A Guide for a foreigner to Purchase Property in Bangkok, Thailand

1. Location is the key. Select the location that best suits your needs and lifestyle 
2. The purchasing process. It is recommended to use a real estate agency for their expertise in the market.
3. Understanding freehold and leasehold property options
4. A checklist of necessary documents
5. Payment of the deposit. What percentage is typically required
6. Signing the Memorandum of Understanding (MOU) 
7. Completion of the property transfer documentation, including the FET form and associated documents
8. Finalizing the property transfer process
9. Additional considerations may include understanding local regulations, assessing property value and exploring financing options

1. Location is the key. Select the location that best suits your needs and lifestyle 

When it comes to purchasing a property in Bangkok, one of the most important key factors to consider is the location of the property that you will be investing in. To determine the location of your future home, you will need to take into consideration your needs and lifestyle. Since Bangkok does have many different areas that have such a unique and prominent character including all the facilities that cater towards specific ways of life, you do have so many options to choose from. If you are enjoying the nightlife of Bangkok, living in Sukhumvit or Phrom Phong would be the best idea since you can walk from your place to all the nightlife spots. If you are more into an area that is not too crowded, choosing the location that is a bit further away from the city center would be best fit for you. Most of the areas in Bangkok, regardless of whether they are in the city center or not, are all fully equipped with facilities, entertainment, malls, public transport, and medical and healthcare services. However, for foreigners in Bangkok, living in the city center could give you more access to international communities as well as experiences. For example, you will be able to easily find restaurants of different cuisines from all around the world in the area like Sukhumvit, Silom, or Ploenchit. 

For foreigners working in Bangkok, another thing to consider is the distance between your office and your future home. You might want to do some research on the traffic in the area of your interest to determine if it will be convenient for you to travel to your office. The property that is within walking distance of the subway or metro station would be a great option to consider as well if you are not planning to drive. 

2. The shortcut to the purchasing process through the use of a real estate agency for their expertise in the market.

Another thing to be mindful of is the purchasing process of the property. You will also need to know all the rules and regulations, as well as restrictions for foreigners to purchase property in Thailand. It is recommended for you to consult with a local real estate agent to explore the property market that fits your preferences and financial budget. Whether you are searching for a place to live in Bangkok or a property for investment, exploring the market with an expert in this area is essential to ensure that you will get the property that best meets your wants and needs. To find a good or reputable real estate agent in Thailand, you might want to start from doing an online research and specifically look for agents who have experience with international clients to ensure that there will be no language or communication barriers and that the agent does know all the rules, regulations, and restrictions when it comes to foreigners purchasing real estate in Thailand. Secondly, you can ask for recommendations from the expat communities, for example, facebook groups or expats gathering events since some expats do have more experience than others and have extensive knowledge or even network in the real estate industry. Lastly, once you have the list of the agents, you might want to look for a review online and meet up with the agents to see if they are a suitable option for you.

Although you can seek help from the real estate agent, it is also important for you to know the basic rules, regulations, restrictions, and process of purchasing real estate in Thailand. According to the laws, foreigners can own up to 49% of the total unit space in a condominium project and the remaining 51% must be purchased by Thai nationals or entities. Foreigners cannot directly own land but can lease it long-term for up to 30 years or set up a Thai company to purchase land. However, they are legally allowed to own freehold condominiums but with the 49% restriction as mentioned above or buildings/ structure of a property, separate from the land they are on. 

3. Understanding freehold and leasehold property options

Freehold property in Thailand grants you an absolute and indefinite right to own property legally. This kind of ownership is usually considered as the most secure option for investing in real estate, particularly for people looking for long-term security and authority over their property. However, please be mindful that as a non-Thai national, Thai laws only allow you to legally own freehold condominium units but not the land. Purchasing a property under freehold terms allows you to have absolute ownership over the property for an indefinite period of time in which your name will be registered and listed on the title deed as an absolute owner, and this is officially recorded at the Land Department. However, purchasing a condominium under freehold terms comes with higher transfer and registration taxes payable at the Land Department, with the amount of 6.3% of the property value with additional administrative and transfer fees. 

