First Time Buyer Questions
Justin (one of the many residents of Hotmail) and almost every
other prospective buyer of Property in Phuket usually starts out with
a list of very basic questions. Questions that can seem almost too simple
to require a response, but their frequency suggests that they do, so
Can a non Thai citizen own property in the kingdom of Thailand? (Land and House)
Foreign national may not own land freehold (fee simple) Thailand, they
can however register long term leaseholds over land and own outright
all improvements (houses etc) upon the land. Long term leasehold can
be (and typically are) structured to be tantamount to freehold ownership.
A property can also be owed indirectly through control of a Thai corporation
- which owns property. More details on this and other property ownership
issues can be found within the various "Gazette Property"
articles at http://www.phuketland.com/gaz/
How much is the property tax in the kingdom of Thailand.
Property Tax (or Rates) do not exist per se in Thailand. So long as
a property is being used for private residential purpose there is no
ongoing property tax. However if the building is being used for commercial
purpose, then a "Structure usage Tax" is assessed (this is
calculated as 12.5% of the notional rental value of the property - this
notional value is well below the commercial market rental value).
If however you are referring to transfer fees, taxes and costs - these fall into 4 potential categories - transfer fees 2%, Duty stamp 0.5%, Business tax 3.3% and Income tax (the Thai equivalent to capital gains tax - a variable rate). Which of these categories will be applied depends on the details of the transaction, the vendor and the duration of ownership. It is also significant to note that most of the fees are calculated relative to the governments "tax assessment value" of the property and this value is well below market value. The precise methods of calculation are complex, but as a rule of thumb for residential sales - expect the total fees and taxes to work out to be approximately 2 to 3% of the property market value - and typically these will be split in some degree between the buyer and seller.
What about rental options?
Rental with purchase options while not common are on occasion negotiated on private sales. As an owner - and typically (check the lease contract) as a long term lessor you will be allowed to rent out your property. In larger managed developments, there will typically be a rental service organized by the development body corporate - and in this situation there may be restrictions to the format of the letting - or a requirement to let through the management (this needs to be reviewed development by development)
How secure is my investment?
So long as you have taken all the usual and sensible precautions (done some due diligence, had a lawyer prepare you a solid lease agreement ) there is no reason why an investment in Thailand is not as secure as anywhere else in the world.
What about zoning restrictions?
There are indeed zoning restrictions in Phuket. These govern both building usage and density of construction in each of the zones. From a single residence construction perspective, the only zones you will find significantly restrictive are land less than 50 meters from the sea shore (where a single storey and maximum 25% ground coverage apply) and hillside land (where you may not exceed 8 meters building height)
What about the standard of management and construction?
These are variable. Some of the construction on the island is very simple and basic, while at the top end of the market, build quality now equals or exceeds standards found in the best developments in the west. Much the same applies to ongoing property management. This needs to be reviewed and evaluated on a project by project basis
Do I have the option of designing my own house?
Once again, this will depend on the development. Buy your own single plot of land and you will be subject only to general building codes, buy into a development and there will usually be style and construction guidelines and minimum standards and time frames to be observed. Controls within a development, while in some degree restrictive to the individual, generally have advantages in as much as they will offer the whole community protection - and serve you well with regard long term capital protection.