FAQs on real estate in Thailand
Thailand Real Estate Market Terminology
Every country has its own specific terminology, and the Thailand real estate market is no exception. Before diving into Thailand and its real estate market, let's take a closer look at how to understand unfamiliar terminology.
Agent (Agent)
A private agent or a large real estate agency that helps you select a suitable property. In the Thailand real estate market, it is customary for the seller or developer to pay the agent's commission. Therefore, we recommend actively using the services of real estate agents in Thailand.
Developer (Developer)
A legal entity that acts as the investor during the implementation of a construction project. The developer assumes all project risks and bears legal responsibility to property buyers. The developer hires the necessary contractors to build the project and, after completion and commissioning, transfers the property to the management company.
Investment Property (Investment Property)
Property built and acquired for the purpose of generating rental income. The key characteristics of such property include proximity to the sea, major tourist attractions, and infrastructure. The owner earns income from renting out the property as well as from capital appreciation when reselling it.
Condominium (Condominium)
A residential complex of apartments with shared common areas. As a rule, it is a gated development with 24/7 security. The complex's amenities and infrastructure are located within the common areas. Condominium units can be registered as private property in the names of foreign citizens.
Condominium Facilities, Complex Facilities, Common Areas
These are all facilities located within an apartment or villa complex and available for use by all residents:
- Fitness centers
- Children's clubs and playgrounds
- Swimming pools
- SPA facilities
- Bars
- Restaurants
- And much more
Naturally, the more extensive and higher quality the infrastructure, the higher the price per square meter of residential property. However, these additional costs are typically recovered through future rental income, as complexes with superior facilities tend to achieve higher occupancy rates and command higher rental prices.
Area Facilities
This is a property characteristic that reflects the accessibility of all essential amenities required for comfortable living and recreation. The most important elements are, of course, shops, beaches, restaurants, and massage salons.
Unlike condominium facilities, the principle here is not "the more, the better," but rather "the closer, the better."
Freehold
Freehold refers to full ownership rights with no time limitations.
According to Thai law, there is a Freehold Quota under which foreign nationals may own up to 49% of the total residential area of a condominium project on a freehold basis. The remaining portion must be registered under Leasehold ownership.
Leasehold
Leasehold is a form of property ownership in Thailand registered with the Land Department through a long-term lease agreement with a total term of up to 90 years (three consecutive periods of 30 years each).
Built-in Furniture
This term frequently appears in Thai real estate purchase agreements and generally refers to the standard package typically included in the local market:
- Bathroom fixtures and sanitary ware
- Built-in kitchen furniture
- Built-in wardrobes
Built-in furniture is included in the base price of a new apartment or villa. Additional charges apply for optional furniture packages.
Furniture Package
This includes all furniture and equipment necessary for living in or renting out the property, ranging from household appliances to interior décor items.
If your objective is to purchase a property for rental purposes, it is generally recommended to acquire the standard furniture package offered by the developer. This allows the property management company to maintain a consistent service standard and reduce maintenance costs across the rental inventory.
Reservation Deposit
A Reservation Deposit is a monetary deposit for a property that demonstrates the seriousness of the buyer's intentions.
Upon payment, a Reservation Agreement is executed, fixing the purchase price and all transaction terms, while the property is removed from the market.
Typically, within the following 30 days, the developer prepares and provides the main Sale and Purchase Agreement for signing.
When purchasing condominium units, the reservation deposit is most commonly 50,000 Thai Baht.
Payment Schedule
The Payment Schedule is an integral part of a real estate Sale and Purchase Agreement.
It specifies the dates and amounts that the buyer must pay to the seller.
Through this contractual appendix, developers in Thailand commonly offer interest-free installment plans by linking payments to specific stages of the construction process.
Property Inspection
Property Inspection is essentially the process of transferring an apartment or villa from the developer to the owner.
If you used the services of a real estate agency during the purchase process, it is highly recommended to invite its representatives to attend the inspection. They can help verify that the property complies with the specifications and technical characteristics stated in the Sale and Purchase Agreement.
Sinking Fund
A Sinking Fund is equivalent to the capital reserve fund commonly used in residential developments worldwide.
It is initially established through contributions made by buyers when purchasing a new property and is used to finance major repairs and emergency maintenance of the common areas within an apartment or villa development.
The contribution amount is typically calculated based on the total living area of the apartment or villa owned. As the fund is utilized over time, property owners may receive notifications requesting additional contributions to replenish the reserve.
Registration Fees
Registration Fees are government charges and taxes payable to the Land Department upon the transfer of ownership rights.
For Leasehold registration, the fee is generally 1.1% of the property's value. For Freehold ownership, the total registration-related taxes and fees are typically 6.3% of the property's value.
In many cases, developers agree to cover a portion of these expenses as part of promotional offers.
Common Area Maintenance Fee (CAM Fee)
The Common Area Maintenance Fee covers the ongoing upkeep and operation of shared facilities and common areas, including:
- Cleaning services
- Swimming pool maintenance
- Landscaping and gardening
- Minor electrical maintenance
- Minor plumbing repairs
- Replacement of light bulbs and filters in common areas
Unlike the Sinking Fund, this is an annual fee payable by property owners and is generally calculated based on the total living area of the property.
Return on Investment (ROI)
Return on Investment (ROI) is a business performance metric and one of the primary reasons investors purchase real estate in Phuket and other resort destinations in Thailand.
ROI is expressed as a percentage and indicates the annual income generated relative to the purchase price of the property.
For example, if an agent or developer advertises a 7% annual ROI, this means that the owner is expected to receive income equivalent to 7% of the property's purchase price each year.
Capital Appreciation (Capital Gains)
Capital Appreciation refers to the increase in the value of a property over the period of ownership.
For example, Phuket Island has a limited supply of developable land while tourist arrivals continue to increase year after year. As a result, property values in many areas have historically increased by approximately 7–10% annually, depending on location and market conditions.
Guaranteed Rental Return (Guaranteed Income Program)
A Guaranteed Rental Return Program is a contractual commitment by the developer to provide a predetermined level of rental income to the property owner through a property management company.
The agreement specifies:
- The duration of the guarantee period;
- The annual guaranteed return percentage;
- The conditions under which the income is paid.
The guaranteed return is usually calculated as a percentage of the property's purchase price.
Condominium License
A Condominium License is an official certificate confirming that a development meets the legal requirements to be registered as a condominium.
These requirements include:
- At least 30% of the land plot must be allocated to common areas and shared facilities;
- The project must have access to a public road with a minimum width of 7 meters.
Chanote
A Chanote is the highest form of land title deed in Thailand.
This document clearly defines the land boundaries and identifies all registered owners of the property.
Environmental Impact Assessment (EIA)
The Environmental Impact Assessment (EIA) Certificate is issued before construction approval is granted.
It is one of the two key documents confirming that the developer has obtained all necessary government approvals required to proceed with the project.
Construction Permit
A Construction Permit is the official authorization issued by the Thai government allowing a developer to construct a specific project.
In some cases, developers begin pre-sales activities before obtaining the permit. While this may involve additional risk for buyers, developers often compensate by offering lower entry prices or enhanced guaranteed rental return programs.
Blue Book (House Book)
The Blue Book, also known as the House Book, is an official document issued at the final stage of property ownership registration.
It is a small blue booklet containing key information about both the property owner and the registered property.
