Foreigners can buy their own property in Phuket through a number of ownership structures, but there are some rules and restrictions in place that you have to follow to stay in line with Thai Law. It is highly recommended to seek the assistance of a property lawyer in Phuket to secure your investment.
Condominium Units
Condominium developments in Phuket are currently experiencing a significant boom, particularly with the surge of new tourists and expatriates post-COVID. It’s undeniably a promising investment opportunity, especially for those who appreciate beachfront views.
According to the Thai Condominium Act of 1979, foreigners are allowed ownership of condominium units either through buying a unit with freehold status outright or by entering into a lease agreement, also known as a leasehold.
It should be noted that there is a limitation for foreigners to own a condo in Thailand, they are permitted to own only up to 49% of the total area of a condominium building. The remaining 51% must be owned by Thai nationals, although control of this half can be acquired through a leasehold arrangement. A leasehold grants the right of use and possession of a condominium unit for a specified period and is fully transferable.
Advantages of Buying a Condo in Phuket Thailand
- Foreigners are allowed to own a unit in a condominium within the foreign ownership quota in their own name.
- Condominiums come with a title deed, allowing owners to use them as collateral in Thailand.
- Foreigners have the flexibility to use their property as both a holiday home and as a rental to generate a stream of steady passive income, which is a lucrative option given the high visitation rates in Phuket.
- Condominium prices are comparatively affordable in Phuket, unlike other popular destinations heavily favored by expats, such as Japan and Singapore, or even Bangkok.
- Owning a condominium unit requires reduced maintenance and repair responsibilities compared to full ownership of a building.
Long-Term Lease of Properties
Long-term lease of properties, also known as a leasehold, is often the preferred approach to owning land in Thailand for foreigners due to legal reasons. Foreign nationals generally are not allowed to buy land in Thailand and hold it under their name. However, a leasehold offers the most secure means for you to exercise de facto control long-term even though you do not fully own the property. Additionally, you are able to obtain a leasehold to properties beyond condominiums such as villas, houses, townhouses, land, and more.
Foreign “buyers” usually enter into a 30-year lease agreement with the landlord or developer, with the option of having two additional renewals through a contractual agreement at the Land Department. This means that barring any complications, disputes, or transfers of ownership, the lessee can control the property for up to 90 years, which is about as close to ownership as you can get.
These lease agreements grant the lessee full rights to the property throughout the lease period. Moreover, the Land Department recognizes the 30-year lease as a secured right, safeguarding against any attempts by the landlord or building owner to disrupt or terminate the owner’s rightful use of the property.
While the maximum fixed term for a lease of property in Thailand is typically 30 years, a leasehold arrangement allows for the possibility of extending the lease through an additional two renewals, totaling a 90-year lease for the buyer.
However, it’s important to note that while the initial 30-year lease is a guaranteed right ensured by the Thai government, the additional two 30-year lease terms are contractual obligations outlined in a legal agreement mutually accepted by both parties. So, if you are hoping to renew the lease at the end of the first period in three decades, you need a good lawyer now to ensure your lease agreement guarantees that right. When the time comes for the renewal and you re-register the lease with the Land Department, your rights will again be officially guaranteed by the Thai government.
Leasing the Land but Owning the Building
According to the law, any building placed on land is typically regarded as part of that land. However, if a tenant constructs a building on leased land, it may be viewed as a separate entity. As a result, foreigners have the legal right to own buildings constructed on leased land in Thailand as investors.
Advantages of Buying a Leasehold Property in Phuket
- Increased variety of property types to choose from
- Complete control over maintenance activities
- Potential for a favorable return on investment (ROI) and high likelihood of lease agreement extension opportunities in the future
Property Buying Process
The property buying process in Phuket closely mirrors the buying process across other parts of Thailand. The standard procedure includes negotiating a deal, signing a contract, paying a deposit, and transferring ownership. Outlined below are the recommended steps to buying a property:
- Research and Consultation
Begin by identifying the type of property you wish to purchase, determining your budget, and selecting the preferred location in Phuket, keeping in mind that oceanside and city center properties are usually much pricier. Next, hire a reputable local real estate agent with expertise in the Phuket property market. This experienced agent can offer valuable advice and local knowledge, assist in finding a property that aligns with your requirements, and navigate you through the purchasing process.
- Legal Due Diligence
After the initial step, collaborate with a property lawyer specializing in real estate to perform comprehensive legal due diligence. A lawyer will assist in conducting a thorough examination which includes a property title search ensuring there are no outstanding debts or mortgages, and confirming all necessary permits are in place. Should any concerns arise, you have the option to renegotiate terms or withdraw from purchasing the property.
- Negotiation of Property
Following the completion of the legal due diligence process and your decision on either the current property or an alternative, you may collaborate with your real estate agent to negotiate the purchase price. While negotiation is possible in Phuket’s real estate market, it’s important to consider cultural norms and market conditions.
- Contract Signing & Deposit Payment
Once a price is agreed upon, you’re required to sign a reservation agreement and pay a reservation fee, typically ranging from 5-10% of the purchase price, to secure the property. It’s important to note that this fee is non-refundable if you decide not to proceed with the purchase later on.
After signing the reservation agreement and paying the deposit, you draft and sign a sales agreement, detailing the terms and conditions of the sale. It’s crucial to ensure that all agreed-upon details, including the date of ownership transfer, are clearly outlined in the contract. Again, you will want a knowledgeable property lawyer on your side to ensure everything is in order and you are getting a fair deal. A contract review of your property Purchase and Sales Agreement is a must.
- Final Steps
In the final stages, you complete the remaining payment and proceed to transfer ownership at the Land Department. Your lawyer will assist with all necessary paperwork, including fund transfer and obtaining a new title deed in your name.
Additionally, it’s important to take responsibility for the ongoing maintenance and management of your property. If you’re not residing in Phuket full-time, you may want to consider working with a property management company to oversee upkeep and rental arrangements.
Finding the Best Property Lawyers in Phuket
If you’ve got your sights set on purchasing a property in Phuket and need an expert property lawyer to make the process as smooth as possible with minimal risk, reach out to Siam Legal. We’re a full-service law firm with over 20 years of experience delivering effective legal solutions in Thailand to clients from around the globe. We have a head office in Bangkok and satellite offices across the nation, including our lawyer Phuket.
Siam Legal’s Phuket team has the local and legal knowledge to assist you at every step of the property purchasing process and ensure a swift and successful sale. We’ll meticulously research your chosen property and carefully review every line of your contract to make certain everything is above board and you don’t run into issues with the government or unscrupulous landlords. Contact Siam Legal for an initial consultation today!
Siam Legal (Phuket)
Address: 123, Cherngtalay, Thalang, 27-28 BangTao Place Thalang District, Phuket 83110, Thailand
Phone: +66 76 326 322
Email: info@siam-legal.com
Siam Legal International (Bangkok Office)
Address: 18th Floor, Unit 1806 Two Pacific Place, 142 Sukhumvit Rd, Khlong Toei, Bangkok 10110, Thailand
Phone: +66 2 254 8900
Email: info@siam-legal.com
Siam Legal (Chiang Mai)
Address: Curve Mall 2nd floor Room C219-C220, 215/2 Chang Klan Road, Mueang, Chiang Mai, 50100, Thailand
Phone: +66 53 818 306
Email: info@siam-legal.com