Buying a Condo in Bangkok: What You Need to Know
If you are planning on buying a condo in Thailand, it’s worth checking out some of the processes and costs involved before doing inspections.
Acquiring a pre-owned or older condo in Bangkok can be relatively straightforward and a little different to buying in your home country. However, there are some things you need to watch out for.
Of course, one of the first questions is how much does a condo cost in Bangkok? Like in other major cities, this can vary greatly depending on location, quality of build, design, building amenities and age of the condo. The first step is to look through our site to see a selection of properties available which meet your budget, make a shortlist and take it from there.
But to also help get you started, below are some great tips about buying a condo in Bangkok, covering several of the key points you need to be aware of:
▪ The basic buying process:
– offer and acceptance: it’s quite easy really, you make an offer (usually through the real estate agent) and either the seller accepts or does not. Normally there will be some negotiation on price and other terms such as which items (furniture or decorative) are included in the agreed price, which are excluded and so on, plus about the timing of paying a deposit and transferring title of the condo;
– sales and purchase agreement (“S&PA”): most transactions involve the preparation and signing of an S&PA, but some don’t.
Simplistically, in the latter case, all you do is go to Land Office with the seller, pay the balance of the purchase price and have your name added to the title deed, but it’s always better to have an S&PA as this sets out the key terms of your agreement. The S&PA may be prepared by either the real estate agent or a lawyer if one is involved in the transaction (see below) and you need to read the terms and conditions carefully;
▪ Important financial terms:
Once a price has been agreed, and assuming you will sign an S&PA, there are several other important items to consider:
– how much deposit should be paid on contract signing (usually 10% of the agreed purchase price) and who will hold this (often the real estate agent involved in the transaction). The S&PA should specify what happens to this deposit in the event of default by either party;
– the balance of the purchase price (typically 90%) is to be paid on transfer of title at the Land Office and is usually paid by cashier’s cheque to the seller (or his/her bank or nominated person);
– transfer taxes, stamp duty and local taxes have to be paid upon transfer of title and the market practice is for these taxes to be shared 50/50 between seller and buyer. However, this can be a point of negotiation between the parties as, technically, the buyer does not have to share all of the taxes.
As a general rule the total amount of taxes payable is about 5-6% of the agreed purchase price, shared equally between the parties. Taxes payable may be less if it is agreed that the taxes will be based on the government assessed value of the property, as this is normally less than market value. This is an important point to clear before you go to Land Office to transfer title.
If you are buying a condo where the current seller has owned the property less than 5 years, there may be “Special Business Tax” of 3.3% payable. Some sellers require the buyer to share this, others do not;
▪ Transferring funds into Thailand for the purchase:
An often overlooked point is that buyers must bring funds into Thailand when they are buying a condo.
Not only that, but the funds must be transferred in a buyer’s home currency (not in Thai Baht, as the banks like to convert it here). The buyer also needs to have it clearly marked on the form accompanying the transfer that the funds are for the purchase of a condo.
▪ Some legal considerations:
Some foreign buyers of a condo in Bangkok engage the services of a lawyer to help with the acquisition process, many do not. If the real estate agent is capable and has a good reputation, he or she can handle all aspect of the transaction, and using a lawyer is really a personal choice.
Before a visit to Land Office to finalise the transaction, several key things need to be checked:
– on the rear of the title deed there is a record of all sales and purchases of the property in question with dates shown thereon. The title deed should not have any encumbrances such as liens or long-term leases or any other interests registered against it. If there is a bank loan or mortgage (very unlikely if the seller is a foreigner) shown on the title deed, steps will need to be taken to have the lender co-operate in the removal of this debt. The lender may need to attend Land Office on the date of transfer and receive a cheque in the correct amount to redeem the debt;
– a letter/certificate will need to be obtained from the Juristic Office of the condominium confirming that the foreigner ownership % quota is less than 49%. This is because foreigners may only own up to 49% of the total usable area of high-rise apartments in Bangkok and other locations in Thailand. If this 49% has been reached, or if your purchase takes the % over 49% then you cannot buy the condo;
– also, a letter is required from the condo management office to confirm that no debt is owed by the seller in respect of management fees. If such fees are outstanding, these may be deducted from the purchase price and paid to the Juristic/condominium Office;
▪ Real estate agent’s fees
– these are almost always paid by the seller.
For anyone buying a condo in Bangkok, Thailand it’s wise to read up further on this matter. You can refer to a Thai Property Guide or a website of one of the more reputable lawyers.
And, perhaps most important of all, when buying a condo in Bangkok, find a good real estate agent with excellent credentials and references.