricity: Mains connection, and backup generators for condominium blocks.

5. Security: 24 hour security service, door and window locks.

6. Cable or Satellite TV connection.

7. Pest Control: localised spraying and flywire screens on windows.

8. Hot water facilities: nearly all in Thailand are instant and not storage.

9. Air Conditioning: a necessity in Thailand.

10. White Goods: Refrigerators and Washing Machines.

Land measurements

1 Talang Mett = 1 Square Meter = 10.7 Square Feet
1 Talang Wah = 4 Square Meters = 42.7 Square Feet
100 Talang Wah = 400 Square Meters = 4,277 Square Feet = 1 Ngan
400 Talang Wah = 1,600 Sqare Meters = 17,108 Square Feet = 4 Ngan = 1 Rai
1,000 Talang Wah = 4,000 Square Meters = 42,772 Square Feet = 10 Ngan = 2.5 Rai = 1 Acre : 1 Hectare = 6.25 rai


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