5 Great Tips For Buying Property In Phuket

We could make a lot of suggestions and tips for buying property in Phuket, but some are more relevant than others.

We’ve been asked many times for our “Top 5 Tips” for anybody considering buying property in Phuket (or anywhere in Thailand), so let’s break down a number of them here:

– Seek the Most Effective Legal Representation

– Do Not Be Hasty

– Perform due diligence on the projects that you’ve been presented with

– Evaluate Your Sales Representative

– Get a Good Understanding of Thai Law

Unfortunately, despite the fact that it is a lawyer’s obligation to defend their client, it has been clear over time that far too many foreign nationals, even by competent lawyers, are given inadequate advice.

If you have your mind made up about purchasing a luxury townhouse or villa, you should be mindful that foreigners are not legally permitted to buy landed property in Thailand under current rules, and doing so has risks.

Many lawyers will, despite this fact, still attempt to convince clients that using a Thai corporation to purchase a property in Thailand is absolutely permissible. On several occasions, courts have concluded that this goes against the spirit of Thai law on many different occasions.

When it comes to foreign shareholders, it’s not technically illegal for a Thai company to purchase a villa, but it will become illegal if the following happens:

(a) The foreigner in question has a controlling stake in the company, which is really just a holding company and therefore does not trade, and/or

(b) Thai nominees make up the rest of the shareholders. Any company formed for the purpose of purchasing a landed property or a villa would very likely be declared invalid in court.

Bear in mind that it is entirely acceptable for a foreigner to establish a genuine Thai company with valid Thai shareholders, and that company may acquire landed property as long as it is 100% legally compliant. The company must be a legitimate enterprise that generates income, files audited financial statements, and pays taxes.

Furthermore, some lawyers may advise clients that lease extensions beyond the first 30 years are permitted if specified in the lease agreement or an amendment.

This is yet another “grey area” in which the buyer may be put in jeopardy. The legal community is divided on the legality of extended leases since they are “not in the spirit of the law.”

The best case scenario would be the cancellation of the extended clause if the courts decide against extended leases. The worst-case scenario is that the first 30-year lease is voided, resulting in the loss of your property and the money you put into it.

Our Advice

Anyone that’s seriously searching for tips for buying property in Phuket should firstly spend time researching and finding a good lawyer than they do hunting for a good property.

We will not propose a specific individual or company in order to prevent any conflict of interest – or the perception of a conflict. We urge everyone to obtain independent legal counsel.

As the Thai’s Say, “Cha-Cha” – Slow It Down

There is no reason to rush if you already live on the island. Take your time and don’t make any rushed decisions.

If you are on vacation, have a limited amount of time, and feel unable to make a choice this trip, schedule it for a future trip.

You’ll discover that in practically every aspect of life, a relaxed decision is more likely to be an accurate one. By giving yourself time to think about it (sometimes literally), you’ll be able to ponder on and evaluate parts of the purchase that you may have overlooked if you had hurried into it.

This is especially true with regard to real estate selections. If you’re looking to buy a home in Phuket, you should never be in a hurry. So don’t force yourself to make a quick choice, and don’t give in to pressure from a salesperson or anybody else who is solely interested in getting your business.

You clearly don’t want to miss out on a fantastic deal by dragging your feet, so if you’re certain it’s the property you want, go for it! But only if you’re certain it’s the right choice.

Purchasing real estate is a major life choice. It is absolutely not a decision that should be made hastily, since this is when individuals are more likely to make mistakes, suffer from buyer’s remorse, or both.

Research the Developments You Are Shown

A professional real estate agent will have done some basic research and due diligence on the companies and local projects they are proposing. Inquire about the steps taken to thoroughly vet the properties they are promoting.

You should be aware of the developer’s reputation, finances, land titles, and what may go wrong with a new development, particularly one that has not yet been finished.

After that, go ahead and conduct your own research! A skilled lawyer will take care of a lot of the legwork for you, but savvy investors should always undertake their own due diligence on the developers. Everything that has ever existed on the internet has had a very lengthy half-life, so search around and see what you can learn about the company’s founders and their track record.

Don’t put down any money unless you’re completely satisfied with the developer and the project.

Scrutinize Your Sales Agent

Examine how a sales agent conducts business if you are utilizing one. If they’re employing high-pressure sales tactics to urge you to make a rapid choice, and you’re feeling stressed, you might want to consider switching agents.

