Top Three Considerations When Buying a Condo in Bangkok

Are you a local or a foreigner interested in property investment opportunities? Bangkok property is an asset worth considering, but it can be hard to know where to start and where to look if you are unfamiliar with the market. Continue reading to find out our top three considerations for acquiring a condominium in Bangkok.

Understanding Thai Foreign Property Ownership Laws.

Investing in a condominium can be a great way to dive into homeownership or a means to generate a passive income through rent. As an international buyer, the first thing to get to grips with is that Thai regulations and restrictions for property ownership can be complicated and overwhelming. Carrying out research and due diligence is essential before making any decisions.

There are two ways a foreigner can purchase property in Thailand. These will depend on personal circumstances, financial goals and the reason for buying.

All properties, such as a house, villa or condominium, can be purchased as a leasehold. The property is owned for a fixed time, typically 30 years in Thailand, and returned to the freeholder upon expiry of the term. The leaseholder has rights to the property, can use a mortgage to purchase it, and the purchase price is usually lower than a freehold property since a leasehold property does not own the land it sits on.

Freehold purchases typically apply only to condominiums. It is the most common ownership tenure as the property is owned outright until its disposable. One of the key benefits is that this form of ownership allows for a long-term investment strategy enabling the owner to take advantage of future rising condominium prices. Foreigners can purchase freehold condominiums but only up to 49% of the saleable area of a condominium. Called Foreign Quota, it leaves the remaining 51% to     Thai nationals or Thai entities, and in cases where there is no Foreign Quota, overseas buyers can only acquire units in the building on a leasehold basis.

Finding the Right Location.

As the mass rapid transit system expands around Bangkok, it makes the city more accessible and travel more convenient. Property developers seek to take advantage of this infrastructure by building condominiums close to public transport links to alleviate traffic issues and improve the travel experience for owners. Location is one of the most important factors to be considered when making a purchase decision. 

We have categorised location preferences among expats as:

Top Lifestyle Hotspots - Phrom Phong, Thong Lo, Sathorn, and Ekkamai. 

Phrom Phong, Thong Lo, Sathorn and Ekkamai are the top four locations in Bangkok for high to upper-middle-class expatriates with several different condominium styles available. These neighbourhoods offer vibrant lifestyles with a variety of dining destinations, luxury shopping malls and amenities. Due to the high demand for these areas, condominium owners find it easy to secure a suitable tenant.

Budget-Friendly and Well-Connected Areas – On Nut and Phra Khanong.

On Nut and Phra Khanong have increased in popularity among expatriates due to their affordability while offering easy access to commercial hubs. These closely knit communities host attractions like the W District and an eclectic mix of sky bars, night markets and high-quality restaurants.

Property investment in these locales is worth considering due to the abundance of premium and more affordable condominiums, most located close to the MRT/BTS lines. Additionally, most expatriates tend to work in Bangkok’s commercial and business centres, so living in these areas reduce commuting costs due to their proximity to central Bangkok.

Up & Coming Neighbourhoods - Bangkok’s Riverside. 

Interest in Bangkok's riverside district has risen for those wanting to combine convenience and the tranquillity of a peaceful neighbourhood. Moreover, the area is well-connected to the city centre by MRT/BTS lines, meaning it is one place to live in calmer and more serene surroundings without compromising on distance from the city centre.

Securing a Mortgage.

As a foreigner, is it possible to access finance from a local bank to purchase property in Bangkok? 

A common question requiring some explanation to answer, but in short, it is possible to get a Thai mortgage as a foreigner. However, securing such financial products can prove to be hard, time-consuming, and for many, elusive. 

Many Thai commercial banks can be averse to offering loans to foreigners and only grant long-term loans to individuals with lengthy commitments to Thailand. This can be proven through extensive professional and business links to the country, such as business owners or anyone with several years of employment.

An option for increasing the likelihood of securing finance as a foreigner is accessing joint-mortgage products applicable to foreigner buyers married to Thai nationals. Lending rates and conditions are competitive, but assessments are usually on the Thai national’s credit profile. Therefore, a loan is more likely to be secured if the Thai national is a working professional with a strong credit history.

Foreigners should inquire with local banks directly through their head office as access to loans via the approaches outlined above can be granted arbitrarily with rates and conditions fluctuating wildly between banks on a case-by-case basis.

However, to give a baseline to understand potential rates, it is always good practice to research by reading related content before contacting different local banks.

The benefits of a condominium mortgage calculator.

A condominium mortgage calculator helps estimate monthly mortgage payments to help make an informed decision on a property purchase, which is especially important as a foreigner looking for property investment opportunities in Thailand. It is also another potential route to accessing finance with the local traditional Thai banks.

Conclusion.

Buying a condominium is a huge decision, so it is imperative to conduct in-depth research. In addition to the considerations covered in this article, buyers should also assess property management companies and property developers. (Bangkok Post)

Foreign ownership conundrum

Government proposals to allow foreigners to own one rai of land have been applauded by some as a way to revive the economy, but criticised by others who say Thais should be given assistance first

Foreign investment is being seen as a way to revive the sluggish economy, particularly with stagnating domestic purchasing power and GDP expected to grow by just 3% this year.

The Interior Ministry said this month that it will resurrect a measure to allow foreigners to own one rai of land (roughly 0.16 hectares) for residence if they invest 40 million baht in Thailand.

There are mixed feelings towards this scheme, with a similar proposal failing to come to fruition when it was first suggested in 1998 amid the financial crisis.

The Federation of Thai Industries (FTI) believes the plan to allow foreigners to own a plot of land would be a new economic stimulus, especially benefiting the gradually recovering tourism sector.

