Buying a property in Pattaya : a step-by-step guide

What are the steps to buy a property in Pattaya?

The process of buying a property in Pattaya involves several steps, each with legal protocols and careful preparation to secure the transaction.

Conducting due diligence

The first phase in buying a property in Pattaya is due diligence. This means confirming the seller’s legal ownership and checking the property’s title. Ensuring there are no encumbrances, such as mortgages, is essential to avoid hidden risks. A title deed search, commonly known as a Chanote check, is advisable, as it provides the highest form of title security in Thailand. Legal assistance can help ensure that the title is free of claims and valid for transfer.

Signing a reservation agreement

Once due diligence is completed, signing a reservation agreement can help secure the property temporarily. This agreement typically requires a deposit of around 5-10% of the property’s price, allowing the buyer to reserve the property while preparing formal documentation. Although not legally binding, it shows intent in buying a property in Pattaya.

Sales and purchase agreement (SPA)

The next step in buying a property in Pattaya is finalizing the SPA. This contract defines the terms of the sale, including price, payment schedules, and property details. It is essential that the SPA complies with Section 456 of Thailand’s Civil and Commercial Code, which governs contracts for immovable property. A lawyer can ensure the SPA includes necessary protections for the buyer, addressing any potential risks.

Ownership transfer at the Land Office

The final step of buying a property in Pattaya involves ownership transfer at the Pattaya Land Office. Foreign buyers must show proof of funds from overseas with a Foreign Exchange Transaction Form (FETF). This requirement, outlined under Section 19 of the Condominium Act, confirms that funds used in the transaction were transferred from abroad. Buyers also pay applicable fees, including a 2% transfer fee based on the property’s assessed value.

What documents are necessary when buying a property in Pattaya?

Buying a property in Pattaya requires several critical documents, each vital for a secure transaction:

Land title deed (Chanote)

This deed verifies ownership and is essential for a clear property title. A Chanote is the most reliable title form and is strongly recommended for anyone buying a property in Pattaya.

Foreign exchange transaction form (FETF)

This document proves that funds transferred for the purchase came from overseas, which is a requirement for foreign condominium ownership.

Sales and purchase agreement (SPA)

As the main contract, the SPA outlines terms agreed upon by both parties, including sale price, payment timelines, and conditions regarding the property’s state.

Tax clearance certificate

If the seller is a non-resident, they must present a tax clearance certificate showing that all applicable taxes have been cleared before transferring ownership.

What costs and taxes apply when buying a property in Pattaya?

When buying a property in Pattaya, there are several costs and taxes that must be accounted for:

Transfer fee

The Land Office charges a 2% transfer fee, calculated based on the assessed property value.

Stamp duty or specific business tax (SBT)

Stamp duty at 0.5% applies if the seller has held the property for more than five years. Otherwise, SBT of 3.3% is due if the property is sold within a shorter period.

Withholding tax (WHT)

Sellers are responsible for withholding tax, which varies depending on whether the seller is an individual or a company. Individuals pay a progressive rate based on the property’s assessed value, while companies pay a flat rate of 1%.

Legal fees

Engaging a lawyer is advisable when buying a property in Pattaya, as legal fees typically range from 1-2% of the property’s value for services like due diligence, SPA review, and ownership transfer assistance.

What are the potential risks when buying a property in Pattaya?

While buying a property in Pattaya offers investment opportunities, certain risks need to be managed carefully.

Title disputes

Given the rapid pace of property development in Pattaya, title issues can arise. Ensuring the property has a clear Chanote title is crucial. Conducting a thorough title search can prevent ownership disputes.

Developer insolvency

For off-plan properties, the financial stability of the developer is critical. Investigating the developer’s background and their registration status with the Land Office can mitigate risks tied to project delays or incompletion.

Currency fluctuations

Foreign buyers are subject to currency risks when transferring funds from abroad. To avoid potential losses, some buyers consult financial advisors or schedule transfers during favorable exchange rates.

How can a lawyer assist with buying a property in Pattaya?

When buying a property in Pattaya, a lawyer’s expertise is invaluable. Legal professionals can:

Conduct due diligence

A lawyer verifies the property title, checks for encumbrances, and confirms the seller’s ownership, providing the buyer with legal certainty and security.

Review the sales and purchase agreement (SPA)

A lawyer ensures the SPA is complete and protective of the buyer’s interests, negotiating terms that address possible risks and financial responsibilities.

Assist with Land Office procedures

Legal experts can handle the administrative requirements at the Land Office, calculating taxes and ensuring all necessary documents meet the Land Office’s standards.

Conclusion 

For foreigners, buying a property in Pattaya can be a promising investment, but it requires careful navigation of local regulations. Options like condominiums or long-term lease agreements enable foreign ownership under Thai law. Consulting a lawyer experienced in Thai property law helps secure the transaction, ensuring compliance with legal requirements and minimizing risks. With thorough preparation and legal assistance, buying a property in Pattaya can offer long-term financial security and growth potential.