by Daryl Lum | Feb 12, 2022 | Buying Guides
The Foreign Exchange Transaction (FET) Form (also known as Thor Tor 3), is an official document prepared under the Bank of Thailand (BOT) regulations to report foreign currency exchange transactions in Thailand. This document is evidential proof that foreign currency is used to purchase assets like property in Thailand. The FET form is only issued by authorised financial institutions like banks within Thailand. The authorised financial institution is that is issuing the FET will be the one who handled the exchange of foreign currency.
Why do we need the FET when purchasing Thai property?
A requirement under section 19 of the Thailand Condominium Act for foreign ownership is that a foreigner must use a foreign currency that has been remitted into Thailand to pay for the full purchase price of the condominium.
Why can’t we use remittance services?
Only authorised financial institutions like banks within Thailand can issue the FET form. The FET form shows that foreign currency has been used to pay for the property in accordance with section 19 of the Thailand Condominium Act. The handling bank in Thailand, upon request, will issue the FET form as proof of the remittance and exchange of foreign currency into Thai baht. The FET form will be required at the land office in order to register the transfer of ownership of a condominium unit in the name of a foreigner.
Can I use remittance services from my home country to the developer’s account in Thailand?
No, you should not do that. This is because the FET form must bear the name of the overseas bank from which the money was remitted. This is why we tell all our clients to go to their local banks and use telegraphic transfers to make the payment for the property.
Can I remit Thai Baht from outside of Thailand to pay for the property?
No, you cannot. You will need to remit in a currency other than Thai Baht to fulfil the requirements under section 19 of the Thailand Condominium Act. For example, if you are from Japan, you can remit Japanese Yen from your bank to the developer’s bank. You can also use other currencies like US Dollar. Any currency except Thai baht. If you remit Thai baht from outside of Thailand you will not be issued the FET form.
What happens if I do not follow the requirements? Is there any way for me to transfer the title to my name as a foreigner?
We have encountered many instances whereby foreigners have failed to transfer their Thai property purchases to their names because of failure to adhere to the requirements under section 19 of the Thailand Condominium Act. The way to solve this is to transfer the full sum of the condominium in a foreign currency. Even though you may have paid the full sum to the developer, because you did not do it in accordance with section 19 of the Thailand Condominium Act, you will not be able to transfer the title to your name.
If you are unsure of the requirements when purchasing a Thai property, please contact our team for more information.
Yours sincerely,
The editorial team at InvestBangkokProperty.com
by kevinyeo | Dec 2, 2018 | Buying Guides
The rental process in Bangkok can be a wee bit confusing for many as there is no one fixed standard. And it certainly does not help if you have a language barrier or do not understand the local culture in Thailand.
We get 101 questions asked by our clients with regards to renting out their property. So we have decided to answer all these questions once and for all.
To all landlords, this is your complete guide to renting out your condominium and apartment in Bangkok.
To help me work out this guide, I have with me Agnes from TRC Property Co Ltd.
***
Q: Hi Agnes, could you very briefly tell us a little more about TRC Property and what do you do?
TRC Property was founded 4 years ago and we have been providing Condo rental and sales services to landlords, tenants, buyers, and sellers. Being a foreigner who has lived in Bangkok for almost 6 years, I have witnessed how foreigners struggle to manage their investment property in Bangkok. Therefore, we introduced a property management service, two years ago to assist foreign investors in the take-over of their new condos, including defects checking, fittings installation, utilities set up and payment, looking for and managing prospective tenants.
Q: For a property owner who just got his keys to the condominium, what are some of the first things he/she should do or take note of?
I think the first thing to take note of is before you collect your keys, ensure that all the defects are rectified. I will urge buyers not to make the final payment to the developer if the defects of the condominium are not rectified. For one of our clients under our property management service, we have to inspect the unit 5 times over a period of 3 months before the developer was able to rectify all the defects.
Also, ensure that the developer does not move your furniture in without your permission. They are good at hiding things that they do not want you to see.
Q: So you have got your keys to your brand new condo/apartment unit in Bangkok and you are all set to welcome your first tenants. What’s the rental process like?
