Phuket is one of the most popular places in Asia for investors to buy property. The beautiful scenery, the stunning beaches, and the amazing Thai culture are all obvious attractions.
In fact, Phuket has so much to offer that the potential for this amazing island is immediately evident to visitors.
Whether as a home or an investment property, people are extremely comfortable buying property here. And the type of property most popular among foreigners is the condominium.
In this article, we aim to cover the following areas:
- Why Buy a Condo in Thailand?
- Why Buy in Phuket?
- Understanding the Phuket Property Market
- Is a Condo Purchase a Good Investment?
- What Kind of Return on Investment You Can Expect?
- What’s the Cost of a Condo in Phuket?
- What Are The Best Areas of Phuket in Which to Buy a Condo?
- What Other Costs are Involved with Buying a Condo?
- What to Watch Out For if You Buy a Condo!
- The Full Purchase Procedure When Buying a Condo
- Planning for Inheritance
What is a Condo?
Some people are not familiar with the term “condominium” because that specific legal structure is not used in their home country.
Many people think of condos as multi-storey structures with hundreds of unit, but a condominium isn’t necessarily a type of building, but rather that building’s legal structure, or form of property ownership it offers.
The easiest way to define a condo is a building in which the owners – in additional to their individual units – jointly own everything within the complex. The size of each unit then determines each person’s fractional ownership of the common area.
This means you own a percentage of the gardens, swimming pools, gymnasium, corridors and reception areas, all of which form a part of the common areas. In fact, your title will state the size of your condominium unit, the total common area of the resort, and your percentage ownership of that common area. (Your fractional ownership will also correspond to the voting rights you have within the owners association.)
It is this favourable legal structure which compels many investors to choose to buy a condominium over any other type of property.
Why Buy a Condominium in Thailand?
A condominium is the only true means of foreign freehold property ownership in Thailand.
Thai law allows foreigners lease landed property or villas for up to 30 years. Foreigners may also operate (as a minority shareholder) a legally compliant businesses, which itself may own property as part of the business.
However, only a condominium in Thailand allows a foreigner to register the property in their own name with the Land Department. This registration comes with a freehold (Chanote) title, which confers permanent ownership on the foreign buyer.
The Thailand Condominium Act (1979) not only permits foreigners freehold ownership, but the Act has also been amended over the years to include fairly stringent safeguards which protect investors who purchase a condominium in the Kingdom.
Just as restrictions apply to foreigners buying landed property, there is also a foreign ownership quota on condos. The law states that 51% of the unit area in every development must be Thai owned, with the remaining 49% available to be purchased by foreigners.
Crucially, the laws which protect the rights of Thai condo owners apply equally to foreign owners.
It is because of the Condominium Act that foreign nationals have been investing successfully in Phuket’s condominium sector for the last few decades. And the condo is yours until you decide you do not want or need it any more.
You can find out much more about the Condominium Act here:
The Things All Phuket Condominium Investors Should Know About the Condominium Act
Why Do People Choose to Buy a Condominium?
In addition to the freehold ownership, people like condominiums because it is a relatively easy way to own a home. Compared with the upkeep of a house or villa, there isn’t much to do with a condo.
With a condo, the major maintenance and upkeep of the building is taken care of for you by the Condominium Juristic Person (CJP). This is the management body that organises staff and runs the resort so that everything functions and operates smoothly.
If you are an owner and resident, you are responsible for everything within your four walls. This means regular cleaning, paying the bills, fixing leaky sinks, or repairing broken air conditioners are all down to you. But any problem which originates in the common area is the responsibility of the CJP.
If your unit is purely an investment property, and is part of a complex’s rental program, these repairs and maintenance also fall under the purview of the CJP.
For people seeking a holiday home, condos also offer security when they are not there. They will get a 24-hour guard service and/or CCTV. The development will also likely offer a pool and a gym.
All of these amenities are taken care of by the CJP, with no hassle or involvement for the owner. The CJP will look after the swimming pool, the gym and all the common area. That leaves you to just relax and enjoy your home in the tropics.
