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However, before investing in Thailand property, there are various factors that the investor needs to weigh when purchasing a building particularly if the investor is a foreigner. Despite the fact that Thailand has some allowance for foreigners to invest in the property especially condominiums, they should note the following risks of buying property in Thailand.
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Foreign Ownership Restrictions
Thailand’s law does not allow foreigners to own the property of land as freehold property. But where such sub-divisions exist, it is legitimate to own up to 49% of a condo, but it is impossible to own title to land. Unfortunately, many foreigners compromise by paying a long-term lease and face other issues associated with those kinds of contracts. If a lease agreement is for more than 3 years, the parties involved must register the lease agreement to ensure it has legal backing. In addition, some leases can be rigid to roll-over after an initial term of a maximum of 30-years and it is still unknown whether some provisions in leases beyond the 30-year term are legally binding.
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Title Deed Issues
Title search is an important component of any property transaction and can provide substantial information once competently conducted. The highest form of title deed in Thailand is Chanote, also known as the title deed or “Chanote.” Before purchasing, the seller must have legal and clear rights over the property they are selling. However, if this research is not done then the property may be purchased with liens, mortgages or even zoning restrictions as to its use.
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Currency Fluctuations
The investment in an international property becomes subject to currency risk. Immense volatility of the Thai Baht versus other currencies causes the customers to reconsider the property’s overall price and any related costs. This remains a major concern to the foreign buyers because even slight fluctuations in currency price are capable of causing drastic increases in the unit cost of importing goods.
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Additional Hidden Costs
There are also other fees that incur additional expenses and these include the transfer fees, the legal fees as well as taxes. People often assume that the buyer and seller split costs such as transaction fees, business taxes, and stamp duties, but they often overlook these costs. Furthermore, in case you are buying property through a company, erroneous declarations would mean a good deal of taxes down the line.
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Political and Economic Instability
Currently Thailand has political instabilities and some economic cycles that influence the real estate sector. This means that investors require knowledge that changes in the political realms, currency value, or even devastating natural disasters can affect the value of properties. It is one of the major risks of buying property in Thailand. This can have an impact on Frequently Asked Questions about Real Estate, the overall market value of the house or building and sometimes results in low market demands.
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Scams and Fraud
Among the many scam techniques on the Thai market, real estate fraud is widely spread, particularly in the regions that attract foreigners the most. These include fake deeds, fraudulent developers and sketchy contracts and sale deeds. To reduce the possibility of being conned, investors should actively seek out original real estate agents and lawyers. It is again important for the buyers to avoid a situation where they deposit money before they conduct their research fully.
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Construction Delays and Quality Issues
In off-plan purchases of properties, including condominiums, there are usually holdbacks in constructions. In some cases projects are not completed or it comes with very low quality. To avoid such risks foreign investors ought to conduct a due diligence reflecting the credibility and solvency of the developer.
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Legal Complexities
Another condition worth considering is that Thai legal practices differ from those in Anglo-Saxon countries, and contracts may deviate from the standards commonly followed in international relations. This usually puts buyers in legally precarious situations in the event they have not sought legal advice from the right legal practitioners. Before entering any agreement, we recommend seeking the aid of a Thai real estate lawyer to avoid contract pitfalls and ensure all contracts comply with Thai law.
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Environmental and Zoning Restrictions
There are some laws in places like areas near to beaches and other areas of environmental concern to restrict what can be constructed in the areas. This is not always true, as there could be height, use or occupancy restrictions or prohibitions against specific land use. If they do not regularly use these restrictions such buyers can acquire land which they are unable to use for the intended purposes.
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Inconsistent Property Valuations
Thai property values are the result of location effects, nearby infrastructures and the impact of FDI. Depending on the district, such as Phuket or Bangkok, property prices could be higher because of the expats and tourists present in these areas. However these values can decrease at a very fast pace in poorly located areas or in a situation the overall market takes a downturn. For example, time use sectors, particularly those in the geographical locations that rely on tourists, whatever property the tourist utilizes, especially during a disaster like COVID-19. Therefore, potential changes in the price value of local markets have to be analyzed to ensure that the now safe investment is safe in the future too.
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Leasehold Agreements and Limitations
Though the foreign investors are allowed to lease the land for up to 30 years, the issue of renewal of the lease can sometimes turn to be complicated. Under Thai law, you must register all lease agreements extending for more than 3 years to make them valid. Moreover, the landowners may not respect the rights of renewal, exposing the foreign investor at the expiration of the lease period. Tenancy is not as secure as Freehold title, and foreign prospective buyers need to be cautious when signing such leases. It is one of the major risks of buying property in Thailand.
Conclusion
Overseas investment in particularly the Thai property market can be fulfilling but still presents its own vices. The above analyzed restrictions imply that social purchasing of the target business is crucially important to conduct thorough investigations and seek legal advice. As with any foreign investment, there are risks of buying property in Thailand and knowledge of the Thai property market and other operating costs will go a long way to helping minimize those risks.
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