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Top Five things to consider if you’re buying a condo

Tanutam Thawan

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Top Five things to consider if you’re buying a condo | The Thaiger

Not quite a Top Ten but some good straight-talking about buying condominiums in Thailand from Desmond Hughes from FazWaz News…

One of the most commonly read or spoken summary of foreign ownership of property in Thailand is along the lines of

“Foreigners can buy a foreign freehold condominium in their name”.

At this sentence, many foreign investors switch off, and assume that the rest of the detail provided by the author may be legal mumbo jumbo or a thinly veiled attempt to win their business.

In fact, there is quite a lot you should know about Thai condominiums, before you start property hunting. As my clients don’t generally spend their time reading legal journals and legislation unless they have to, I have set out a mixture of legal and practical matters below without much distinction:

1. Only 49% of the Registrable Area of a condominium can be sold to foreigners.

In Bangkok, this is not likely to have any impact on you. Most of the buyers and owners of condominiums in Bangkok are Thai nationals. Even in condominiums popular with foreigners, it is an uncommon phenomena that foreigners would ever outnumber Thais as owners in a building. You might ask why the rule even exists, but there is a fear and protectionism in many Asian countries, not just Thailand, to try and keep foreigners ‘controlled’ through numbers and perecentages.

In other places – Phuket; Pattaya; Koh Samui; Chiang Mai and Hua Hin particularly you should apply caution to ensuring that the correct ‘quota’ of foreign units is available to be sold to you on a freehold basis.

2. Banks often advertise they will give finance, even potentially to foreigners, but in the end – don’t

I speak from personal experience and from that of my clients. For my first condo investment in Bangkok, I had to take out a loan with HSBC which was then taken over by a Thai bank. My loan had to be in foreign currency, because in order to buy a foreign freehold condominium – you have to send foreign currency into Thailand from overseas to generate ‘foreign exchange transaction forms’ to register the title to a foreigner at the land office. This means a lot of hoops for a bank to jump through simply to provide a mortgage. Foreigners are also viewed as flight risks by Thai banks and they do not wish to spend their time chasing foreign assets. This all means that a very high percentage of the foreign buyer market is cash based, which is good for the stability of that part of the condo market.

If you are tempted to try and take out finance applications to banks, be aware that the banks are looking for you to have some business in Thailand; perhaps to be married to a Thai national who preferable from the bank’s perspective will have some degree of wealth for self-support; and that you have other assets in Thailand with a history of using and paying off credit such as credit cards.

3. There is an oversupply of condominiums in Bangkok at the moment and rental yields are traditionally low in terms of % compared to more expensive Asian neighbors – Hong Kong and Singapore, and further afield

A condo in a prime rentable area at a high investment price can remain rentable due to its extremely useful location and amenities. If such condo has a 24 hour supermarket in the basement of the retail area and dozens of restaurants, as a condo building I am thinking of does have such amenities, then it will remain rentable for some time if the property is maintained. However, another condo at the end of the same ‘Soi’ and post building and delivery could remain unrented after many months and even if the rent is cut to 50% of the market price. Don’t just take my word for the state of the market for condo rentals in Bangkok, ask the agents.

In addition to this, the authorities are taking a closer eye at tax declarations and ‘cracking down’ on undeclared taxes – not just personal income tax, but the ‘business tax’ of 12.5% for renting units out. This all adds to the costs of investing and renting in a condo, and you must calculate this into your budget and forecasts to avoid living in fantasy land about dream returns.

3. You won’t have any say in how the condominium is managed

Unless you buy up over half of the voting rights attached to units in the entire building, you will be a minority voice on issues like the raising of the common area fees; use of the ‘sinking fund’ – the fund to make capital repairs, changes to the rules and regulations and general maintenance decisions, even of some significance. Don’t imagine standing up at an co-owners meeting voicing your opinions and somehow making headway in ‘changing’ the direction of the management of a building. The way in which a building is managed boils down to how the developer has structured ownership, whether the developer retains many units and a large % of the voting rights or not, and whether the developer plans to self-manage or outsource management of the asset to a reputable or not-so-reputable management company.

If you don’t check the management plan then I can reference lots of analogous situations where you would take more care – if you buy a car, you should think if there are any decent repair centres nearby and at a reasonable price – Ferraris in Phuket aren’t currently easy to maintain, I would imagine, as a non-Ferrari owner and observer of the state and condition of the roads in that Province. You also wouldn’t, I hope, buy a smart phone without knowing you could have the phone service, fixed and various parts replaced on reasonably short notice. As a property is a far higher value of investment, a lot of investigation into the management plan is necessary.

4. Don’t Believe the Hype – It’s a Sequel

False Media, we don’t need it do we? If you see a glossy marketing brochure and are told that the developer ‘has to deliver on its promises by law’ – be wary. To take one example, I bought a condo under which a ‘private wine cellar area with personal secure wine bottle storage space’ would be provided to every buyer. Amazingly, without any shame at all, the famous developer constructed an unchilled cheap wooden cabinet with glass doors, no locks next to 4 sofa chairs in the open space corridor between a swimming pool and the gym. If you wanted to fry an egg on the ‘wine cabinet’ then that was highly likely to have been possible.

These kind of things are not all ‘horror stories’ – I actually got a decent condo notwithstanding the missing items. However, you will often have to compromise when in more highly regulated and supervised jurisdictions, you would not. Compromise is a very common work in Thai society and it applies to business and consumer purchases too.