If you’d like to find out more about the role and obligations of the condominium juristic person you can read our article here:
Buying a Condominium in Phuket – What is a Condominium Juristic Person (or CJP)?
So aside from the legal ownership reasons for purchasing a condo in Phuket, a condominium development offers many other benefits to those seeking a holiday home or investment.
You can read more about all the advantages of buying condominiums in our article here:
The Benefits and Advantages of Buying a Freehold Condominium in Thailand
Why Choose Phuket to Buy a Condo in Thailand?
Anyone who has visited Phuket will already know the answer to this question. Quite simply, it is stunningly beautiful.
And as Thailand has developed over the last few decades, so has its property market. This has been especially noticeable on this gorgeous tropical island.
Phuket is the number one tourist destination in Thailand, attracting almost one third of all visitors to the Kingdom. In 2018, Thailand welcomed 35 million tourists, nearly 15 million of whom came to Phuket. These numbers are expected to keep rising in the years ahead.
Because of its natural beauty and massively improved infrastructure, Phuket has been attracting more tourists each year, who inevitably become interested in buying property on the island. It doesn’t take long for regular visitors to decide that this is a great place to invest in property.
As these numbers keep increasing, more and more people are becoming aware of the opportunities that exist in the property market in Phuket.
Many global property portals and real estate marketing companies show Phuket and Thailand as one of the most popular places for foreigners to purchase property abroad.
Over the last few years, we have seen buyers from Asia, Europe, Australia and North America. Chinese buyers have been especially attracted to the buoyancy of the condominium sector in Thailand’s most popular island.
In addition to the natural beauty that Phuket has to offer, there are a myriad of infrastructure improvements that have taken place over the last few decades. The biggest of these is the Phuket International Airport, which is modern and efficient and currently handles 24 flight per hour, 24 hours per day.
There are also new roads, underpasses, and a vast amount of new facilities including new marinas, golf courses, health clubs and gyms, shopping malls and restaurants as well as duty free warehouses and all manner of new amenities across the island.
So the answer to the question on this heading is really answered by pointing to the amazing culture of Thailand, the stunning scenery of Phuket and the draw this has on tourists.
Buying a condo in Phuket is way for investors to take advantage of Phuket’s dynamic tourism industry and at the same time have a free place to stay when they visit each year.
Understanding the Phuket Property Market
Like the rest of Thailand, Phuket has seen modest gains in the property market over the last twenty years. But Phuket differs to most other markets in the country, because it relies heavily on tourism. This means that as the tourist industry expands, so does the real estate sector.
As the number of visitors to Phuket continues to grow, and occupancy rates remain high, there seems to be a correspondingly high number of purchases being made. It is very common for people to buy a condo even on their first visit to the island.
Phuket is very different to Bangkok, where overbuilding and stagnation occur from time to time. Prices in Phuket, on the other hand, tend to remain more stable.
Like everywhere around the world, the property sector will always have periods of extreme buoyancy, followed by periods of slower growth. But there has been no boom-bust cycle, just a steady growth.
The broader Thailand property market has slowed slightly for the last 2 or 3 years, but in Phuket this has not necessarily been the case. The market in Phuket is fairly resilient, mainly because the key driver is the tourist sector.
The additional income that Phuket receives from tourism, means money to spend on infrastructure, which in turn attracts new private investment and new attractions. These improvements subsequently bring even more tourists to the island, and things have generally progressed in this fashion for the last 20 years.
The Phuket International Airport has recently been through an expansion which doubled its annual capacity, and even further upgrade works to the airport are anticipated. This would allow further increases in tourist numbers, which again leads to more infrastructure improvements and better attractions.
With tourist numbers rapidly growing, it is expected that this continued trend will have a huge positive effect on the Phuket property sector moving forward.
For anyone who has concerns about how much Thailand’s tourism industry can keep growing, you may enjoy our article about the subject here:
How Much More Can Thailand’s Tourism Industry Grow?
