Deciding whether to buy property overseas either as an investment or as a second home is a decision that requires some serious deliberation. Not all countries allow foreigners to buy property, and if they do, there are laws that restrict the type of property buyers can purchase.
Due to the incentives and perks being rolled out for wealthy global citizens, this might further affect the real estate market in Thailand. These incentives give additional rights to foreign buyers to purchase Thai property without a hitch.
You may be wondering if buying a condo in Thailand is a good investment opportunity for foreigners, especially since the Covid Pandemic. Continue reading to get answers to your Thai real estate questions to help you decide if buying Thai property now is worth your while for the future.
A History of Changing Thai Laws That Affected The Real Estate Trends Majorly
Just as all laws, Thai laws have changed over time and mainly to support the development of Thailand and help the economy of the country. These laws have also been implemented for the well-being of Thai citizens, especially the low- and middle-class population of the country.
Let’s take a look at a few of the recent changes that have impacted the country and markets in a positive light.
Tax Cuts Proposed for First-Time Buyers and Other Thai Real Estate Market Events in 2011-2012
In terms of Thai citizens purchasing property on Thai soil, the years 2011-2012 saw a few important events such as the few mentioned here.
The tax cuts in 2011 and 2012 for first-time buyers caused property values to reach a maximum limit of 5,000,000 baht. This also caused the NCPO deduction cost that the buyer could bear himself to be capped at a maximum of 10%.
Soft loans with low-interest rates were offered by the Bank of Thailand. These loans were offered mainly to existing house owners to renovate their old homes. New soft loans at the rate of 3% for 5 years were also offered to new homeowners.
Well-established developers sought out the possibility of developing property through new projects in upcoming areas with untapped potential. These areas included but were not limited to Chiang Mai, Phuket, Ubon Ratchathani, and Hat Yai.
Financial Measures and Other Events in 2015 and 2016 Courtesy Of The Government of the National Council of Peace and Order
During these years, the Government Housing Bank (GHB) State Housing Bank took financial measures such as making it possible for the Thai low- and middle-income population to get loans. These loans were applicable for a maximum term of 30 years and were offered to people only if they had an income of $900 or lesser. This translated to 30,000 Baht for loan terms of 5 to 30 years.
A reduction of the registration transfer fee was the primary financial measure implemented in 2015 and 2016. Furthermore, the real estate mortgage fee for registration was reduced from the initial 2% to a final 1% of the approximate value in transfer. The final reduced additional collateral value of 0.01% was also applicable.
The income tax measure taken in these two fiscal years, allowed buyers to get an income tax exemption for 5 years in a stretch. This was for eligible buyers who spent a maximum of 3,00,000 Baht for buying their first residential properties for a maximum of 20% of the estimated value of the house.
Credit Controls and Other New Real Estate Laws In Place During 2018 and 2019
In the year 2018, the Government of Thailand worked towards introducing new laws for the sole purpose of strengthening credit control. This was done by introducing new tax initiatives for Thai citizens purchasing their first residential property worth a maximum of 5,000,000 Baht. Individuals could use this residential property as a tax deduction which made it worthwhile to invest in real estate.
In the year 2019, the credit limit for lending per asset was further reduced to 80%. This was done by the Government of Thailand through the help of the Bank of Thailand and was successfully implemented in the first 3 months of the year.
The Effects of The COVID-19 Pandemic On Thailand Real Estate Market
The COVID 2019 Pandemic caused a serious adverse effect on Thailand’s real estate market. This was partially due to the uncertainty of foreigners staying in the country or moving back to their homeland after selling their condos. The pandemic also caused a severe lack of tourists visiting Thailand from2 019 to 2021, which caused real estate prices to crash as well as the Thai economy to suffer significantly.
One of the main reasons the Thai government came up with the initiative of the Thai Elite Visas was to help the Thai economy reboot and recover from the effects of the pandemic. This was also one of the main factors that drove the Thai cabinet to allow Foreign Direct Investments for landed properties and land as well.
A Higher Demand From Foreign House Buyers in Thailand in 2021-2023
In recent years, Thailand saw positive changes in real estate trends. With the overall purchases from foreign homeowners reaching a whopping 30%, there was also a significant increase in FDI investments. Foreigners with a higher purchasing power invested not only in residential projects but also in office spaces and other types of Thailand property types.
The majority of the FDI sales were from foreign buyers from China and Hong Kong, while condominium and other property buyers from 4 other countries followed a close pursuit. These four countries were Vanuatu, the United States, the United Kingdom, and France.
In terms of joint purchases, the maximum real estate investments were made by Japanese shareholders. From January to September 2022, the maximum number of Thai condo units were sold to Chinese buyers and by October the total shares of condo units bought by Chinese buyers alone had reached 60%.
Singaporeans chose to purchase the costliest condo complex flats with an average of 5 million baht per condo unit. Americans however, bought the larger Thai condominium flats, with an average of 54.8 Baht paid per square meter of these units.