The pros of freehold ownership are as follows;

• Security and absolute control: Owning a freehold means you have indefinite rights to the property, giving you long-term security and the freedom to manage it however you want.
• Opportunity for Value Growth: Freehold properties usually increase in value as time goes by, which can lead to financial gains and make them a solid investment for the future.
• Total Ownership Rights: As an owner, you have full control over your property, allowing you to renovate, sell, or transfer it to anyone without having to ask for permission from the legally registered owner.

The cons of freehold ownership are as follows;

• Higher Initial Investment: Buying a freehold property typically means you need to spend more money initially than if you were getting a leasehold property.
• Complicated Legal Processes: Dealing with the legal aspects of freehold ownership can be tough, and it is advisable to have a legal expert to ensure that you are following all the rules of Thai property law.

Leasehold is a way of owning property where the lessee gets the right to use a specific piece of land or building for a set period. In Thailand, a leasehold agreement means that the property owner, or the landlord allows the leaseholder to use and live in the property for a limited time but without owning it. You have an option to purchase a property under leasehold terms in which you will receive a long-term lease that typically valid for a maximum of 30 years, with an option to renew. In this setup, you are the lessee, while the lessor retains full ownership of the property. This means you do not actually own the property, but you have the right to use it for the length of the lease. However, you can also sell the property at any time by transferring your lease on to a new buyer. To provide more legal protection, Lease agreements must be registered with the Land Department. The registration fees for leasehold properties are much cheaper than those for freehold properties, costing just 1.1% of the property’s value, making leasehold ownership a more affordable option.

The pros of leasehold ownership are as follows;

• Lower Initial Investment: Leasehold properties often require a less amount of initial payment compared to freehold properties, making them more accessible for many buyers.
• Flexibility for Short-term Stays: Leasehold arrangements can be advantageous for those planning on temporary or shorter periods of stays or temporary business operations. It offers flexibility without the need for long-term commitment and a high amount of financial investment. 
• Cost-Effective Registration: Since the total registration fees for leasehold properties are only 1.1%, making it a cost-effective solution compared to the higher costs associated with freehold ownership when it comes to registration with the land department.

The cons of leasehold ownership are as follows;

• Limited Long-Term Security: When you own a leasehold property, you don’t have the same long-term security as you would with a freehold. Your rights to the property only last for the duration of the lease.
• Potential Issues with Lease Renewal: Renewing a lease can be tricky and isn’t always guaranteed, which can create uncertainty for the person leasing the property.
• Less Control: Leaseholders have fewer rights than freehold owners, meaning that any major changes or renovations usually need the landlord’s approval.
• Limited Ownership Duration: Unlike freehold ownership, leasehold agreements have a specific time limit, which can affect how valuable and appealing the property is in the long run.

4. A checklist of necessary documents

For the necessary and required documents during the process of purchasing a property in Thailand, you can hire a lawyer or a real estate agent to assist you in going through all the administration and paperwork. However, the below are the checklist of all the necessary documents which you will be asked to prepare.

1. Personal Identification Documents

• Passport: A valid passport with at least six months of validity.
• Visa: A long-term visa/stay permit (if applicable) or proof of legal residency in Thailand.

2. Financial Documents

• Proof of Funds: Bank statements or proof of transfer for the funds used to purchase the property.
• Tax Identification Number: You may need a Thai Tax ID number for tax purposes.

3. Property-related Documents

• Title Deed or “Chanote”: The official document proving ownership of the property from the seller’s side.
• Land Registration Documents: Registration details from the Land Department.
• Building Permit: If applicable, especially for newly constructed properties.
• Condominium Documents: If purchasing a condo, the condominium declaration and Rules and Regulations or By-Laws of the Condominium
• Common Area Fees: Documentation related to common area maintenance fees for the condos.

4. Legal Documentation

• Sale and Purchase Agreement (SPA): A legally binding document outlining the terms and conditions of the property sale.
• Power of Attorney (if applicable): if someone is representing you to perform legal acts on your behalf, a power of attorney letter and identification card of the authorized person or a copy of the identification card and a copy of the house registration (photocopy) certified by the authorized person.