Is a Condo Purchase in Phuket a Good Investment?
As already mentioned, investors in Phuket condos are attracted in part by the continuously improving infrastructure and the high standards of build quality on the island. The stylings and amenities offered by Phuket’s luxury developments are bringing new buyers into Phuket every day.
Because Phuket has so many visitors each year, a great deal of the investment made is based on this holiday market. New resorts are being built to cater specifically to investors looking to capitalise on the booming tourist sector.
This increase in competition has sparked greater innovation. As each year passes, and the industry matures, the project designs are becoming bolder, with more facilities and amenities to cater to the ever-expanding tourism industry.
Many new resorts offer in-house shops and a choice of restaurants, as well as a range of other facilities including saunas and steam rooms, Jacuzzis and libraries, all in addition to the usual health and fitness centres and swimming pools.
Phuket is able to attract investors for these fantastic projects because the buyers know that when they (or their renters) are in Phuket, the infrastructure around the island will be an equally high standard.
Here we are not just talking about the road and accessibility improvements, but also the quality of the healthcare, leisure facilities, education and even shopping available on the island.
Barring a drastic long-term reversal in the tourist industry, Phuket will always be a great place for investing in property. (See more below on how Phuket has faced and overcome adversity in the past.)
How Much Should You Expect to Pay for a Condo in Phuket These Days?
The price of condominiums in Phuket has risen gradually over the last two decades. However prices are still much lower than in other holiday destinations around the world, and could be called amazingly cheap compared to some capital cities.
Prices can start as low as 2 Million Baht (US$65,000) depending on the location. But due to the scale of some new developments, even west coast projects offer off-plan units for very low prices.
At the other end of the scale, luxury properties can fetch anything up to 75 Million Baht (US$2.5 Million). These tend to be in prime locations with stunning sea views, and although they have a condominium license and offer freehold ownership, may even have a garden and a swimming pool.
Of course there is a myriad of choice between the economy and luxury condos. Much depends on the location, the build and finishing quality, and the even the developer’s reputation.
Renowned developers will try to keep the quality standards high, while also aiming to keep prices at attractive levels for buyers. They want to offer a first class quality product, but must also take affordability into account. Their price points will also be relative to the completion on the island.
The general rule of thumb is new developments sell at approximately 100,000 Baht per square metre. If you can find a quality condominium in a great location for less than this price, then it is probably a good deal. For any new project to be much more than 100,000 Baht per square metre, there need to be other factors to justify this higher price.
The units for sale will come in a variety of sizes, so you are able to choose the one that fits your budget. The island offers a multitude of studios, one and two bedroom units, with the occasional three and four bedroom on offer too.
If you would like to read more about the factors expected to influence Phuket property prices, both now and in the future, you may enjoy reading our article on the subject here:
An Overview on Phuket Property Prices
What Kind of Investment Returns Can you Expect?
As long as discerning buyers choose their development wisely, they will see a good return on their investment. Because the rental market is so buoyant many developers offer anything from 6-9% guaranteed returns for a specific period of time.
This timeframe for these returns may be as short as 3-5 years, but some developers offer up to 10 years guaranteed rental income.
In many cases, investors can expect to receive the cost of their property back in rental income within a timeframe of slightly more than decade.
If they bought wisely then this income, in addition to the capital growth achieved on the value of their investment, should make them extremely happy with their purchase.
If you are wondering just how guaranteed returns have fared for the last 25 years, please bear in mind that we have been through some pretty difficult periods during that timeframe. These include The 1997 Asia Crisis, the SARS Outbreak, Bird Flu, the Tsunami, a few Coups d’Etat and the 2008 Global Financial Crisis.
Through all of these troubled times, the tourism sector bounced back stronger than ever, and the real estate market also went from strength to strength.
And more importantly for investors, they carried on receiving the income from rentals.
If you’d like to read more about the condo rental income market in Phuket, you may enjoy our article here:
Demand for Rental Income on Phuket Property
What Are The Best Areas to Buy a Condo in Phuket?