New economic booster

"The plan will be good for the economy and investment in the long term because wealthy foreigners, notably businesspeople, will enjoy a long stay here after their retirement," said Kriengkrai Thiennukul, chairman of the FTI.

Domestic tourism operators will benefit if the plan can attract more foreigners.

Thailand is among the world's major tourist destinations. The country is rich with natural resources such as beaches and coastlines, and the cost of living is not too high, said Mr Kriengkrai.

The FTI said it would help and support real estate businesses which were affected by the impact of the Covid-19 pandemic and the Russia-Ukraine war.

Prices of energy and raw materials, notably steel, have increased during the ongoing conflict between the two countries.

A property executive who requested anonymity said many Thais might disagree with the government's attempt to attract affluent foreigners by granting them full land ownership of one rai for residential use.

"It's good that the government wants to boost the economy by attracting foreign investment," said the executive.

"Thailand is very attractive among foreigners. They want to stay here as our medical services are good, the cost of living is low, the food is superb, and we have a lot of international schools for their children."

However, some locals think it is unfair to them, as many still cannot afford to buy property.

Lilttle help

Wallaya Chirathivat, president and chief executive of developer Central Pattana Plc, said the government should adopt other measures to boost the economy via foreign investment.

However, other proposed measures to increase the quota of foreign ownership in a condo project to more than 49%, which is the current threshold, could be implemented but with a careful approach.

Absent customers

According to the Real Estate Information Center (REIC), Thai residential property remains popular among foreigners. This is particularly the case amongst the Chinese, who had a 45% market share in foreign condo ownership in the first quarter of 2022, despite a year-on-year decline in the number of condo units transferred to them.

Recently, more Chinese buyers have chosen houses over condos, particularly luxury single detached houses, which they own through a Thai company, said Wongsakorn Prasitvipat, managing director of Property Perfect Plc.

During 2018-20, the number of condo units transferred to foreigners totalled 34,653 units, worth a combined 145.6 billion baht.

The top five nationalities included the Chinese, who mainly own condo units in Bangkok, Chon Buri and Samut Prakan, according to REIC.

In the first quarter of 2022, Bangkok and Chon Buri were the most popular places where condo units were transferred to foreigners, with 829 units (39%) and 677 units (32%), respectively.

The other three provinces included Samut Prakan (230 units), Phuket (164 units), and Chiang Mai (97 units).

The top five provinces for Chinese buyers were Bangkok (51%), Chon Buri (22%), Samut Prakan (19%), Chiang Mai (4.8%), and Phuket (1.5%).

For Russians, the top locations were Phuket (55%), Chon Buri (39%), Prachuap Khiri Khan (4.5%), and Rayong (1.5%).

Americans chose to buy in Chon Buri (58%), Bangkok (15%), Chiang Mai (11%), Phuket (8%), and Samut Prakan (2.6%).

Bangkok Metropolitan Administration to levy land taxes in fullThe Bangkok Metropolitan Administration (BMA) is planning to fully collect land and building taxes on land used for agricultural purposes after landlords and property owners allegedly exploited tax cuts to avoid higher taxes, a source said. Under current regulations, land plots used for agricultural purposes are subject to a land tax of 0.01-0.1%, depending on their value. The full rate is 0.15%, which has a tax liability of 1,500 baht per 1 million baht. However, the full rate is being planned on land used for agricultural purposes in three zones commercial (red), industrial (purple) and warehouse (lilac)  under the city planning law, the source said.

The tax rates for the other zones will remain unchanged. The plan comes after owners of undeveloped land in commercial areas, where land prices are high, turned their properties into banana and lime plantations to lower their tax rates. Undeveloped lands in commercial areas are subject to 0.3-0.7% tax of their value. According to the source, more than 120,000 undeveloped land plots have lately been used for agricultural purposes. The BMA's fiscal office has already drafted new tax regulations, which will be submitted to the Bangkok city council for approval. The BMA has sent a letter to the Finance Ministry's Fiscal Policy Office to ask about its plan to make the full collection on lands used for agricultural purposes. The source said the plan is in line with Bangkok governor Chadchart Sittipunt's policy on land development, in which land should be developed in accordance with city zoning. "So, we are considering adjusting the land and building tax rates to encourage land owners to make proper use of their property," the source said. "We start with agricultural land and if we can proceed, the BMA will collect more revenue." However, the source said with less than two months before the start of the new fiscal year, the new rates may not be imposed until the 2023 fiscal year, which begins in October. On the use of privately owned unused lands for development into public parks, a committee has been set up to draw up criteria to ensure optimal benefits for the public. It is part of the governor's campaign platform "Bangkok 15 minutes", in which city residents will have parks that are no more than 15 minutes' walk away from their houses. The BMA needs to work out details of such arrangements such as the period of land use because the property owners will receive tax benefits or they may lose income opportunities. "The criteria are expected to be completed in August so it can be implemented in the next fiscal year. "Initially, we must first consider which areas will be turned into parks, how large they should be and how much money is needed. "The BMA has to shoulder maintenance costs and it may not need the entire plot offered. "For example, if it receives an offer of 10 rai, it may want just 2 rai for its park project and collect land tax for the remaining 8 rai," said the source. The Bangkok administration has received more than 10 offers and the plots are scattered in several districts including Watthana, Pathumwan, Bang Rak, Taling Chan and Thawee Watthana. Staff are looking at which ones will be suitable. After assuming office, Mr Chadchart floated the idea of collecting a higher tax on land that is improperly developed and discussed the idea with Interior Minister Anupong Paojinda. (Bangkok post)

An interesting requirement of Thai law, which I did not know about - what is the maximum amount of cash that can be paid in coins:For 25/50 satang no more than 10 THB1 THB no more than 500 THB Nothing is said about 2 THB 5 THB no more than 500 THB.For 10 THB no more than 1000 THB.

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