Bangkok Condo Rentals Ltd.

How To Buy A Condo In Bangkok

Condominium Ownership in Thailand 

 

Similar to other countries, the right of foreigners to own a piece of land in Thailand is limited as the Country has to ensure that ownership remains predominantly with Thai people. However pursuant to the Thai law, foreigners are permitted to own a condominium providing they satisfy certain criteria. Purchasing a Bangkok condo may seem complicated but providing all of the correct procedures are followed, its a fairly straightforward process.

 

Eligible Applicants

 

Pursuant to Section 19 of the Condominium Act B.E.2522 (1979) there are only five types of foreigner considered to qualify as owners of condominiums:

 

1. A foreigner holding a resident permit under Immigration law

2. A foreigner permitted to stay in Thailand under the Investment Promotion law,

under the Board of Investment for example

3. A registered Thai juristic entity with at least 51 percent of shares held by Thai nationals

4. A foreign juristic entity which has a received a promotion certificate under the Investment Promotion law

5. A foreigner or a foreign juristic entity bringing foreign currency into

Thailand or withdrawing money from the Thai bank account of the persons who have residence outside Thailand or withdrawing money from foreign bank accounts pursuant to Section 19 bis of the Condominium Act B.E.2522 (1979)

 

Limitation

 

There is one major restriction which aims to limit foreign ownership of condominiums.   According to the Condominium Act, not more than forty-nine percent of the total units in a condominium can be foreign owned.

 

If the condominium block is already held by 49% foreigners, does that mean a foreigner cannot proceed with the purchase? Not necessarily. See the solutions below.

 

Solutions

 

If the foreign-owned quota of the condominium exceeds the limitation, the unit cannot be sold to any foreigners. However there are options available to those who wish to buy a condominium as follows:

 

1. Thai Company Establishment

 

The Company must be 51% Thai owned so it is recognised as a Thai entity which is not restricted from the quota. The ownership of the Condominium will be registered under the name of the Company. Voting rights of any transactions relating to the Condominium or other matters should be controlled and prescribed in the Articles of Association of the Company.

Benefits: The Company is treated as a Thai entity and therefore it has rights which a foreign company does not have i.e. the ability to buy a piece of land.

 

Responsibility: The Company has to declare its yearly balance sheet and make a yearly income tax payment. The accounting, visa and work permit services will be provided by a good law firm.

 

Under Thai Law, a condominium can be registered as a company office. Unfortunately, most Condominiums have regulations which prohibit the use of the unit other than for residential purposes therefore, this may pose a problem.  Therefore, if you are looking to purchase a condominium in order use the address for business purposes, it may not be the best solution.

 

2. Thai Ownership

Buying a condominium under the name of a Thai person is another option. However this option should only be considered as a last resort.

 

Problem: A foreigner wishing to buy a condominium may buy a unit under the name of his/her Thai partner: a girlfriend, a boyfriend, a wife or a husband, people whom they can trust. However as the Thai person will have 100% ownership of the unit, this entitles him/her to constitute any transactions i.e. sell the unit, mortgage it or sell it with a right of redemption over the condominium.

 

A condominium unit which is obtained by a Thai national who has a foreign spouse, whether legitimate or illegitimate, will result in a co-ownership of the unit to the foreign spouse. Therefore it shall be deemed that the condominium unit is wholly owned by the foreigner and governed by Section 19 bis of the Condominium Act B.E.2522 (1979)

 

 

Protection: A good lawyer can provide a Memorandum of Understanding to ensure that even though the condominium is not under the name of the person who makes the payment of the Condominium, the ownership still remains in control of the real purchaser.

 

Due Diligence

 

Condominium and Land

 

A legal due diligence investigation of the condominium unit including the land upon which the unit is being built (the Property) is recommended to be carried out to ensure that the Property is free from any debts and encumbrances i.e. the sale with a right of redemption and/or a mortgage, and also to ensure that the seller has the right to sell and that the property and other facilities are in good condition.  The prices of common fees, water and electricity should, as well, be taken into account.

 

Contract Review

The Sale and Purchase Agreement of a condominium unit is required to be reviewed and amended so as to be satisfactory to both parties and to avoid any misunderstandings or any disputes in the future. This way, both parties are protected under the Law. Once both parties enter into the agreement, the deposit should be placed in order to secure the obligations of both parties.

