Doctor Property considers itself a responsible and reputable real estate agency. We do not wish to withhold information from you nor will we embellish things just to make a quick sale. We are bound by our quality standards, and we want to maintain and build our reputation. Therefore, we like to point out not only the many benefits, but also some of the risks when purchasing a property in Thailand. Risk is present when purchasing anything, anywhere – and the cure is having the right knowledge, from people you can trust! We wish to welcome you as a neighbour to this somewhat close community and as such, your interests become our interests.
In Thailand, real estate purchasing works somewhat differently than in Europe when it comes to foreigners wanting to buy. We would like to give you some information in advance so that you have the best possible start for your new dream home, land or apartment. However, this information should not be considered to contain legally binding statements. For this, we recommend that you enlist the services of a good local lawyer. If you wish, we can recommend lawyers who specialise in this subject.
Any foreign national wishing to purchase property in Thailand should be aware that Thai local and national laws are not designed to provide many benefits to foreign nationals in terms of direct land ownership for the purpose of pure speculation. Foreign investment in Thailand is something that is both sought after and encouraged in Thailand, but as with any type of investment, it must be done according to the rules of the country in question. You should always seek assistance from a lawyer in order to provide you with the greatest possible legal certainty and fact check everything you read online, including here!
The guide for your real estate purchase in Koh Samui – Thailand!
Here Doctor Property presents all the important information that you should consider when buying a property in Thailand. However, this information applies only to non-Thai nationals. We would also like to invite you to visit our property Koh Samui blog regularly. There we report about changes and new interesting real estate projects.
Basic considerations before you buy a property in Koh Samui – Thailand!
A purchase decision for a property should always be well considered. Here, it is particularly important to inform yourself in advance about the current legal situation and to seek legal advice. Doctor Property recommends you some good law firms if you wish. Of course, we will always be available to advise you. For this topic, you should take some time and understand everything before you buy a property in Thailand. Here in Thailand, the procedure is certainly something different than what you know, for example, from your home country. Likewise, the same rules apply here for real estate acquisition, as elsewhere. Is the location of the property good? Do you have a reputable estate agent? How expensive may the new property be? Do I need financing? Do I want to use this property myself, or rent it commercially?
If you have a clear answer to all these questions, Doctor Property would like to help you find the right property. We see ourselves as an independent real estate agent and are very familiar with the peculiarities of the market on Koh Samui. We can competently assist you in the location as well as in the valuation of the property.
Is financing through a Thai bank possible?
Many interested people are thinking of buying a property in Thailand, especially in Koh Samui. In recent years, the interest rate policy of the banks was very friendly, almost inviting to a possible real estate loan. Many properties have even been fully financed in their home countries. From this consideration, the idea grows to finance a property in Thailand well and cheaply. Unfortunately, in 95% of cases, this game of thought does not work in Thailand. Funding through a Thai bank is almost impossible for a non-Thai citizen. In very few cases, customers evade a lending institution in Hong Kong. Also, there are only a few cases a chance of success, if you speak with your house bank and want to apply for a loan. However, some small development companies offer some development companies that offer their own project with financing. Some of these offers can also be found at Doctor Property. Nevertheless, you should go with the hiring of a 100% self-financing to the property search.
Would you like to buy your property in Koh Samui – Thailand as a pure investment?
If you play with this idea, then you should seek competent advice. It is important to consider in advance which type of property is best. Whether it’s a villa, a townhouse, a condo, or a condominium. It should also be noted which property title this property carries. This is usually very important for a resale. Also a consideration of the expenditures, as for example the maintenance expenditures, security and the management costs are partly quite different. You should also consider which object generates high demand. Are they 3-bedroom villas, or just the two-bedroom apartment? After all these considerations, serious projections of returns can be made. Here too, some development companies offer guaranteed returns on their own real estate. You can also find some offers here at Doctor Property.
Take some time for this and look at the rental price market in Koh Samui. Take a look at the relevant rental portals, such as booking.com, agoda.com, or airbnb.com and get an impression of which type of property is in high demand and good rating. Sometimes even the less considered choice is a small villa with its own pool.
Property types: individual property, community facilities, or apartment complexes?