There are so many areas to choose from in Phuket that deciding on which area you like best may be a bit daunting. We normally find that people tend to choose the area where they have spent their holidays over the years.
The area becomes comfortable and familiar, so it is a natural choice for a home when they decide to buy. That said, it is also common that people discover other areas that they may have preferred only after they have made the decision to buy.
It is a good idea to thoroughly explore all of the areas that may suit you better, and your property advisor should be able to offer some recommendations.
Phuket offers foreigners a number of choices. Contrary to what most newcomers think, every area is very different. Each has its own unique positives and may even have what for some people are major negatives.
For a start, do you love to be away from people or prefer to be in the middle of a bustling city atmosphere? Do you like nature or prefer concrete jungles? Do you prefer the beach or mountains? Do you like to see the sunset or the sunrise?
To assist potential buyers, we have broken down the areas we believe are the most popular into 21 different locations. You may read about each area and hopefully identify the one that suits you best here:
A Comprehensive Guide to the Best Locations to Buy Property in Phuket
What Other Costs are Involved When Buying a Condo in Phuket?
As in many countries around the world there will be either local or government taxes which must be paid. For a condominium, these are relatively simple, and not too expensive either. In fact, Thailand’s taxes on property are some of the cheapest in the world.
Although they are fairly straightforward they are not always uniform, as the fees will either depend on the developer (for a new build), or on the seller’s situation (with a resale).
On a new build, when you buy directly from a developer, the developer will spell out what the fees will be in the marketing material, and these are usually detailed on the price list.
The transfer fee is usually 2%, split equally between the developer and you.
If you are buying a foreign freehold unit, then the developer will often require an additional fee over and above the condominium sale price (which is typically quoted as a Thai freehold/foreign leasehold).
The foreign freehold upgrade may be a one-off fee of around 100,000 or perhaps even 200,000 Baht. But on larger or more luxurious developments you should be prepared to pay anything up to 500,000 Baht.
Sometimes the freehold upgrade cost is expressed as a percentage of the sale price, which may be as low as 1%, but occasionally may be as high as 3.15% (which is basically a 50/50 split on the cost to the developer).
On a resale, you will likely be expected to share fees 50/50 with the seller. These will vary depending on the profit made on the condo and the length of time that the seller has owned the property. If the seller has owned the property for more than 5 years, these costs shouldn’t amount to more than 1-2% of the purchase price if shared.
All new developments will require you to pay into a sinking fund, which is a form of emergency fund held in reserve by every condominium development. Should any major repairs or refurbishments be required in the future (e.g. repairing the swimming pool or repainting the exterior of the condo), the CJP can call upon the sinking fund to cover these costs.
This one-off payment is usually around 500-600 Baht per square metre, and is easily calculated by multiplying this amount by the square meterage of your unit.
You can find out more about a condominium sinking fund here:
What is a Condominium Sinking Fund?
Don’t forget, there are also ongoing running costs involved with condo ownership. Obviously you’d like to see your investment looked after and kept in good condition to remain attractive to future investors.
For example, the gardens need tending, the swimming pool needs maintaining, garbage needs collecting and admin and security staff have to be paid.
Freehold ownership gives you a fractional interest in the entire resort, but that also gives you a fractional liability for all the costs associated with upkeep.
The Common Area Maintenance Fee (or CAM fee) will vary from resort to resort, but the average is around 50 baht per square metre. This is easy to calculate by multiplying the fee by the size of your condo unit.
The CAM fee is usually paid monthly, but occasionally may be calculated on a quarterly basis.
You can find out more about the common area fee here:
What is the Common Area and the Common Area Fee?
What to Watch Out For if You Buy a Condo in Phuket!
So far, we have covered all the positives associated with buying a Phuket condo. But there are also a few things about which buyers and investors need to be aware to ensure there are no hiccups with their purchase.
Here are some things you should know about:
Does your condominium have a hotel license? – This never used to be a question someone would think to ask. But over the last few years, governments around the world have been clamping down on private rentals using portals such as hotel.com, booking.com, or airbnb.
