To Rent or To Buy in Thailand?
One dollar is approximately THB 32.8. That makes Thailand an attractive country to foreigners. Add to this the fact that it is a safe country. The crime rate is low. It’s clean and it has a balance of civilization and tradition. If you are relocating to Thailand, for work or by choice, congratulations, it’s one of the best cities in the world. It could get confusing when you are already trying to decide whether you want to buy or rent a property. There are four basic things you need to consider.
One dollar is approximately THB 32.8. That makes Thailand an attractive country to foreigners. Add to this the fact that it is a safe country. The crime rate is low. It’s clean and it has a balance of civilization and tradition. If you are relocating to Thailand, for work or by choice, congratulations, it’s one of the best cities in the world. It could get confusing when you are already trying to decide whether you want to buy or rent a property. There are four basic things you need to consider:
• the law on ownership
• long-term plans
• supply and demand
• taxes and dues
The Law on Ownership
We will be writing a detailed account on laws that foreigners must know about owning properties in Thailand. However, here are some basic pointers. A foreigner can fully own a condominium unit if not more than 49 percent of the apartments in the condominium complex are owned by foreigners. Foreigners can buy a house or a and but only through a legally registered company. However, a single foreigner cannot own more than 49 percent of the shares. You also need a minimum of six Thai partners to hold the remaining shares. You can, however, make yourself the sole signatory.
The Cost
It is the most basic of all. If you are not staying here for good, what’s the use of buying if the total amount you will be spending when you buy is more than the compounded amount of your total rent for the length of your stay? Buy only if it is more cost efficient to do so. You will find a Town house for sale in Sukhumvit for THB6,000,000. This is 104 square meters with four bedrooms and four toilet and baths. You can rent a condo for the same size with 3 bedroom for THB28,000-65,000 a month. Now do your math. If you are planning to stay for five years, at THB65,000 a month, that’s THB3.9M. If you are planning to stay for ten years, compute the dues and taxes first. If it’s even, might as well buy.
Supply and Demand
When the demand for residential spaces is high, the prices go up. So you can choose to stay in areas a little far from the commercial districts to save you some money. For as long as your place is near a train station, you’ll do just fine. Silom & Sathorn, for example, are Bangkok’s commercial district. Residential condos there are at least three times more expensive than the ones you will find in Ladprao, Paholyothin. Others intentionally stay far from the commercial district to avoid seeing the city buzz once they get home. They simply choose areas that are accessible via the BTS or MRT.
Taxes and Dues
Some of the taxes and dues you need to pay include property taxes, maintenance costs, insurance, agency fees, and others. This will cost you an extra 5%-6% net return per annum on your investment property. There are definitely more financial obligations to consider. We will write about it in the posts so be sure to come back.