Even if you’re on vacation, don’t be pushed into making a decision even if your return trip is only two days away.

An agent is usually compensated as soon as the principal deposit on a property is paid. Obviously, every realtor’s job is to sell you a property no matter what – that is their business – but they should be considerate of the time you need to decide. Don’t feel obligated to make a quick choice, and never put a deposit on a home without first consulting an attorney.

They are most certainly receiving a good commission for making the sale, so pay attention to they and the company that they represent are doing for you in order to earn that money. Ask them if you don’t see it.

What kind of due diligence did they perform on the developments they’re presenting to you? Have you had a qualified lawyer go through the land titles? Inquire about the developer’s track record and, if possible, examine some of their prior work. If you have the opportunity, inquire about the contentment of past development owners. (For example, some developers have neglected to give title documents to owners in the past while continuing to build new developments.)

If you’re unhappy with your current one, find a new agent.

Know the Thailand Property Law

It stands to reason that you should be aware of the law. However, we believe that nine out of ten foreign buyers of Thai villas are unaware of Thai legislation.

It’s a good idea to sit down and calculate the statistics, asking yourself, “How Much Cash Could I Afford to Lose?”

Australia, England, France, Germany, China, and Russia are not places where you can buy. You’re a foreigner purchasing property in a nation that differs from your own in terms of land ownership legislation.

Trying to go around the law might be disastrous. What do you think your prospects are if you’re taken before a Thai court over a shady villa purchase? There are several conceivable infractions that fall under different provisions of the legislation (e.g., the Land Code, the Foreign Business Act, and the Civil and Commercial Code).

Condominiums Are Usually A Great Investment

If you want to make a good investment in Thailand and really want to follow our tips for buying property in Phuket, you should consider buying a condominium. Foreigners can purchase condos with a perpetual freehold title.

If you believe a condo is a “second-rate” alternative in comparison to a villa, you haven’t seen any of Phuket’s condominiums. There are several magnificent penthouse units to choose from, as well as villa-style condominium buildings. Some of them offer private swimming pools and sea views, as well as gardens and/or roof top gardens. These are on par with many of the island’s villas.

If you want to buy a villa or property in Thailand and your spouse is not a Thai native, you must be aware that this is illegal. Foreigners seeking to purchase landed property in Thailand are breaking the spirit of Thai law, regardless of what you may hear from enthusiastic parties anxious to clinch a deal. “Everyone else is doing it,” which isn’t necessarily good advice.

As previously stated, some brokers, attorneys, and developers will inform you that you may buy a house by forming a Thai corporation. However, a Thai corporation with foreign shareholders cannot be formed solely for the purpose of purchasing real estate.

A 30-year lease may be extended for another 30, 60, or even 90 years, according to some brokers. This has already been challenged in court, and not in favor of foreign property owners. A lease can be renewed every 30 years, but there is no legal way to prolong it.

If you already have your mind made up on a town house or a villa and are willing to take a chance, you must assess the proportion of your net worth that is at risk. If the money you’re investing in your dream home represents a modest percentage of your overall wealth and you believe you can afford to lose it, go ahead.

We don’t want to sound alarmist, but any avenue to overseas land or villa ownership has never been welcomed by the government.

Thailand refused to comply with IMF demands to codify authorization for foreign property ownership into law, which the IMF demanded as a condition of Thailand’s rescue from the Asia Crisis. Despite receiving $17.2 billion from the IMF, the country’s property market remains restricted to this day.

Taking up a “leasehold” and accepting that the lease can only be guaranteed for 30 years is the safest option for living in a villa for an indefinite period of time. Anyone who organizes their lease contract (or amendment to the lease) properly should be able to extend the lease for another 30 years when it expires.

The number of people who buy villas for millions of dollars through Thai companies astounds us. The Thailand Board of Investment (BOI) Scheme allows you to legally acquire 1 rai (1,600 square meters) of land for 40 million Baht.

Rather than fraudulently purchasing a US $3 million luxury property, why not invest US $1.25 million in Thai government assets under the BOI plan, and then spend the remaining US $1.75 million on your dream villa, all legal and above board. (Believe us when we say that 56 million baht would get you a lot of Phuket villas.)