Pressure from hoteliers has led to legislation requiring properties offering short-term rental to have a hotel license.
If you own a unit a condominium and the resort does not hold the requisite licenses, there is a possibility, at some stage in the future, the resort will be forced to stop accepting short-term rentals.
You can read more about this here:
Owning a Freehold Hotel-Licensed Condominium in Thailand
Are you buying off-plan or a completed project? – Buying off-plan is when you buy a unit in a condo development that has not been constructed yet. Many people decide to buy off plan because the advantages seem to outweigh the disadvantages.
That’s a decision you will have to make for yourself, and hopefully we can help you with this. New projects obviously offer discounts, but there are some risks involved and buyers need to be aware of these too.
In this article you can find out all about the benefits of buying off-plan:
The Benefits of Buying a Phuket Condominium Off-Plan
And in this article you can find out about all the risks associated with buying off plan:
The Risks of Buying a Phuket Condominium Off-Plan
How financially sound is your developer? – No company is immune from the economic shocks which can occur at any time during the construction process. Even without any outside influences, some developers just may be poorly run, or have overextended themselves financially by juggling too many projects simultaneously.
Others may have borrowed too much, only to struggle with the interest payments. It is imperative that buyers at least do some preliminary checks on the developer to make sure they are of solid financial standing.
You can read more about the importance of using developers of sound repute in this article here:
Why Developer Reputability is Important When Buying Real Estate in Phuket
Be careful of dirty land in Phuket – Over the last few decades, as the property markets in Phuket and Phang Nga took off, a great deal of land that belonged to the government (or in fact the Department of National Parks, Wildlife and Plant Conservation), managed to be sold to private citizens, who then used this land for development.
Some of this land remains under individual names today, even though the true owners are the Thai Government. We call this “dirty land” and it is essential that you do not buy a condominium purchased on land that does not legally belong to the developer.
There is no statute of limitations on this illegal land acquisition, and the government can reclaim it at any time they wish. In other words, if your condo is found to have been built on forestry land, you could lose your condo in 5 years, 10 years, even 15 years or more in the future.
You can read more about dirty land and why to avoid it here:
Are you buying freehold or leasehold? – It is also worth pointing out that many people are persuaded to purchase a leasehold unit rather than a freehold unit. The thing to remember is that if you are looking for an investment with “saleability” then you are much better off choosing freehold. In fact, a leasehold could in fact be called a depreciating asset rather than an appreciating asset because it loses value over time.
If you’d like to know exactly what “leasehold” means in Thailand, please read this article:
What Exactly is a Leasehold in Thailand?
A leasehold in Thailand may be good for some people who get a great deal on a condo they plan to live in for the next 30 years. They lock into the current price, and never have to pay rent so it may suit them.
But in most cases, it is hard to call a leasehold condominium a good investment. It may be possible to generate decent rental returns each year, but leasehold units are very rarely sold on to a new buyer at a higher price.
If you’d like to read more about why we do not recommend buying a leasehold condominium in Thailand, you may find this article interesting:
The Pitfalls of Buying a Condominium Leasehold Unit
Under certain circumstances, it could be argued that setting up a Thai Company Limited to purchase a leasehold unit as a Thai freehold is a better option.
You can find out more about that option here:
Using a Thai Company Limited to Purchase a Leasehold Condo Unit
The Purchase Procedure When Buying a Condo in Phuket
Once you have decided to “take the plunge” into the Phuket property market, by following guidelines can ensure everything is done painlessly and efficiently.
If you adhere to these step-by-step, you will be enjoying your perfect Phuket condo in no time flat!
First Find Yourself a Good Lawyer
Many of the risks mentioned above can be negated or avoided altogether with the use of an experienced lawyer, and this should be the very first thing you do before looking at properties.
A lawyer will conduct due diligence on the condo development and make sure everything is above board. Probably the most important thing is carrying out the title search, which confirm that the developer is the legal owner of the land, and that the land was never owned by the government as national forest.