 

 

Requisite documents for the transfer of the condominium ownership

 

1. Purchaser – a natural foreign person

 

1.1  A certified copy of the foreign purchaser’s passport showing their photo and the latest visa page together with confirmation of their parents’ names, to the Land Official

1.2  Evidence of the foreign currency remittance (Foreign Exchange Transaction Form), or

1.3  A residence permit, or

1.4  A letter of the Office of the Board of Investment certifying that the person has been granted promotion of investment under the law on promotion of investment

1.5  Power of attorney (if any) together with copies of the proxy’s ID card and household registration

 

Remark          A natural foreign person can only own a condominium unit excluding raw land or land with ongoing construction.

 

2. Purchaser – a Thai juristic person

2.1  The Company Certificate

2.2  A list of the shareholders (60% of the total amount of shares must be Thai owned)

2.3  Minutes of the Meeting of the Board of Directors specifying the objective to buy a condominium and the source of the funds

2.4  Copies of the authorised director(s)’s ID card(s) and household registration(s)

2.5  A letter showing a sample of the director(s)’s signature(s)

2.6  Power of attorney (if any) together with copies of the proxy’s ID card and household registration

3. Purchaser – a foreign juristic person

3.1  The Company Certificate

3.2  The list of shareholders

3.3  Minutes of the Meeting of the Board of Directors specifying the objective to buy a condominium and the source of the funds

3.4  A copy of the authorised director’s passport

3.5  A letter showing a sample of the director(s)’s signature(s)

3.6  A letter to certify the particulars of (3.1-3.5) notarised by a Notary Public

3.7  Evidence of the foreign currency remittance (Foreign Exchange Transaction Form) or the remittance in a Thai bank account or  a letter from a commercial bank certifying the remittance or evidence of money exchanged to Thai Baht or a Foreign Currency Declaration Form. The Customs Department requires proof of the withdrawal of  money from a non-resident Thai account, proof of the withdrawal of  money from a Non-Resident account,  or

3.8  Evidence to demonstrate the promotion of investment from the Office of the Board of Investment

3.9  Power of attorney (if any) together with copies of the proxy’s ID card and household registration

 

Remark     A foreign juristic person can only own a condominium unit excluding raw land or land with ongoing construction.

 

 

***Foreign Exchange Transaction Form (FET Form)

 

Foreigners who remit foreign currency into Thailand to finance the purchase of a condominium unit if they buy in their own name must obtain a Foreign Exchange Transaction form (FET) from the bank as proof of such remittance.  The FET form must be filed at the Land Department when the foreigner registers the purchase. If the foreigner remits Thai Baht from abroad, the bank will refuse to issue an FET Form and so the foreign purchaser will be unable to comply with the provisions of the Condominium Act.

 

 

Transfer Process

 

Like a land transaction, the registration of a condo transfer may take up to five hours.  For a newly built condo, the sales agent will usually carry out the transfer on behalf of the buyer.  Otherwise, the buyer should attend to ensure the transfer is registered correctly.

 

If the foreign purchaser cannot attend the Land Office, a proxy can be appointed.  In this case, an official Power of Attorney, Tor-Dor 21, is required.  This is issued by the Land Office.

 

If the foreign purchaser is abroad when signing the Power of Attorney, the document must be notarised. Other forms of Power of Attorney are unacceptable at the Land Office.

 

On the transfer date, the purchaser should bring cash and/or a cashier’s cheque, made payable to the seller representing any balance of the purchase price together with the official fee and taxes (if any).  It is advisable not to hand over such monies until it is clear that the foreign purchaser’s name, with the correct spelling, has been stated in the condo title deed.

 

When the transfer has been finalised, the Land Office will return the owner-amended title deed and issue an official version of the Sale and Purchase Contract together with receipts for government fees and taxes.

 

Once completed, the purchaser needs to contact the utilities companies in order to change the billing name.  The purchaser will need to exhibit the title deed in order to do this.

 

 

Taxes and Transfer Fees

 

All taxes and transfer fees should be borne by both parties equally unless specified otherwise. The following table sets out the taxes and transfer fees payable on the transfer date.