5. Set up your ownership for easy re-sale

If you are buying a condo as a ‘foreigner’ and paying cash, then you can buy your condo through a foreign company, and sell the company later. This is only worth doing if the cost of setting up and maintaining the foreign company is reasonable and the company you set up is ‘saleable’ and attractive to others. You should not carry out this kind of structuring to ‘avoid tax’. However, you can set up this kind of structure, pay tax on the purchase, and subsequently deal with your company as you see fit, provided a buyer is willing to buy it. If such a company receives rental income, then even if it is foreign it is till liable to taxes as the use of the ‘immoveable property’ for generating revenue isn’t deemed to be ‘outside’ of Thailand, and that applies even if the company tries to contract for and receive the rent outside of Thailand.

Top Five things to consider if you're buying a condo | News by The Thaiger

Desmond Hughes has operated and owned 2 law firms in Asia in 14 years spanning Thailand; Vietnam; Indonesia with clients in all of Asia and other markets investing inwards into the region with his existing firm Hughes Krupica possessing a large market shares in its fields of expertise. Desmond’s professional expertise comprises real estate from the most complex mixed use development structuring through to assisting with private property transactions. Desmond also assists investors in relation to hotel disposals and acquisitions and restructuring. Desmond keeps his market knowledge fresh by presenting at seminars; participating in real estate industry events; writing prolifically for different printed and online publications and by meeting and networking amongst his client base.



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Local Thai journalist speaking fluent Thai and English. Tanutam studied in Khon Kaen before attending Bangkok’s Chulalongkhorn University.

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1 Comment

1 Comment

  1. foot

    September 29, 2017 at 1:14 pm

    The bottom line is don’t buy a condo. While there are some that have worked out, the huge percentage of buyers lose everything they spent.
    The author also fails to mention how many times the Thai who holds the 51% changes the locks and throws farang out. Usually the wife, girlfriend, or “trusted” Thai associate.

    BTW, all of these warnings also apply to any timeshare, regardless of what country it’s purchased in.

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Hua Hin

Drivers of fatal migrant truck arrested in Phattalung

Tanutam Thawan

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Drivers of fatal migrant truck arrested in Phattalung | The Thaiger

by Thanyawee Chansuksri. PHOTO: Chaiwat Satyaem

Two brothers from Phatthalung have been arrested in their province over their alleged role in the pickup-truck crash in Prachuap Khiri Khan on November 30. The incident led to two deaths and 12 injuries of illegal Burmese migrant workers.

Suspects, 29 year old Anurak Khongdaeng and 27 year old Sompong Khongdaeng, for whom the Prachuap Khiri Khan Court had issued arrest warrants for aiding illegal migrants to avoid arrest, were taken into custody in Tambon Tha Khae, in Mueang Phatthalung, where they had fled to after the night crash last Friday.

The brothers also had reportedly stopped in the Khuan Khanun district to clean up their getaway pickup  in an attempt to avoid police detection and destroy evidence.

Their vehicle was one of two pickups used to transport 26 Burmese, who had trekked through the Tanaosri mountain-range forest and crossed a natural border into Thailand, heading to a labour market in Malaysia.

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Hua Hin

Two year battle for hospital compensation

Tanutam Thawan

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Two year battle for hospital compensation | The Thaiger

Thai media 77jowo is reporting that the Hua Hin Hospital and the Department of Public Health have agreed to return more than 20,000 baht to a man from the Netherlands who claims he was ripped off by the hospital because he was a foreigner.

Back in September 2016 a man, Erwin Buse, complained to the government watchdog Damrongtham in Prajuap Khiri Khan that he had been obliged to pay 300 baht for each visit to the hospital and an unexplained 858 baht “admission fee”. The man, a former engineer, was suffering from prostate cancer at the time.

He claims that he was ripped off because he was a foreigner. By that time he had already been in Thailand ten years and had a Thai wife.

But he says justice was slow in coming. He recounted that visits to the hospital were painful round trips of 200 kilometers on a motorcycle. He says the hospital kept on coming up with excuses not to pay him.

But 77Jowo reported good news for Mr Buse on a recent visit to the Prajuap Damrongtham office. He was told by the office that he would be receiving 20,000 baht from the Hua Hin Hospital and the Department of Public Health by the end of this month. The fight has been dragging on for two years.

Thai media is reporting that Mr Buse now suffers from intestinal cancer, has no job and looks after goats. His Thai wife runs a salon in Makham Khong, Koh Lak, they said.

SOURCE: 77Jowo

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Hua Hin

400,000 baht Hua Hin shark net comes loose again

Tanutam Thawan

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400,000 baht Hua Hin shark net comes loose again | The Thaiger

Talknewsonline is reporting that the shark net installed along Sai Noi Beach in Hua Hin has come loose for the second time and floated ashore.

The net was installed back in September after a Norwegian tourist Werner Danielsen was bitten by an alleged shark while swimming at the beach last April.

Official visited the beach yesterday after a local hotel manager called to say the net had come loose from its anchoring buoys in heavy seas. Officials confirmed that it was the second time the net had become detached but that it would be fixed by next week.

The net was installed at a cost of 400,000 baht after much debate following the attack by what was thought to be a bull shark. Mr Danielsen, who has a Thai wife and visits Thailand each year, needed expensive treatment in two hospitals and racked up bills of a reported 300,000 baht during his recovery.

Read more about that incident HERE.

SOURCE: Talknewsonline

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December 13, 2018, 11:12 pm
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