In Thailand, Bangkok might be the most visited city – probably even in the world – but it’s Phuket that has one of the fastest-growing real estate markets in the country. Thanks to its natural environment and beauty as well as luxury resorts, it is attracting a wealth of tourism and development projects. Whether you are looking for new bases, real estate to invest in, or holiday homes, Phuket got it all. Now, you might be asking; as a foreigner, can I buy a holiday home on the island? Well, continue reading
Can foreigners buy holiday homes in Phuket?
Yes, they can! Under Thai law, foreign nationals are allowed to buy property, but they can’t own land on the island. You can either buy on a Foreign Freehold or a leasehold. The former applies to the purchase of condos, while the latter applies to the purchase of holiday homes, villas, and non-foreign freehold condo units. The leasehold extends to a maximum of 30 years.
How can you own a holiday home on the island?
If you are considering buying a holiday home in Phuket, then you should know that there are a number of ownership structures and land titles through which you can own one. Contrary to what you might think, the process is pretty straightforward, especially with a property agent helping you. Now, as we mentioned above, there are three basic rules foreigners have to follow if they are looking to buy or rent a holiday home in Phuket:
- They are not allowed to own land, but they can own and control the building in a specific plot of land.
- They can buy condo units and have them registered under their names, which also reflects on the Title Deed.
- They can buy leasehold homes
Now, all these forms of ownership do come with their own pros and cons, which need to be considered carefully as decision-making factors in choosing the home that suits your objectives best. The thing is, foreign nationals are only allowed to own a condo unit, however, the unit has to be above the ground and must be in a building where ownership makes up 49 percent and below of the property. Practically, this is to say that acquiring a condo unit in Phuket is relatively easy.
On the other hand, acquiring a holiday villa on the island is a bit more complicated as now you are acquiring a home with land, which can only be acquired through either a leasehold or freehold. Talking of freehold properties, you will be required to form a company with a Thai national – may be your spouse – so that the entity formed owns the property. This is the only way you could own the land on the island. Remember, there are several administration and expenses associated with this plan.
With regards to leasehold properties, they are owned by existing companies that have been granted land by the government on a 30-year lease. These leases are renewable, and in Phuket, they do stipulate your right to buy the freehold land which the holiday home sits on, if and when Thai law permits. Moreover, the leasehold company does have full ownership of the structures and buildings sitting on the leased land, and by owning shares in the company, the holiday villa can be designated to you – as the foreign investor. The lease gives you full rights to the property and it is recognized by the Land Department, which means that it will be difficult for individuals of ill-will, including the building owner or the landlord, trying to negate, cancel or interfere with your ownership. Essentially, you will be recognized by the government as the rightful owner of the holiday home.
Depending on the size of the home, the price ranges somewhere between 1 million USD to 4 million USD. How you are going to finance the property entirely depends on the leasehold company you decide to choose. There are some companies where you find that you are being charged a reservation fee of about 5 percent on the property’s value as a deposit on escrow, which, after the documentation is completed within 21 days, will then be credited towards the purchase price. Basically, what we are saying here is that there exist no financing options unless you and your bank come up with one. Given the fact that payments are meant to be processed quickly, you should ensure that the money is readily available and can be accessed at any time.
Holiday homes and villas in Phuket are quite attractive to investors, such that even after the crisis, you should still be able to get a good return throughout the leasehold period. So you won’t have a problem selling the property, and there are no time restrictions on how you can hold it before selling.
What do you need for the buying process?
There are two most crucial documents you are supposed to avail if you are to own a holiday home in Phuket: one is a passport, and the other is an Exchange Control Form, and of course, enough money. Also, it is quite important that you hire a real estate attorney, who will help you through the entire buying process. As the industry in the country is still unregulated, having a lawyer on your side will definitely provide much more security than with a mere property agent.
Also, before signing any documents and paying deposits, due diligence needs to be conducted. Request your lawyer to do a caveat search in order to verify the actual condition of the property. After that, a purchase/lease agreement will be prepared, specify the party that covers the legal fees, taxes, and transfer fees.
Overall, buying a holiday home in Phuket makes a lot of sense, especially considering everything the island has to offer. If you are an expat looking to buy real estate in Thailand, a luxurious holiday property in Phuket is the ultimate investment.