On Koh Samui, you have the choice between all these different species. You can opt for the single villa on a hillside with a fantastic sea view, a community of many villas, to an apartment complex in the city. Every type of property has its authorization. For example, many investors like the benefits of investing in a property in a managed community. This includes 24-hour security, regular maintenance, cleaning and a comprehensive service package, from bookings to guest management. However, if you are looking for a property for your own use, you may prefer a quieter location and the greater privacy of a single villa. Here you have to make the right choice for yourself. Doctor Property is pleased to show you different examples so that you can make the right choice.
Deposit / Reservation of the property in Koh Samui – Thailand
If you decided after all research and considerations to purchase a property and have already found the right one, then it is customary on Koh Samui and Thailand to make a small down payment on your property. As a rule, it is 100,000 THB for an apartment and 200,000 THB for a villa. This payment is governed by a preliminary contract and the property is taken off the market. As a result, you now have the option of arranging the purchase agreement together and subjecting the desired property to a risk assessment (due diligence) once again. There are usually 4 to 6 weeks available. The design of the down payment contract or reservation contract is individual. Sometimes the development company will provide you with a copy, or you may even design a contract with the owner of the property. There are no specific conditions for this.
Perform due diligence/risk assessment of the property
Before signing the main purchase contract, you should instruct your legal representative to review all risks.
- Is there a legal right of access to your property?
- Do the sellers even have the right to sell this property?
- Are debts, mortgages, or liens on this property registered?
- Are legal regulations (construction law) ignored?
- If the sale is regulated by a company, then please check what is still in the company and whether it is debt-free and all taxes have been paid!
New construction projects (off-plan real estate) on Koh Samui – Thailand
At Doctor Property you will find some new construction projects. Our clients often ask themselves, how safe is my investment in such a planned real estate project? The real estate market on Koh Samui has gained popularity in recent years. The attractiveness of the island and the yield opportunities in real estate investment increase the size of the property market year-on-year. For this reason, there are currently many development companies to market these new projects. Concern for such projects is not shared by our Doctor Property team. Of course, there may be small differences between the marketing brochures and the finished villa, but usually, you will also receive the property as promised to you when you sold it. The computer technology and 3D design make many things possible today and the customer gets a very good idea of his future property. Similarly, with off-plan development, you have some financial headroom. You do not need to provide the entire capital from the beginning. After a down payment, you usually pay in stages. Completely dependent on the construction progress. This also gives you security only to pay for what has already been built. Another advantage of such a new construction project is the co-determination during the construction process. Here, many development companies have the opportunity to adapt the type of materials, colour and interior design to their wishes. Another big advantage is that at the beginning you have the free choice of the property. As a rule, the villas, or apartments with the best view, or the best location are sold first. In this case, it is really important to decide on the right property in a timely manner. From our experience, new construction projects are sold in a very short time. Often the objects are only 6 months on the market. Feel free to send us your contact details and we at Doctor Property will regularly send you new projects via email.
Important excerpts of the building codes and environmental regulations of Koh Samui – Thailand
An essential part of the building regulations on Koh Samui is the dependence of the distance of the property to the beach. The planning permission obtained in the municipal office and is, of course, mandatory here before construction to have the approval for it.
- If your property is within a 10-meter radius of the beach, then you may not build there at all.
- If your property is within a 50-meter radius of the beach, then you may only build a single storey house. The maximum height here is 6 meters (with roof), maximum building area is 75 m2
- If your property is within a 200-meter radius of the beach, then you may only build a maximum of 12 meters high and an area of 2,000 m2 may not be exceeded.
- If your property is located outside of 200 meters, then you may only build a maximum of 12 meters high.
- If your plot is under 80 meters above sea level, there will only be restrictions on hotels and villa projects of more than 10 villas. For normal villas, there are no provisions
- If your plot is between 80 and 140 meters above sea level, then you may build a detached house if your plot is larger than 400 m2. The maximum height of 6 meters must also be respected and half of the property can only be built on. Likewise, the design must fit harmoniously into the landscape. You should definitely seek the help of expert architects.
- If your plot is over 140 meters above sea level, then essentially the same applies as before, but with the further restriction that you may only cultivate 90 m2 of land.
