Buying property in Koh Samui real estate market is one of the most lucrative investment arenas on the globe and Thailand, in particular, is very attractive to foreign investors. This is partly because of its strategic location at the heart of southeast Asia serving as a hub for business, trade and lifestyle. In fact, a good number of international companies choose Thailand as their headquarters for business all over Asia. After all, Bangkok, its capital is just an hour-long flight from Vietnam, Laos, Cambodia, and Myanmar which are all fast-growing frontier markets. The Thailand market itself offers remarkable diversity.
Moreover, Koh Samui is the perfect destination for many seeking to enjoy tropical beaches, exotic forests, and beautiful mountains in the nation’s unique culture. Whether you are an already experienced real estate investor or a newbie in the business considering to buy your first dream home in Thailand, success requires careful attention towards the specifics of the market.
Can You Own Land and Property in Koh Samui?
Thailand’s business environment isn’t quite as open as some other southeast Asian countries. As a foreigner, you must, first of all, realize that expats are not legally allowed to own land in Thailand although property ownership is allowed. This restriction is in accordance with the 1979 Thai Condominium Act which permits a foreigner to only own a maximum 49% of the total unit space in any given condominium. Meaning, Thai citizens must own the other 51%. Only Americans are partly exempted thanks to the Thailand-US Amity Treaty, which permits 100% foreign ownership of a firm. Even so, the process is highly bureaucratic and requires approval from many different government agencies. That said, there are important routes you can take to reap the rewards of owning investments in the unique and attractive real estate market Koh Samui.
Here are Important Tips for Expats – Buying Property in Koh Samui
1. Understand Property Ownership
The government has established foreign ownership restrictions in a bid to ensure the locals who own the land stay in control to prevent spiking prices throughout the country due to foreign investment. It may sound a little bit confusing that foreigners are able to own property but not land in Thailand. However, you don’t have to worry, there are many ways to get the land of your choice to construct your desired property on. Below are the most practical;
Through a Thai Limited Company;
The ownership of the land will be in the name of the company on your behalf. Even in this case, you won’t be allowed to own over 49% of the shares unless you are a U.S citizen.
With a Leasehold;
A foreigner can decide to sign a leasehold agreement with the owner of land in Thailand which usually spans 30 years and is optionally and renewable a maximum of three times, in agreement with the owner.
Tip: When drafting the lease contract, remember to make sure you can pass it to another person. This would be useful if you choose to sell the land or you would like to leave the ownership to your children or spouse.
Buying Property in Koh Samui – Other Routes;
There is the option of investing THB 40 million or more in a project with the approval of the Board of Investment which may allow you to purchase land of up to 1.600 square meters and match to 1 Rai.
Insider Tip: Some expats take the route of buying property in Thailand by proxy, through a trusted Thai partner or a spouse.
2. Get Expert Legal Advice
To avoid getting yourself mixed up in fraud, it is recommended to get a lawyer when purchasing property in Thailand. A local lawyer who understands the building regulations in Samui and process perfectly will protect your interest with the legal help you need. Like everywhere else in the world, there are always some people looking to defraud investors and reap them off. The lawyer will be tasked with helping you to do a comprehensive search of the title deed. This is necessary to verify that the person trying to lease the land has the legal right to do so. Land development in Thailand carries records of title deeds from the very first owner.
The three most common types of title deeds in Thailand are;
– Freehold or Nor Sor 4 which grants the owner full rights to do with it whatever they want so far as it ties with the law.
– Nor Sor 3 Gor which means the owner is awaiting the Nor Sor 4 (the full title deed)
– Nor Sor 3 which means the Lands Department is yet to measure the land.
– Possessory right which is only recognized for its payment of taxes at the local government office.
The best title deed to lease for an expat is, therefore, the Nor Sor 4. During the search, you will also be able to find out the kind of property allowed to be constructed in the area. Some areas have restrictions.
Button: Complete Article about existing Land Title Deeds.
Yes, you’ll have to pay for the services of the lawyer, but it’s always worth it.
3. Buying Property in Koh Samui – Be Patient
Don’t allow your anxiety to own property breed impatience. No need to be in a rush. It may take a few months to find the property that best suits you even though there are dozens of opportunities across the island. For instance, properties available to foreigners in Thailand include; condos, houses, bungalows, apartments, and villas. They all have their perks and you’ll identify the best deals if you take time to compare the different available properties. Features you always need to look at are; closeness to the main road, distance from public transport hubs, utilities like hospitals, education etc. and prices of similar properties in other areas.
4. Hire a Good Real Estate Agent or Property Manager
An experienced real estate agent with sufficient knowledge of the terrain, language, and other guidelines will guide you through the buying process. It can be very challenging to find property in any foreign country especially if the language is foreign like Thai. Around Samui are no multi-listings websites like in many other markets around the globe. Never go into the Thailand market without a property agent so that you can set a budget and make the search efficient and a lot less stressful for you. Additionally, hiring an agent is time-saving as they act as an intermediary between the owner of the property and yourself. A property manager to handle the management of the property especially when you are away will also come in handy.
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5. Deposits and Contracts
After checking and confirming your satisfaction with the seller’s terms, you may have to leave a deposit so that the structure of land can be reserved for you. Always make sure you both sign a clause indicating the expectation of the deposit.
All the arrangements should be done in the presence of your lawyer so that all the terms included can be verified accordingly. Make sure the contract permits multiple installments especially if the property is still being built. A fair contract shouldn’t require you to pay the full amount if the houses are incomplete. Steps can be spitted in 20%/25%/25%/10% for example.
Koh Samui’s real estate market is fast becoming more and more attractive to foreigners as the years go by. Although the procedure is still a little complex and involves typically higher interest rates than in most western countries, the mid-2000s saw expats in Thailand start getting access to home loans provided by banks in the country. You can qualify for loans making up to 40% – 80% of the selling price of an available property depending on the particular circumstances.
Follow these tips diligently and you will definitely make the perfect property investment in Thailand.