Your lawyer will also check to see if there are any mortgages or loans taken on the property. If the property is leveraged, it could be a danger to owners should the developer lose control of the land. All of this is important to avoid any risk on your investment.
If you’d like to learn more about why obtaining sound legal advice is important when buying real estate in Phuket you can read the following article:
The Importance of Sound Legal Advice When Buying Property in Phuket
If you are not familiar with “due diligence” and would like to learn a little more about why it is important when buying property, you might like to read this:
Paying a Reservation Deposit
An experienced lawyer will protect you throughout the buying process. If you have not already engaged a lawyer from the outset, it is certainly advisable to find a lawyer before you place a deposit on a condo unit you like.
Your lawyer will make sure that everything checks out with the sales and purchase agreement, and once satisfied will give you the go ahead to place the deposit.
He/She will also ensure that your deposit is safeguarded, and will be returned to you in full should the due diligence check find something amiss with the development you have chosen.
We have written the following article about things to look out for when leaving a reservation deposit:
The Risks of Placing a Reservation Deposit When You Buy Phuket Real Estate
The amount that you might be expected to pay for a reservation deposit varies from resort to resort, but is usually between 100,000 and 200,000 Thai baht. It may also be a percentage of the purchase price.
When you pay the reservation deposit (which can usually be paid with credit card or cash) you will also need to provide the developer with your passport.
At this stage the developer will draft the pre-sale and purchase agreement. They will also provide your lawyer with a copy of the title deed (Chanote), so that the title search may be done.
On a resale, the seller’s lawyer will draft the pre-sale and purchase agreement. The seller will also have to provide your lawyer with some other documents, such as the tabien baan, often called the “house book”.
The final sale and purchase agreement usually takes a few days to put together, although most developers are aware that buyers may traveling home from a holiday, so they are accustomed to expediting things.
Your lawyer will want to read and approve the sale and purchase agreement, and the developer will also at this stage confirm the payment structure/schedule so you know when each payment is due (provided an instalment payment option exists).
On a resale the payment will obviously need to be made in full, but if you are buying off-plan, the schedule of payments may be spread over a year or more, right up until the completion of the project.
Please remember that the sale and purchase agreement will also spell out the other payments due (e.g. taxes, registration/transfer fees, furniture package and freehold upgrade, if applicable). It will typically also clarify the amount of the sinking fund, although this is usually paid upon completion of the development.
As well as listing what will need to be paid in the future, the sale and purchase agreement will also confirm the payment of your reservation deposit, and will show this amount deducted from the balance due.
Transferring Money into Thailand For Your Phuket Condo Purchase
This is important because, if done correctly, it will ensure that everything goes smoothly. Not merely registering your condo purchase at the Land Office, but also repatriating the funds back to your home country when you decide to sell the property.
If you plan to leave your condo to children or loved ones in your estate, listing multiple owners will also make succession much easier.
So once your lawyer has given you the green light and your first instalment is due, you must then follow the correct procedures to bring the money into Thailand.
The 1991 Condominium Act states that to purchase a condo in Phuket, the funds must be transferred from overseas. Therefore, you must show proof that the monies came from abroad. To do this, you need to follow some simple steps.
Every tranche of funds you transfer into the country must qualify to receive a Foreign Exchange Transaction Form, commonly abbreviated as “FETF”. This is a certificate that your bank in Thailand will issue when they receive the funds in Thailand. To qualify, the minimum amount of each instalment must be US$50,000.
This FETF will be required by the Land Office in order to register the condo in your name, so it is imperative that you have this certificate.
When you send the money from your bank account at home, the transaction advice (or form) should state that the money is being used to buy a condominium in Phuket, as well as the names of all the buyers. If you already know the name of the development where you are buying, it doesn’t hurt to put that down, too.
In some cases, on new builds, the developer may allow you to transfer the money directly to them and assist in obtaining the FETF for you.
