What is the procedure for purchasing an off-plan property in Thailand?
Purchasing an off-plan property is an excellent option for investors who want to obtain a property in Thailand. With an off-plan property, you can enjoy numerous benefits and flexibilities. For example, you can choose the best units and have the freedom to modify the unit you want to buy. Buying off-plan in Thailand also gives buyers an opportunity to buy a property at a lower price than an already built property with the expense of waiting for the construction to be completed. Plus, the property is likely to increase its value after construction, so buyers and investors can benefit from more significant financial rewards.
If you’re interested in buying an off-plan property in Thailand, be sure to read our guide below, so you don’t miss anything!
The Procedure to Purchase an Off-Plan Property in Thailand
Step 1. Select the unit you want and agree on terms and conditions
The first thing you need to do after you’ve found a project by a reputable Developer is to choose the unit you want. It’s vital that you understand the position of the unit you want to buy in the project, such as what amenities are available nearby.
Once you’re sure that the unit you want is the best for you, you should make sure that all parties involved agree on the major terms and conditions of the transactions. These may include:
- The purchase price and what’s included in it. Some developers may consist of fittings and/or furniture in the price, while others may not.
- The payment plans. Some developers may offer flexible payment plans, give a discount or include a furniture package.
- Reservation deposit value, which will secure the unit for the buyer.
- Whether or not the reservation deposit be refundable if the buyer conducts due diligence.
- Taxes and transfer fees, particularly what the buyer and Developer are responsible for.
- The schedule for upcoming payments.
- The expected completion date for the project and the penalties that are in place should the Developer be late.
Step 2. Due Diligence
Purchasing a property from a reputable Developer with a proven track record doesn’t necessarily mean you can skip the legal due diligence process. Yes, the risk might be lower, but legal due diligence can give you additional safeguards. Be sure to get a reliable lawyer to help you with the due diligence. Your due diligence should include thorough research on the Developer’s credentials, title search, permits, contract review, and access to capital.
Keep in mind that not all deposits are refundable, subject to legal due diligence. Therefore, if you want to do legal due diligence, it’s best to make sure that the deposit is refundable.
Step 3. Reservation Agreement
Your Developer will provide the reservation agreement. The document typically outlines the general purchase terms. Additionally, it may also outline the agreed timeline associated with your investment.
Step 4. Reservation Deposit
Once you have found your perfect off-plan property and reached an agreement with the Developer, you will be asked to pay a reservation deposit. The deposit varies from Developer to Developer and market to market. However, it’s typically around 2% of the purchase price. The reservation deposit will secure the desired unit for the buyer, so it is removed from the open market. Make sure you obtain a payment slip for the transfer from the Developer.
Step 5. Review Sales and Purchase Agreement
You will usually have up to 30 days after paying your deposit to evaluate the terms and conditions of the Sales and Purchase Agreement. The Sales and Purchase Agreement contractually specify the entire project and the specifics of the unit you’re buying. Additionally, an agreement to buy or sell a property becomes legally binding at this stage, and the terms of the contract can only be changed by mutual agreement.
Step 6. First Contract Payment
The first contract payment ranges typically from 20% to 40% of the purchase price. For Thailand’s non-residents, the funds have to be transferred from an overseas bank account into the country.
Step 7. Payment Installments
Your next payment will be related to construction milestones, depending on where the project is in the build cycle. The Developer can propose rough timeframes, but payment should be tied to the accomplishment of crucial milestones in the project. Just like the first contract payment, the funds must come from overseas.
Step 8. Snag List
When your house is finished, you’ll be invited to do some ‘snagging.’ This is when you inspect your new home and point out anything that you don’t like or that isn’t up to your expectations. The snag list is usually developed two to three weeks ahead of handover. In short, it’s done to address any issues on the property.
If you’re not sure, it’s a good idea to bring a surveyor with you to perform your snagging, as they’ll be able to point out any flaws your Developer will need to address before you move in.
Step 9. Completion and Transfer
When the build of the property is complete, the Developer will issue a completion notice and will agree on a date with you to move in. You’ll have to pay the remainder of the purchase. Once they receive the money, the Developer will hand over the keys, and the property will be yours!
To complete the handover process, you do not need to be in Thailand. A third party can do it on your behalf.
And that’s it! Now that you understand the steps of purchasing an off-plan property in Thailand, it’s time to hunt down the best projects by a well-known developer. Remember, always make sure that the Developer of your desired project has a proven track record of delivering projects on time. You can make a well-informed decision and seek professional advice from Thaiger Property.
Ready to purchase your off-plan property but not quite sure if you need a Thai bank account to do it? Read our guide on whether or not a foreigner needs a Thai bank account when buying real estate
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