 

Transfer Fee	2% of the registered value of the property price
Business Tax	3.3% of the registered value or appraised value (whichever is higher) of the property price
Withholding Tax	In the case that the seller is a limited company, 1% of the registered value or appraised value (whichever is higher) of the property price

 

In the case that the seller is a natural person, the tax shall be calculated at the progressive rate of the registered value

Stamp Duty0.5% of the registered value. Only payable if exempt from Business Tax

 

Business tax shall be payable if the seller sells the property within five years of the purchase registration date.  However this rule does not apply if the seller, who is named as the owner of the condo in the household registration document, sells the condo within one year of the registration date.

 

A newly built condo will be subject to Business Tax as the Inland Revenue is aware that often the units generate a profit on the sale.

 

The taxes and transfer fees are normally paid in cash however, when a transaction involves large sums of money, the parties may agree to pay such expenses by cashier’s cheque, made payable to the Ministry of Finance.

 

Please note that the above fees and taxes table is not applicable to certain juristic entities, such as a mutual fund.  

 

Office : 02-9394565

 International: +6629394565

  Email: info@BangkokCondoRentals.com

  Web: www.BangkokCondoRentals.com

Top Ten Tips for Bangkok property

Despite the recent political and global economic crisis Bangkok Property prices continue to rise. Surprisingly there is a shift in the forecasted prices rises as more and more investors are looking towards new ‘more for your money’ projects located on Ratchada, Phonyothin, Lad Prao most of which conveniently just a few minutes walk from a BTS or MRT station

Top Ten Insider Tips – Getting to Grips With The Bangkok Property Industry.

1. Sukhumvit, Lumpini and Sathorn are the most popular areas for foreign investors and there is a wide selection hi-end developments commanding some of the highest prices in Bangkok.
2. If being close to the CBD is important and you have a family to consider then  hi end housing villages will be worth considering. Two of the most popular villages are located close to the International School of Bangkok and BAngkok Pattana School.
3. Many investors are attracted to the newly popular riverside developments, with its stunning views and close proximity to a string of Bangkok’s top hotels, including the Peninsula, The oriental and the Shangri-La. The new BTS stations have recently opened making these areas much more accessible and increasing the demand by expatriates.
4. Bangkok’s traffic is notoriously bad epically on Sukhumvit,  most potential tenants will be looking for a home within a short walk to either a BTS or MRT station.
5. With the western influence the standard of Bangkok condominium projects is improving fast, the units are becoming better designed with modern state of the art facilities that can compete with those found in Hong Kong and Singapore.
6. Dozens of new hi end housing villages are being constructed on the suburbs of Bangkok. The villages usually feature great amenities such as children play grounds, tennis courts, swimming pools and often shopping complexes.  These are mostly built in similar style to a high end western a housing development, where the rows of detached houses look the same. These developments are very popular with the middle class Thais.
7. Over the next three years, the amount of new condo developments  will increase, by an average of 6,000 units per year, considerably high when compared with an average of 4,450 units per year during 2003-2007. The result will be high competition among the new developments and less for the older units.This increase in availability should leave bargaining power in the hands of the tenants and buyers.
8. In the coming year 2012, new property projects in central Bangkok have focused more on the middle and upper-middle segments, with the majority of units being one to two-bedrooms in order to offset declining purchasing power.
9. At the lower end of the property market, project development focus in Bangkok is shifting to locations along the recently opened SkyTrain and Subway routes where property can be much better value for money.
10. In the past few years most condo developments have had high percentage of studio or 1 bed units, now due to the shortage and changing living style 2 and 3 bedrooms units are in high demand.

 

So you want to rent a condo or apartment in Bangkok. So how do you go about it? Who do you ask advice from? Who is offering you a good deal? Is the landlord trustworthy? Will you get your rental deposit back?

Lets answer the above questions one at a time with good and bad example of renting in Bangkok.

So how do you go about it?

So you have just arrived in Bangkok, or perhaps you have not even got here yet and are just looking at the Bangkok Real Estate market on the internet. Perhaps you have been to Bangkok before on holiday, or perhaps you have a friend already living in and renting in Bangkok to help you. Any of the above could apply to you, and hopefully this blog article will help explain or at least reassure you of the common practices for renting a condo or apartment in Bangkok.

First of all let’s explain the differences between a Bangkok condo and a Bangkok apartment, as the two are technically not the same. One can be bought, rented and leased out, whilst the latter can only be rented or leased out.

There are of course quite a few other technical and detailed differences, if you want to know more about which one appeals more to you and why then please go to the previous Bangkok Property Blog article which goes into far greater detail:

Ok so assuming you have read the above article and that you are familiar with the differences between Bangkok condos and Bangkok apartments then let’s look at the payment terms of renting in Bangkok.