5. Due Diligence Documents

• Property Inspection Report: A report on the property condition, often required for due diligence.
• Certificate of Utilization: Verification that the land can be used for the intended purpose.
• Tax and Utility Bill Receipts: Current bills to verify ownership and that there are no outstanding dues.

6. Additional Documents (if applicable)

• Marriage Certificate: If purchasing jointly with a spouse, especially if one is a foreigner.
• Birth Certificates: For joint ownership with dependents as applicable.
• Employment Letter or Business Registration: If you plan to buy under a company.

7. Legal Advice and Representation

• Hire a Lawyer: It’s highly advisable to engage a legal professional with experience in Thai property law to assist in the transaction and ensure all documents are in order.

Please ensure that the property transfer is registered with the Land Department to officially record your ownership.

5. Payment of the deposit. What percentage is typically required

For the payment terms when it comes to purchasing a property in Thailand, there are differences for when you are purchasing a condominium unit off-plan (pre-construction phase before they are built) or a unit that has already been built.

The process of purchasing a resale condominium unit is pretty straightforward. Once a sale price has been agreed between the buyer and seller, the buyer is required to pay a deposit to the seller. The percentage depends on the negotiation between the buyer and the seller but one (1) percent is considered to be a normal figure for a resale condominium unit. Once agreed, both parties then sign the sales and purchase agreement which details the sale transaction, and change of ownership including payment terms. Once the full selling price has been paid to the seller, the official transfer of ownership can then take place at the local land office. 

As for purchasing a condominium unit off-plan, payment terms and deposit will be different. Since off-plan projects are purchased before the building is completed, the sale of the units will be used to fund the construction of the condominium too so it is recommended to buy from a reputable developer to ensure a safe investment. The payment plan will be dictated by the developer and typically a reservation fee needs to be paid to secure a unit. The first deposit is usually between ten (10) and twenty (20) percent of the unit price which is paid once the sales agreement is signed. The buyer then has to pay installments throughout the construction phase with the final lump sum payment of usually 50 percent of the sales price which is due once the condominium is completed. After that, the new owner can be legally and officially registered on the title deeds.

6. Signing the Memorandum of Understanding (MOU) 

A memorandum of understanding or MOU is the first stage in a sale before signing the final formal contract. An MOU is a nonbinding agreement in which the buyer and seller outline the essential terms and conditions of the property sale before a formal purchase contract is executed which includes requirements and responsibilities that both the buyer and seller must fulfill and meet before the process can continue. However, the MOU is not legally enforceable like a contract but it signifies the intention of both parties to move forward with the transaction under the specified terms mentioned in the duly signed MOU. 

Here are some information and details which should be listed in the MOU.

• Parties Involved: Names and contact details of the buyer and seller.
• Property Details: Description of the property, including its location, size, and type.
• Purchase Price: Agreed purchase price and payment schedule or deposit amount.
• Terms and Conditions: Specific terms related to the transaction, such as payment methods, financing options, or contingencies, for example, property inspections, and approvals.
• Timeline: Dates for the completion of the sale, including when the final contract will be signed and when the transaction is expected to be completed.
• Termination Clause: Conditions under which either party may terminate the MOU.
• Legal Considerations: An acknowledgement that the MOU is not a legally binding contract but represents the intentions of both parties.

The MOU is significant in a sense that it provides clarity to both buyer and seller on their intentions and the terms of the agreement. Although it is not considered as a legal enforcement, it could signify the commitment to proceed with the buying and/or selling transaction. The MOU can also be used as a basis or starting point for all the details, terms and conditions for the drafting of a purchase agreement/contract which will be legally binding.

However, it is recommended to seek legal advice or service from a local lawyer who specializes in real estate transactions to assist with the review of the MOU. The local lawyer could play a crucial role as It is important that the MOU is translated accurately and that you understand all terms before signing in case it is in Thai.