When you take the FETF to the land office (or if the developer does this for you), you will get the FETF back, and you must immediately put it in a safe place. If you have safety deposit box, or a safe at home, then that is the best place for it.
Although getting your money out of the country is relatively straight forward, you will need the FETF when that time arises. That may be in 5 years or 25 years, hence the reason to keep it safe.
If you have a good lawyer, he/she will likely assist you through the whole process and make sure you are doing things correctly.
How To Send Your Money Correctly Via TT (Telegraphic Transfer)
When you transfer the money to Thailand, the total amount you send must not be less than the actual purchase price of the condo. You must also state what the money is for (i.e. a condominium purchase, ideally including the name of the development).
As mentioned above, you also need to make sure you list all the buyers’ names on the TT instruction.
When preparing to wire the funds, please have the following details to hand:
- Bank name
- Beneficiary name
- Bank account number
- Bank Branch and address
- SWIFT CODE
When confirming the reason for making the transfer, you should write something like this:
“This is for the purchase of condominium unit number 323 at the Beautiful Blue Sky Condo Resort”.
Make sure you include the names of every buyer. This includes the names of your children (and perhaps even your grandchildren). In fact, there is no limit to the number of buyers you can list on the TT form. (We will cover the very important reason for this a little later.)
Once you’ve sent the money, and the receiving bank confirms receipt, they will issue the FETF.
The FETF will state the following:
- The amount sent in foreign currency
- The amount converted into Baht
- The name of the account holder who sent the money
- The receiver’s name
- The purpose or reason the transfer was made (i.e. purchase of a condo)
Although the fund transfer must be accompanied by the correct details, it is worth pointing out that the money may be sent from a third party bank account, and does not have to be in the name of the buyer.
The important thing is that the names of all the buyers are on the bank instruction, as well as the clearly stated purpose of the transfer.
As long as these details are correct, the Land Office will be happy to accept the FETF issued by the bank.
Will I Need a Thai Bank Account if I Buy a Condo in Phuket?
This is a very common question we are asked by buyers. The answer really depends on a number of factors. Sometimes it is not necessary and sometimes it may be essential.
For example, let’s say you purchase a new build condo unit from the developer. It is possible that the developer will assist you in obtaining the FETF. They may even offer to pay your guaranteed rental income overseas, in which case you are not likely to require a bank account in Thailand.
On the other hand, if you purchase a resale condo and wish to rent it out as a business, you will most definitely require your own local bank account. Even if someone else runs it for you day-to-day, you will still have access anywhere in the world to the money paid into your Thai bank account through an ATM card.
You are likely to need assistance opening an account, which a lawyer, accountant or your real estate agent can likely provide. It is worth noting, however, that opening a Thai bank account can be difficult until after you have paid the reservation deposit on a condo unit.
As a non-resident, a bank will typically only open an account once you present them with the original sale and purchase agreement. You’ll only receive said agreement after you pay the deposit, and bank will also want to see your deposit receipt for the payment you’ve already made.
If you are determined to have a bank account in Thailand whatever the circumstances, then you’ll need to take along the following documents:
The documents required will vary from bank to bank, but generally speaking they will be:
- Your passport
- Your departure slip (from your immigration arrival card) which should be in your passport
- The original Sales and Purchase Agreement
- The receipt you received for the reservation deposit
Each bank is different, and some banks aren’t very helpful when opening accounts for foreigners. Your advisor or lawyer should know the best bank(s) to use.
Will I Need to Go to the Phuket Land Office?
The reason a visit to the land department is usually required is because this is where your condo unit will be registered in your name.
But your presence is not always necessary. If you purchased directly from a developer they may be able to obtain the title deed on your behalf.
However, if you purchased a resale property, you will usually have to make the trip yourself, together with the seller and your legal representatives. Of course, if you have given a lawyer or another individual Power of Attorney they can go in your place.