Fortunately payment terms for renting a condo in Bangkok or for to rent an apartment in Bangkok are the same and also standardized throughout the city. And they are:

1. 2 Months Deposit
2. 1 Month Advance

So a total of 3 months, so a simple example is that you want to rent a condo or rent an apartment in Bangkok for THB 20,000/month then you must give the landlord THB 60, 000 up front. Then after that you only have to pay another 11 months (on a year’s contract) or another 5 months on say a 6 months rental contract.

This is basically the how the financials work in the Bangkok rental market and people who tell you otherwise should be viewed with suspicion. I can guarantee that is you were to call 10 reputable Bangkok Real Estate Agents after reading this blog, then you would get 10 Bangkok Property Agencies telling you the exact some thing.

Who do you ask advice from?

Well of course we would be delighted if you asked advice from us here are Bangkok Condo Rentals Co., Ltd. We could certainly not only offer you free professional advice, but we could also help you find a property in Bangkok at no cost to yourself. In Bangkok property agents do not charge viewing fees and there is no cost to you the client at all, our fees are paid for in the form of commission from the landlords in Bangkok whom we work with.

Our advice in general though would be to approach a reputable, established Real Estate agency in Bangkok. We do not recommend that you try and arrange a deal thorough a well meaning friend or worse still or a freelance property broker here in Bangkok, as we have heard some nightmare stories. Please check out the blog below about such ‘rogue’ traders who pray on expats new to the Bangkok property market.

Rouge Freelance Agents

There are plenty of quality national or international Real Estate brokers in Bangkok who can deal with clients from budgets of THB 10,000 or over so there should be no need to contact free-lance property agents or unprofessional brokers in Bangkok.

Not only will an established Bangkok property broker be able to offer you more security and knowledge, but given their established relationships with landlords they should be able to negotiate you a better rental contract than you could get yourself.

Who is offering you a good deal?

Well of course like any deal or negotiation every deal is unique and there are so many variable to one that it is impossible for me to judge on individual deals in this blog. A Bangkok condo or apartment may have a better than average view of Bangkok city center, it may be in a particularly good condominium building or the amenities in the Bangkok apartment block in which unit you choose may be unsurpassed. What I can tell you though is that I have met dozens if not hundreds of people in Bangkok whom tell me they have the best Bangkok rental deal in town, only to find out where they live and on 99% of the occasions it turns out to be no better than an average deal. In a free market economy like the Bangkok Property Market, you usually end up getting what you pay for.

However you will enhance your chances of getting a good deal by using the knowledge, help and expertise of a Bangkok Real Estate agent.

For general rules of thumb though here is a rough guide to rental prices on Sukhumvit road, the most popular are in Bangkok.

For Condos for Rent on Sukhumvit:

1. Grade C or below – THB 200-300/sqm/mth
2. Grade B – THB 350 – 500/sqm/mth
3. Grade A – THB 600 – 800/sqm/mth

For apartments for rent on Sukhumvit:

1. Grade C or below – THB 150 – 250/sqm/mth
2. Grade B – THB 300 – 500/sqm/mth
3. Grade A – THB 500 – 750/sqm/mth

As you can see Bangkok apartments are generally cheaper than condos in Bangkok, but of course this is a very rough guide and so many variables such as age of buildings, maintenance levels, location, amenities & facilities will all come into play. As will of course the styling of the building and the units within.

And what of the Grading of these apartments in Bangkok or the condos highlighted above. Well mainly they will be more obvious upon visiting the property, but if you are not sure ask your real estate agent for advice.

Is the landlord trustworthy?

Well to be quite honest when you are meeting a person for the first time or renting a property it is difficult to know. There are of course smiling assassins in this world. However if you are working with a trusted Bangkok rental broker with an established company and reputation, then they should know the landlord/ landlady, and by definition should not be recommending them if they are not.

Will you get your rental deposit back?

This is in many ways the easiest to answer.

If you have taken good advice and have chosen an established and reputable property broker, then the answer should be an undeniable ‘Yes!’ as long as you stick to the terms of the rental agreement.

If you do not choose a reputable real estate agent, and or you do not stick to the terms of the rental agreement you have signed, then it is impossible to answer, and I would often urge on the side of caution and say ‘Don’t expect the rental deposit back!’