Some Advices: Ownership - Condo or house

Owning Land

There are a number of ways that a foreigner may follow to own freehold land:

• Become a Thai resident/citizen
• Be the principal investor in a new export orientated Board of Investment (BOI) approved company [the current maximum size limit of freehold ownership rights is one Rai of land (1600 Sq.m.)
• Make an approved investment of over 40 Million Baht left for a minimum number of years [the current maximum size limit of freehold ownership rights is one Rai of land (1600 Sq.m.)
• Acquire the land through a Thai private limited company. This involves the incorporation of a private limited company of which the foreigner holds 39% of the shares. The remaining 61% of the shares is held by nominee Thai Nationals who grant an irrevocable and absolute power of attorney over the same. The foreigner retains full control by being the sole director of the company with executive powers. Additional safeguards (if required) include personal loan agreements, the creation of a registered mortgage and/or long lease with pre-paid options to renew
• Acquire the land in the name of a nominee Thai national who then grants a registered 30 year lease (residential) to the foreigner in the foreigner’s own name with pre-paid option to renew for a further two periods of 30 years each. The foreigner may also be given the option to purchase the land should the law in respect of foreigner’s land ownership rights change.

Under Thai law, the foreigner can own the structure (for example a house) erected on the land. Additional safeguards (if required) include personal loan agreements and/or the creation of a registered mortgage and an agency agreement.

In practice, the method favored the most by foreigners is to acquire land through a Thai private limited company, and this is the way we recommend for our clients most frequently. The additional advantages are that it establishes a business presence in Thailand and it may be the employer/sponsor in the foreigner’s application for a non-immigrant visa and/or work permit. If you decide to purchase you new home from us, we will assist you in helping to set a company up in Thailand for the purpose described.

Condominium Versus House Ownership
This is one of the fundamental choices you will have to make when you decide to purchase a property here in Thailand. The government has relaxed the rules on Foreigners owning Condominiums, and it is now possible to buy and sell these without too much restriction, the Law relates to the percentage of Apartments in the development which are owned by foreigners, which means not more than 47% can be foreign owned in one development.

However, as you will quickly find out when you research them, Condominiums are in fact very expensive when you compare the floor area you get for your money. And when you compare the area of Land you would own for your “exclusive use” as a house owner against the small space a condominium offers, then it would appear condo ownership is a very expensive option indeed.

The advantage of a condo is that if you plan to be away for long periods, all maintenance is taken care of for you, and also you will usually have security on the development. However, we at Thipurai Development have helped many of our customers find domestic staff, and when you take out “management” fees, you will be very surprised at the low cost!

Another big consideration is to research as much as possible on the Management Company who owns and operates the Condo. If the place is well managed there will be a good track record. Check there is a “sinking fund” for large items of maintenance. Lifts for example are very expensive to service and replace when worn out. If no such fund is in place, or if there has been, and the company has trouble and the money somehow “disappears”, then the Condo Owners can be faced with a very large bill indeed if emergency repairs need to be carried out. Check out the company as thoroughly as you can before investing. Many companies are run well, but many are not!

If you own your own place, you control your own destiny. For example, your pool filtration equipment needs replacing, you find the cheapest quote, and get it done when you can afford to. No one is there to make that decision for you!! And no one is there to add their percentage, or take a back hander from the contract!

Condos usually offer prime locations, and excellent facilities – more than the average home owner has space for, or can afford. But what’s to stop you joining the Gym at the Hilton in Town, open now for private memberships at very reasonable monthly cost….?

The money you save on expensive Condo management and maintenance charges will more than outweigh the cost. And finally in your own house, you won’t have some-one clonking around at 2.30 am above your bedroom or through the party wall – that is of course unless you have invited them!

Bank launches mortgages for foreigners
Bangkok Bank has broken ranks with the Thai banking establishment to become the first Thai bank to offer mortgages targeted firmly at foreigners wanting to buy property in Thailand..more..