Costs associated when purchasing real estate

When you purchase a house or an apartment, you typically agree on a payment plan with the seller, especially if the property is still under construction. This payment plan is set by the developer but can be negotiable in some aspects. Here’s how it typically works:

  1. Reservation Fee: Whether you’ve made a final decision or need more time to think, a written reservation is usually agreed upon at the beginning of the decision phase to block “your” property, at least the land, from being sold to someone else until the contract is finalised. The fee can range from 50,000 to 100,000 THB for apartments or 200,000 to 300,000 THB for houses and is non-refundable if you change your mind. If you proceed with the purchase, this reservation fee is usually deducted from either the down payment or the final payment.

  2. Down Payment or Deposit: This is paid immediately after signing the contract and often amounts to at least 20 to 30% of the purchase price.

  3. Instalments: Depending on the construction timeline (and for villas, also construction phases), the next payments can be made in instalments monthly or quarterly. Since bank fees for transferring money from your home country to Thailand are quite high, it’s advisable to negotiate fewer individual transfers. Tip: Compare your bank’s transfer fees with online transfer options like WISE.

  4. Final Payment at Transfer: When the property is ready for occupancy, the final payment is due, often amounting to 5 to 10% of the purchase price. Use the time before making the final payment to inspect the construction quality and scope. If necessary, create a snagging list to address any issues within a short and agreed-upon period before making the final payment.

Once the full payment is made, a date for transfer and property registration at the local office is set. Then, you become the owner of the apartment or house, as well as the official lessee of the land on which your house was built. Regarding land ownership: foreigners cannot directly purchase land in Thailand but lease it for registered 30-year periods. The acquisition (lease) is settled with the payment of the agreed purchase price stated in the contract. For more details on this specific topic, read the article “The Purchase of Real Estate.”

Additional Costs:

In addition to the purchase price, there are further expenses that should be carefully listed and inquired about during negotiations:

Transfer Fee/Tax: Fees charged by the Land Office currently amount to 2% of the purchase price. Taxes, on the other hand, amount to 4.3% of the purchase price. Often, the transfer fees and taxes are split equally between the buyer and the seller. However, some developers have started to charge only half of the 2% transfer fees, meaning you would only pay 1% of the purchase price.

Annual Property Acquisition Tax: As foreigners cannot directly purchase land in Thailand, a Thai company is often established to hold the land title, or the land is leased for 30 years with an option to extend for two additional 30-year periods. Initially, only the first 30 years are officially registered. The relevant authority calculates a tax of 12.5% per year, based solely on the land price. For example: the contractual purchase (lease) amount for a 500 m² plot of land is 1,500,000 THB, multiplied by 12.5% 187,500 THB, divided by 30 years = 6,250 THB in property tax per year.


Additional Monthly Costs Charged by the Developer:

Sinking Fund: This one-time payment covers unforeseen costs or investments related to the common areas of the residential complex. For apartments, the amount is typically around 400 to 600 THB per m² of living space. This fund is rarely charged for villa purchases within a residential development.

Maintenance Fee: This fee is calculated monthly but is usually invoiced annually in advance. It covers general costs such as garbage collection, pool and grounds maintenance, security services, and other communal expenses, rarely incl. services for your private pool and garden. Fees are approximately:

For apartments: around 35 to 60 THB per m² of living space per month, depending on the size and luxury of the residential complex, often averaging around 40 THB/m². For houses: the fee is based on the square meters of land. It often ranges from 5 to 10 THB (or even more) per square meter of land. In some cases, providers in Hua Hin also cover the costs of maintaining your private garden and pool or provide a shuttle service to and from the city or the beach.

Electric/Water Meters: They are supplied by the electricity provider or the water management office, which typically charge a deposit fee of approximately 7,000 to 15,000 THB per meter.

Legal (Notary) Costs:

The developer, your contractual partner, will present you with pre-prepared contracts that only need to be supplemented with the seller’s and buyer’s data, as well as negotiation details. These contracts are usually drafted by law firms and comply with the strict regulations of the authorities.

However, if you want to be sure, especially when it comes to land acquisition or resale, or if you are not proficient in English, let alone Thai, it is advisable to consult a law firm. They can review or even completely draft the contracts for you and handle the bureaucratic processes up to the legal transfer, if you wish or if you are not present at the relevant time.

For simple tasks such as contract review, they typically charge around 10,000 THB, while for contract drafting, due diligence (verification of the legal integrity and unencumbered status of the property), and ownership transfer, the fee is usually around 50,000 THB. 

For the preparation of a will (strongly recommended) regarding your real estate and other assets relevant only in Thailand, the law firm charges approximately 8,000 to 10,000 THB.

 
 
 
 

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