This is what you would usually need if you go to the Land Office yourself:
- The passports of all the new owners including immigration slips if applicable;
- If the property you are buying is a resale, you will require a letter from the Condominium Juristic Person (CJP) confirming the foreign ownership quota for foreign freehold at that condo remains within the legally mandated 49%;
- A letter from the CJP confirming that all common area and maintenance fees (as well as all utility bills) have been paid up to date. If the seller does not have this then the sale cannot proceed;
- The FETF showing the funds for the condo purchase came from overseas;
- A bankers draft for payment of any balance owing;
- Cash for the government fees and taxes; and
- A marriage certificate (if the spouse’s name is also to be on the title deed). This may be in English, but it may need to be translated if it is in another language.
Most lawyers will accompany you to the Land Department to assist with this process. The lawyer will work with the seller’s lawyer and the land office officials to make sure everything runs smoothly.
The final steps in the process require handing over the final payment, which must then be verified. Once this has been done, the official will prepare the department’s own sale and purchase agreement which is signed by you and the seller.
After this, you will be required to pay the government fees and taxes in cash. Make sure you have sufficient cash with you on the day you visit the Land Office. In most cases, you’ll be expected to split these costs with the seller, so should be aware of how much you’ll have to pay. There should be no surprises here because your lawyer should be aware of the exact amount long before you arrive.
After everything is complete, you will be handed your copy of the Chanote title which will show your name as the legal owner.
The Land Office is usually quite efficient. On an extremely busy day it may all feel a bit time-consuming, but it is generally easy enough. That said, it is worth taking a good book to read, just in case you’re there on one of the busier days.
When you leave the Land Department, you will be the chuffed owner of a Phuket condo.
The Ease of Leaving Your Phuket Condo to Loved Ones Upon Death
The last thing we will cover is succession planning. Succession is basically the processes of leaving your assets to loved ones upon your death.
The ease of doing so is yet another benefit of owning a condo because upon your death you may legally pass your condo on to your beneficiaries.
If you have planned and prepared for it, then it can prove to be a very simple procedure. If no provisions have been made, however, it can turn into a nightmare for your loved ones.
That brings us to the reason why it is vital that you list all of your beneficiaries’ names on the bank transfer form when you send your money into Thailand in the first place. If the names of all beneficiaries appear on the telegraphic transfer form, they will also appear on the FETF.
And having the names of the beneficiaries on the FETF overcomes one of the hurdles required for condominium ownership in Thailand under the Condominium Act. Namely, that all owners, whether they be the original buyer or inheritor, must show that they transferred the requisite monies into Thailand from overseas.
Essentially, the names of the beneficiaries on the FETF secures a smooth inheritance.
You may wish to read the following article on this subject here:
What You Need to Know if You are Inheriting a Phuket Condo or Wish to Plan for Succession
The other means of securing an easy inheritance of a Phuket condo is by using an offshore company to buy the condo. Offshore companies are typically those which are domiciled in the British Virgin Islands, Seychelles, Mauritius, Cayman Islands, etc.
As the owner of the condominium, the offshore company can’t really die. If the individual simply leaves his/her controlling shares in the offshore company to their beneficiaries, then they have effectively passed on ownership of the condo at the same time.
You can read more about using an offshore company for this purpose here:
Owning a Freehold Condominium through an Offshore Company
Getting the Keys to Your New Phuket Condo
Well, that’s about it. As the new owner of a Phuket condominium, you’ll only have a few loose ends to tie up before you either move in or start to rent it out.
The only other thing you’ll need to care of is ensuring the water and electricity metres are registered in your name. On a new development, the CJP or developer will normally assist you with this, but on a resale you will likely need the help of the selling agent or the old owner.
After that there is nothing else to do apart from enjoy your life or your holidays in this wonderful tropical paradise!!
You may want to read some of our related Phuket property articles here:
Understanding the Concept of Freehold Property Ownership
A Comprehensive Guide to the Best Locations to Buy Property in Phuket
The Benefits and Advantages of Buying a Freehold Condominium in Thailand
The Things All Phuket Condominium Investors Should Know About the Condominium Act
Owning a Freehold Condominium through an Offshore Company
Social Contact