- If your plot is above 140 meters and your land is between 35 and 50 degrees, then you may only build one house with a floor area of 80 m2. Likewise, only 25% of the land is to be cultivated. 50% must remain open space, 25% usable space. The plot size must total at least 480 m2.
- If the slope is greater than 50 degrees, then a new building is prohibited.
Guarantees from the developer for your villa, or apartment in Koh Samui – Thailand
- Apartments / Condominiums with registered government title: Here you will usually receive a 5-year warranty on the shell and 2 years on the entire property. However, some property developers also offer higher guarantees here.
- Property projects not regulated by the state: Here you must check the terms of the guarantee yourself with the property developer. There are no guidelines for this. In general, some developers give a 10-year warranty on the shell.
Differences in the different land or land titles
Again, there are differences in legislation in Thailand. In essence, two titles are relevant to foreign nationals. On the one hand, this is the title “Chanote” and “Nor For Sam Kor”. We would like to explain to you both in the following.
Title “Chanote” (Chanote ti din):
This title is the best land title for the owner or investor. He is the best title of the survey accuracy. Likewise, the chanote title can be transferred very easily and quickly. All titles are issued by the respective Land Authority. Optically, the titles can be distinguished just as well for foreigners. The chanote title is always created in red. On-site, the land is also marked with a post in the ground.
Title: “Nor Sor Sam Kor”:
The difference to the above-described title “Chanote”, is the accuracy of the measurement. This can lead to minor inaccuracies. The transfer to another owner takes a little longer. The document is issued in black.
Title: “Nor Sor Sam”:
This title is the most inaccurate, of all three titles. There are big deviations from the survey. Measurement tolerances can be up to 20%. In the event of a transfer/sale, a public announcement must be made 30 days in advance. The title “Nor Sor Kor” is created in green.
Buy an apartment or a condominium
If you would like to acquire a condominium in a large apartment complex, then there is the possibility in some cases that you can acquire it 100% as a foreigner. But only if not more than 49% of the private living space is held by foreigners in the entire facility. This model is referred to as Condo Freehold and only applies to “registered condominiums”
If it is no longer possible to use this distribution, then you have the opportunity to purchase this apartment through the models already described. Either you start a Thai company, or you can lease/rent this apartment for 30 years.
Which visa is required for a purchase of real estate in Koh Samui – Thailand?
Foreign citizens have 3 types of visas available. With each of these visas, you are also entitled to purchase a property in Thailand. We would like to introduce you to the different types.
- The normal tourist visa: With this visa, you are not allowed to work in Thailand. You will receive the visa upon arrival and you can stay in Thailand for a total of 30 days with this visa. A one-time extension of another 30 days is possible and can be requested, for example, here on Koh Samui (Samui Immigration Office). The fee for this is THB 1,900. The processing takes only a few hours.
- The Non-Immigrant Visa: This visa can only be obtained through a Thai embassy abroad. Overall, this visa is valid for one year. However, you have to leave the country every 3 months for a short time. You can apply for this visa if you want to work in Thailand or own a company (capital value greater than THB 2 million). Or you have a Thai family. Or the third variant would be the so-called “Retirement Visa”. For this, you must be over 50 years of age and have sufficient financial resources, or be able to prove that your pension is paid to you each month.
- The Resident Visa: – These visas are not available to most foreigners. For this, the Thai language must be able to read and write. Furthermore, you should have very good financial resources and influential local contacts that act as references for you.
What taxes and fees do I have to pay for a property purchase in Koh Samui – Thailand?
Acquisition of a property through a company takeover:
If you purchase a property in Thailand through a takeover of another company, you will not be charged any taxes or fees. It’s more about a stock transfer here. The property still belongs to the same company after the acquisition. If the acquired company is a Thai company then you only have to pay a certain stamp duty (paid to the government) of 0.1%. For the design, the value of your shares is decisive here. If you are the divestment, you must tax your income. As a rule, this is the income tax on capital gains.
Acquisition of a property without a company takeover:
Here in the true sense of a real transfer of the property to another owner. For this, you must expect government fees and taxes of up to 6% of the purchase price. There are still differences between a lease (lease), or a contract of sale.
