Anyone who has ever visited Thailand has probably considered what it would be like to buy property in the beautiful country of smiles. Most don’t think, though, that while the costs might be low, there are still several risks of buying property in Thailand.
Some buyers have been able to reap the financial rewards, but while some have been successful in their endeavors, there are also those who have suffered tremendous financial losses. There is always a risk for buying property, but this is heightened when you are looking to purchase property in Thailand, and especially so if you are a foreigner.
In this article, we’re going to take a look at the seven risks of buying property in Thailand, so you can fully educate yourself on the topic before looking into this subject further.
1. A Foreigner Cannot Own Land in Thailand
Few people understand that there is a law in Thailand that prohibits foreigners from owning land. If you are interested in owning, you still have two courses of action you can take.
Traditional houses and townhouses are not allowed to be owned by a foreigner without a Thai national’s assistance.
30-Year Lease
Rather than owning land in Thailand as a foreigner, you can lease land extensively. These leases last 30 years and typically require a foreigner marrying a Thai citizen. The Thai citizen then purchases the land and creates a lease with the foreigner.
If you pursue a 30-year lease of land through Thailand, you want to be very careful that all of the deed information is correct. You’ll also want to ensure that your lease has the appropriate title documents. These are different ways to run into complications later on if you are not careful at the beginning of the process.
Thai Limited Company
The only other way as a foreigner to hold land in Thailand is by setting up a Thai Limited Company. If you choose to set up a Thai Limited Company, the company must be 51% Thai-owned, with the foreigner owning no more than half of its shares.
The one exception to this law is for citizens of the United States, who have a treaty with Thailand allowing them for full ownership in a Thai Limited Company. In these circumstances, the Thai ownership is authorized to sign the company over to you. Keep in mind that when this happens, the Thai immigration office is immediately notified and will closely monitor your business activities.
2. Foreigners Find it Difficult to Secure Financing in Thailand
To purchase in Thailand, you will likely need to seek out financing through a Thai bank. Unfortunately, foreigners typically find it challenging to secure funding through Thai banks. Even foreigners who have resided in Thailand for an extensive amount of time with proven work records and permits will still find it to be a challenge.
Let’s assume you cannot provide a Thai bank with any sort of history that proves you have lived and worked in Thailand for some time. In that case, we highly recommend that you seek funding in your home country instead of Thai banks because of the level of difficulty experienced by most foreigners.
If you intend to have the property under your name, as a foreigner, the money will have to come from another country. Even if by some grace of luck, you can secure funding through a Thai bank, they will bring the money in from overseas, and your loan will be in US Dollars or Euros.
3. Potentially Terrible Build Quality of Condos in Thailand
Since buying condos is the only way for foreigners to purchase in Thailand, we’ll look most closely at this option. When it comes time to buy a newly built condo, you will absolutely have to look very closely to ensure your investment will be worth your money. The government has taken a bit of a hands-off approach in constructing new buildings in Thailand in the last fifteen years due to Bangkok’s skyrocketing property values.
Since the government isn’t closely monitoring these newly built condos, developers have been taking advantage of the market and building nonstop. Because these developers are so focused on building as much as they can as quickly as possible, quality has begun suffering immensely.
Unfortunately, due to the minimal levels of government oversight, most of these newly built condos are under construction again within five years or less of being completed projects.
You might be wondering just how severe these concerns might be, and we don’t blame you. Some examples of cut corners in these newly built Thai condos might be as minimal as inferior quality flooring or as severe as significant plumbing concerns. Needless to say, when you are researching potential condos to purchase, make sure you take the time to look into the details of the build. Reach out to the property developer or seek out legal advice to help you.
4. Run the Risk of Losing Your Deposit in Thailand
Everybody is aiming to sell, sell, sell in Thailand. Because of this, in order to stay competitive, you must submit a deposit to reserve the property you have set your sights on. This deposit will reserve the property in your name until the builders have completed the final build project.
You will typically see deposits consisting of anywhere from 10-15% of the condo’s value in Thailand. Thankfully, this deposit will be deducted from your final purchase price once everything has been completed correctly. It is important to note, though, that you run the risk of losing your deposit if you do not follow through with your end of the bargain. Alternatively, if the seller falls short at some point in the process, you can receive your funds back.
While these are the standard terms of a contract in Thailand, you absolutely must make sure that they are written out in your agreement before you commit to your purchase. Additionally, make sure that you receive a copy of the transaction as well as the contract, should any issues arise later on through the process.
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5. Complications Arise with Passing on Property in Thailand
Once you have become an owner of a condo in Thailand, your next move will naturally be to set up who will inherit your property following your passing. If it is not, it absolutely needs to be on your top list of priorities to handle because the Thai government can make this process incredibly challenging without written consent prior to the fact.
Ultimately, in Thailand, your heirs must be able to prove that they are qualified to own your property. Because this can be up for debate, the most thorough way of proving these qualifications is by having it in writing in your Last Will and Testament.
Not only will you need to have it in your Last Will and Testament in your home country, but also in Thailand to include your Thai property.
6. Fees Associated with Selling Your Property in Thailand
Owning your Thai condo for the short term is not advised due to all of the fees that can be associated with the sale of your property. If you plan on selling your property, you can anticipate an excessive amount of fees, including document fees, taxes, and transfer fees.
7. No Regulatory Protection for Foreigners in Thailand
As a foreigner, when you choose to make any kind of investment, you can typically rely on some type of regulatory protection provided by the country for which you are trying to do business. Thailand, however, is the exception to this rule as it is primarily unregulated.
Since the regulations are minimal if at all existent, real estate agents in Thailand can essentially tell you whatever you want to hear to get you to buy property from them. These lies don’t just include small cover-ups. Real estate agents can tell you lies that could lead to a complete loss of your money, with no retribution to them.
It is also believed that in Thailand, many of the real estate agents work closely with developers and sometimes lawyers, which can also play into some of the deceptions of the industry.
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Conclusion
As you can see, while it is a beautiful idea in theory, there are several common risks of buying property in Thailand. Whether you choose to buy off the plan or a completed property, there are risks associated with both.
Ultimately, it is up to you to weigh the pros and cons of owning property in Thailand. We just hope you take into consideration the risks we have detailed out for you ahead of time, so you are not caught off guard when the moment comes.
If you decide to pursue the property investment, always be sure to take your time and don’t be rushed into any sort of agreement. Visit offices in Thailand, check leases, seek legal assistance, and any other guidance you can to ensure that you are minimizing your risks through the process.
See anything we missed? Let us know in the comments below.