Is There A 2023 Housing Market Update For Foreigners Buying Landed Property in Thailand?
As of 2023, foreigners can buy more than just condos in Thailand, they can also buy a landed property that is built on Thai soil but under a few conditions. While earlier considered impossible, the new law passed by the Thai Cabinet may change the Thai property market for good.
The decision was made in October 2022, and the directive will be applicable and active for a period of 5 years. The benefits that are offered to eligible foreigners will be applicable for a minimum investment period of 3 years upon a minimum investment amount of 40 million Thai Baht. To be eligible for owning landed property, foreigners have to invest in one or more of the following schemes offered by the Thai government.
· Thai government-issued bonds
· Bank of Thailand issued bonds
· State Enterprises issued bonds
· Finance ministry issued bonds
· Property fund shares
· Infrastructure fund shares
· Shares for funds that rehabilitate debts of financial institutions
· Trust shares for property development investments
· Legal entities share that are entitled to BOI benefits
· Business shares that are entitled to BOI perks
The decision to allow ex-pat real estate buyers who are primarily foreign investors can enjoy the perks of owning both land and houses on Thai soil was made after careful consideration by the Thai cabinet. To be eligible, foreign investors have to apply for permission by submitting the required certificates as proof of investments in Thai development.
The directive also states that foreign investors can purchase landed property in municipal areas and residential areas in Bangkok, and Pattaya among other cities. Foreigners will however be restricted from purchasing both land and houses in any marked military areas.
Furthermore, this directive states that foreign investors are permitted to buy 1 Rai of Thai property only once, and this limit will also apply when they choose to sell the land or landed property.
Thailand Real Estate Trends – Projections for the Next 5 Years
With the Elite Thai visa offers, the rollout of the fabulous new incentives, and the additional landed property perks offered to wealthy global citizens, Thailand is expecting a significant improvement in the economy.
It is estimated that over 1 million expats will relocate to Thailand in the next 5 years. It is also estimated that over 1 trillion baht will be generated from the landed property perks.
Furthermore, it is estimated that over 8 million Baht will be invested into the purchase of both landed property and Thai land. To under the benefits and to see if you are eligible for the Elite Thai Visas with immigration, work, and other perks it will be important to talk to the right people and the Thai Embassy is a good place to start.
Do Thai Laws Allow Foreign Buyers To Own Property in Thailand?
Thailand was initially known to have strict laws in regard to foreigners purchasing property in Thailand. These restrictive laws have changed in the last few years but not completely as in the Thai Kingdom, citizens are given maximum priority and rights when it comes to purchasing ready real estate and also undeveloped land.
Foreigners can buy freehold property under Chanote title deeds now, yet landed properties can be bought only via a few exceptions as mentioned in the paragraphs above. Freehold property under Chanote titles largely comprises condominium units sold by Thai developers.
Is Residential Property In Thailand An Attractive Investment For Foreigners?
Yes, it is especially for talented freelancers, working professionals, highly skilled employees, affluent retirees as well as businessmen and investors. Even if you do not qualify to buy a landed property such as a house, you can always buy a condo in Bangkok and transfer the title deed to your name.
You can also enjoy the perks of leases for 10, 20, and 30 years with the option to renew if needed. Leases are valid for townhouses, penthouses, small residential houses, and other types of Thai real estate that are not under the Chanote title.
The Bangkok real estate market is still very much growing but the Thailand real estate market size is set to not only expand with more new property developments but also bring in a new wave of foreign investment.
Thailand – A Land of Smiles, A Land of Laws, And A Labyrinth for First-Time Expat Buyers
While Thai real estate laws exist to protect Thai citizens and foreigners as well, in reality, the property market in Thailand is largely unregulated. This can cause first-time investors that are foreigners to suffer a financial loss if they do not do the needed research before buying a property that they have chosen.
To avoid such situations that arise due to a lack of information or misinformation and misunderstandings due to a language barrier, having a realtor on your side can work wonders. A company such as Silk Estate is so much more than a property market place we can help you buy a Bangkok condo, smoothen transactions, reduce language barriers and help you get a property suited best for your unique needs and also help you manage the property while you are not in Thailand.
Silk Estate can be your eyes and ears while you seek to purchase a condo, your source of information when you have selected a condo and the door to a world filled with real estate opportunities before you sign the final Sale and Purchase Agreement.
Buying Thai Landed Property and Condos In Bangkok Can Be Further Simplified For You
To purchase landed property in Thailand you have to be eligible and submit the certificates of investment to the Land Department. The documentation work can be handled by a solicitor who is an expert in Thai real estate.
To buy condos in Bangkok, the process is a lot simpler, however, having a realtor such as Silk Estate on your side can reduce the entailed work. If you plan to do a private survey of the land to make sure that you are getting the exact square meters that you are paying for then you would need access to resources, and Silk Estate can help you with this as well!
Contact Silk Estate today for all your Thailand real estate and property purchasing needs. We aim not just to provide you with the best condo in Thailand, but also to make the journey of relocating to Thailand a very pleasant one!