Lease, or rent a property (leasehold):
If you only want to rent/rent a property, you will have to pay both a stamp duty of 0.1% and a rental registration fee of 1%. Here, the total duration and the total rent are used for the calculation. Usually, the seller pays the stamp duty and the rental registration fee is shared in half. The seller may have to pay tax on his return on capital gains.
Ownership also the “freehold” model:
There are different types of taxes and fees due. It is also distinguished whether the seller does this commercially or he acts in a private nature. A holding period of the property of 5 years has to be considered. In this case, a trade tax is applied. Otherwise, there are fees, withholding tax, trade tax or stamp duty for the freehold model transfer.
The Land Office estimates the value of your property and determines from this the transfer tax to be paid. As a rule, this value is significantly lower than your purchase price. The fee is currently 2% of the estimated value.
Many interested parties will firstly find themselves asking these questions:
Can a Foreign National Ever Own Land in Thailand?
Option 1: Leasing.
The land must be legally owned by a Thai entity, such as a Thai citizen or company. The foreigner will then lease the use of the land for a maximum of 30 years per single agreement. This agreement may be renewed further if both parties agree, with some projects offering the 30+30+30 year leases, giving a total lease term of 90 years . This is an attractive option for the foreign investor as it provides the most protective legal framework with a long enough term to realise a return well in excess of the initial investment. If buying a completed villa or house and you wish to lease, you will enter into an agreement with the land owner. Buildings, and the land upon which they sit are 2 separate assets distinct from one another, and there is also a “mixed” structure of property ownership whereby the foreigner leases the land but will own the building outright. The mixed structure may be employed when buying a unit, such as a villa, from a villa project or when you lease a vacant plot and then proceed to construct your own desired property. Leases are registered in the land office and are a rock solid form of (temporary) ownership in the foreigners own personal name.
Option 2: Establish a Thai company.
Establish a Thai limited company in order to purchase your real estate. You may own up to 49% of the company’s shares. The remaining 51% must be held by a minimum of 3 Thai nominee shareholders (which have an interest in the shareholding in the form of small annual or monthly dividends agreed upon during establishment of the company) with the foreigner as director and the largest shareholder. This is a safe, tried and trusted method and the foreigner maintains sole executive rights in the company and the Thai nominee shareholders are anonymous to one another. Our trusted legal professional contacts offer packages which take care of everything from company registration and company bank account setup to land transfer and company books. It should be noted that we only recommend this method as a way to invest in property and run it as a business, such as a holiday rental business. We do not recommend this as a way to live full-time in a property with no income/outgoings shown on the company books. Almost 99% of foreign investment in property uses this structure – Contact us for more information and quotes on start-up packages.
Option 3: Usufruct.
Similar to leasing described above, a Thai citizen owns the land and another party wishes to make lifelong use of that land. Once a price is agreed, instead of a leasehold, a usufructuary is recorded in the registry in the land office . This includes the lifelong right to live in a house or apartment and use the land for this purpose. The main difference to leasing here is that a usufruct expires upon death of the usufructuary and cannot be passed down to his or her heirs.
Option 4: Invest (Big!).
You invest over 40 million baht in Thailand, and the government (Board of Investment) will allow you to buy land up to a size of 1 rai (1,600 m2) for residential purposes. This comes with a few other conditions and requirements as well as the outlay which makes it impractical for the vast majority, but if successful it does indeed give you the right to own land in Thailand and have more or less the same rights to it as would a Thai citizen.
Option 5: Become Thai!
Not to be considered part of most people’s investment strategy but it is possible to obtain Thai citizenship by naturalisation. Start by applying for permanent residency of Thailand after 3 years of continuous residency on a non-immigrant visa. Once obtained, after a few years you may then apply for Thai citizenship depending on meeting other criteria, such as Thai language proficiency and knowledge of Thai culture and heritage.
Can a Foreign National Purchase Condominiums?
What Taxes are Incurred When Purchasing Real Estate?
- Land registration: Also called transfer fees. This is 2% of the appraised value.
- Stamp duty: 0.5% of the sale price must be paid.
- VAT: 3.3% of the sale price must be paid.
- Income Tax: This tax is very individually based. Personal income structure must also be taken into account here. As an estimate, you can expect an amount of 2% for low to medium priced properties, and 3% for high-priced real estate.
- Property taxes are not charged