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Top Five things to consider when buying condos in Thailand

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Top Five things to consider when buying condos in Thailand | The Thaiger

Straight-talking about buying condominiums in Thailand from Desmond Hughes from Hughes Krupica

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:

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.

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.

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.

If you want to search through Thailand’s largest selection of properties, or even rentals, click HERE.

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.

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.

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.

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.

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1 Comment

1 Comment

  1. Avatar

    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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Bangkok

Royal Barge Procession on Bangkok’s Chao Phraya postponed to December 12

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Royal Barge Procession on Bangkok’s Chao Phraya postponed to December 12 | The Thaiger

PHOTOS: AFP

His Majesty the King has ordered the Royal Barge Procession to be postponed to December 12, originally scheduled for October 24, as recommended by the organising committee chaired by PM Prayut Chan-o-cha. Deputy PM Wissanu Krea-ngarm told Parliament yesterday about the official postponement.

After ten rehearsals and one dress rehearsal, he said the organising committee agreed that, if the procession were to proceed on October 24, the water conditions in the Chao Phraya River, currents and weather conditions would not be optimal. The committee then reported its concerns to HM the King, who subsequently agreed that the event be postponed until December 12, the beginning of the winter in Bangkok and the most settled weather of the year, according to Thai PBS World.

The committee will meet again on October 21 and a formal announcement will be made about the new schedule, said Wissanu, adding that December would be perfect timing for the event as there will be little chance of rain.

The Royal Barge Procession is the official finale of the King’s Coronation ceremony held in May this year. Their Majesties the King and Queen will ride on one of the 52 barges in the procession.

SOURCE: Thai PBS World

Here’s an example of what it will look like…

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Bangkok

BTS thief and credit card skimmers arrested in Bangkok

May Taylor

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BTS thief and credit card skimmers arrested in Bangkok | The Thaiger

Tourist police in Bangkok have arrested a thief accused of pick-pocketing tourists on the city’s BTS Skytrain, along with an Indonesian couple charged with credit card fraud and card skimming.

Kasem Masan Jantaro, a 44 year old food vendor in the Huay Kwang market, says he started pick-pocketing when business became too slow for him to adequately support his family. The Skytrain security team alerted the police after several reports of tourists being pick-pocketed on the trains. Victims described the thief as middle-aged, with pale skin.

Kasem was arrested while trying to flee the scene at the Asok BTS station on Wednesday and was found to have 4,600 baht in cash and four stolen credit cards in his possession. Thai Residents reports that Kasem was previously prosecuted for drugs offences in 2015 and for robbery in 2016.

In a separate arrest, Bangkok police detained 32 year old Alexander Eddilias and 33 year old Estie Rusdiana, an Indonesian couple charged with being in possession of fake credit cards, stolen credit cards, and skimming devices used to steal credit card information.

The arrest comes after several banks notified police of transactions made using fake cards and the couple were tracked to a room in the Pratunam area of Bangkok. Officers also seized a computer, a skimming device, twenty two fake credit cards, two stolen credit cards, and twenty four credit card receipts.

The suspects say they bought the information on the Dark Web. The information was then recorded in the magnetic strip of the fake cards, which were used to make purchases worth approximately 2 million baht.

SOURCE: Thai Residents

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Bangkok and Nonthaburi to get 2 extra holidays during ASEAN summit

May Taylor

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Bangkok and Nonthaburi to get 2 extra holidays during ASEAN summit | The Thaiger

November 4 and 5 have been approved as official holidays for Bangkok and Nonthaburi as a result of the 35th Asean Summit and Related Summits being held at Impact Arena Muang Thong Thani in Bangkok.

Deputy government spokeswoman Traisulee Traisoranakul confirmed yesterday that the measure was being taken in an effort to alleviate traffic problems in both areas during the summit, adding that other state enterprises and the Bank of Thailand could implement the holidays for their subsidiaries at their own discretion and on a case-by-case basis.

“Government agencies in Bangkok and Nonthaburi will stop working on these dates. Meanwhile, state enterprises and the Bank of Thailand will consider announcing November 4 and 5 as holidays for their subsidiaries on case-by-case basis.”

“However, government agencies which have a necessity to provide urgent or previously scheduled services to their clients that cannot be postponed may stay open on November 4 and 5, depending on the decision by the heads of these departments.”

Some other public or regional holidays coming up…

Bangkok and Nonthaburi to get 2 extra holidays during ASEAN summit | News by The Thaiger

SOURCE: The Nation

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