7. Completion of the property transfer documentation, including the Foreign Exchange Transaction form (FET) and other associated documents

One of the key documents for purchasing or transferring property for foreigners in Thailand is the Foreign Exchange Transaction form (FET). It is a form required to ensure that the purchasing and transferring process is in compliance with Thai regulations regarding the ownership of property by foreigners in Thailand. It is a document to report foreign currency exchange transactions in Thailand and the document also proves the exchange of foreign currency into Thai baht inside Thailand. This document is also used as proof that the property is purchased and paid by a foreign currency that has been remitted to Thailand as it is required under section 19 of the Thailand Condominium Act that foreigners must use foreign currency that has been remitted to Thailand to purchase the property. A non-resident foreigner buying a condo in Thailand must be able to provide the FET form issued by an authorized bank in Thailand to the land department in order to qualify for a registration of foreign ownership of a condominium unit. The foreign exchange transaction form must show the foreign purchaser’s name either as the sender or receiver of the money from the overseas bank.

The FET form is issued by the authorized financial institution (bank) in Thailand that will process the exchange of foreign currency. The FET form should contain the following information:

• the amount in foreign currency which will be transferred ( the amount should be at least in a full purchase price for the condo)
• the converted amount in Thai Baht 
• the name and contact details of the money sender
• the name and contact details of the money recipient
• the purpose of transferring the money – is to purchase a condo

The FET form can be obtained from the bank in Thailand which will receive the money in the foreign currency (the recipient bank). To do so, the bank might ask you to provide the documents as follows;

• Your original passport
• Copy of the duly signed condo purchase agreement by the buyer and the seller
• Copy of the title deed of the purchased condo

8. Finalizing the property transfer process

To finalize the property transfer process, these are the key outlines of the process in general.

• Due Diligence: Ensure that the seller has the right to sell the property and that the property has no encumbrances.
• Sale and Purchase Agreement: Draft a sale and purchase agreement which outlining the terms and conditions and ensure that both parties sign the agreement. 
• Transfer of Ownership: Both buyer and seller should go to the local Land Office to initiate the transfer or assign someone with the power of attorney documents. Also, bring all the necessary documents, including the original title deed, personal identification document(s), and any related agreements.
• Payment of Taxes and Fees: The buyer typically pays the transfer fee (2% of the assessed value) and possibly other taxes as applicable.
• Finalizing Registration: Submit all documents at the Land Office and once approved, the title deed will be transferred to the buyer.
• Post-Transfer: Register the change of ownership with local authorities and update any related utility accounts.

In addition to the process, the key documents in which you will need to ensure that they are all ready to be presented at the Land Department are as follows;

• Sales and Purchase Agreement: This outlines the terms of the sale.
• Title Deed (Chanote): The official document proving ownership of the property.
• Identification Documents: Passport and a visa as applicable.
• Transfer Application Form: This form is usually provided by the Land Department.
• Evidence of Payment: Receipts or bank statements proving payment for the condominium.
• Tax Documents: Specific business tax (if applicable) and income tax on the transfer (if applicable).
• Building Management Documents: If applicable, documents related to management fees or regulations.
• Certificate of Ownership: It might be required to confirm the seller’s ownership.
• Power of Attorney: If someone is processing a transfer on behalf of the buyer or the seller.
• Foreign Exchange Transaction Form (FET): showing the transfer of funds in a foreign currency to a Thai bank to purchase the property.

9. Additional considerations may include understanding local regulations, assessing property value and exploring financing options

Purchasing and investing in a property involves a lot of funds and that is why it is important for you to take into consideration all the small details and information that could contribute to your decision to buy the property that you like as well as contribute to the whole process of purchasing until it is finalized and registered under your name. 

Firstly, it is very important for you to understand the local laws and regulations. You should familiarize yourself with zoning laws, building codes, and any other regulations that could impact your investment. Secondly, you should assess the property’s value. You can simply conduct a thorough market survey and analysis to determine the fair market value of the property through the comparison of all the properties in the same location or area that share similar characteristics and with similar conditions. Thirdly, you could also explore financing options available in Thailand to help ease the pain of financial burden. You could look into different financing methods, such as traditional mortgages or alternative financing like bank loans. Some local Thai banks do offer financing services to foreigners but with strict terms and conditions.

You can then compare interest rates, terms, and requirements. You should also consider and define your investment goals and strategy, if any, if you would like to purchase a property for rental income, to resale it, or just for personal use. Also, do research on any tax benefits or liabilities associated with property ownership and investment.