Upon a successful viewing, the tenant will need to pay a one month deposit with a booking form stating the start of the lease, term of the lease and any requests that the tenant may have.
If the Landlord agrees to the terms stated, the landlord will sign on the booking form and terminate all other prospective viewings of the unit.
Landlord and Tenant will proceed to sign the Tenancy Agreement prior to or on the move in date. In the event that the tenant does not honor the booking, the Landlord is entitled to keep the booking fees. In the instance where Landlord and tenant are unable to agree to the terms of the contract, the booking fee has to be returned to the tenant. Therefore, Landlords are highly encouraged to engage professional agencies and not freelance agents to manage the expectations of tenants, especially inexperienced ones.
Upon the signing of the Tenancy Agreement, the tenant will pay a 2 months deposit (this is the norm for most landlords) to be kept by the landlord till the end of the tenancy. The booking fee paid will then be regarded as the first-month rental.
During the rental, the landlord is still liable to attend to the tenant should there be any problems preventing the tenant from enjoyable living in the unit. At the end of the tenancy, if the unit is returned to the landlord in reasonable condition apart from normal wear and tear, the landlord has to return the deposit of two months to the tenant.
Q: Is there a minor repair clause and can you tell us more about how it works?
This clause is to ensure that the tenant is responsible for minor repairs such as bulb change or maybe fixing of a dripping tap, after the first 30 days warranty given by the Landlord. Usually, a maximum amount will be stated for such repairs. If the price for repairs exceeds the maximum amount, the landlord may need to pay for the repairs, if the damage is due to wear and tear and not negligence on the part of the tenant. The Landlord will have to be consulted in such cases.
Do take note that there are no standard Tenancy Agreements in Bangkok and often times it is arguable who pays for the minor repairs. Therefore it is advisable that you check through the Tenancy Agreement and ensure that there is a clause stating this clause in detail. With the influx of more foreign investors in recent years, there is a clearer definition of such clauses seen within Tenancy Agreements.
Q: How much security deposit should be given?
In the past, I have encountered landlords who demand deposit of up to 6 months of rental due to bad experiences and sometimes lavish decorations. However, over the years the property market has evolved and most Landlords and Tenants are now comfortable with the idea of paying a 2 months deposit.
In 1st May 2018, the authorities of Thailand implemented a set of Laws on rental including how much of deposit is required (http://thailandproperty.news/new-rental-law-start-may-1), to protect the tenants from unscrupulous landlords. As to how widely it is enforced, I have no idea. After a brief period of time, it was never discussed on media again. It seemed like nothing ever happened.
Q: What happens if the tenant fails to pay rent on time?
Within your Tenancy Agreement, it is always important to state the penalty for late payment. Usually, most landlords will include a penalty of 500baht/day for late payment but as far as possible, it is always good to maintain a good relationship with your tenants. Don’t forget that the tenant has access to everything within your unit and especially when you are not living in Bangkok yourself. Therefore, if you do not have the time to keep track of your rentals, please get professional help to manage this.
Fortunately, up to date, we have been able to encourage all the tenants under our charge to pay punctually. During rare instances of late payment, we have also been able to mediate such instances peacefully for the landlord and the tenant.
I have heard of instances where tenants are uncontactable or did not pay rent for up to more than two months. Eventually, the landlord sought help from the juristic to break into the unit and discovered that some of the electrical appliances are gone.
Q: Should the condo be fully furnished? And what would be an estimated cost for furnishing the property?
Yes absolutely! It is rare to find tenants with their own furniture except for an occasional item like a washer. The exceptions are landed housing or high-end properties where tenants are relocating with a full relocation package.
For a basic 1 bedroom unit, the estimated cost of fully furnishing it is 150k baht, including electrical appliances and curtains. For a two bedroom unit, it would be about 200k baht.
There is a stunning difference that I notice between a Thai landlord and a foreign landlord. A Thai landlord will definitely have wallpaper on their walls and they will usually include a full set of beddings, pillows, and bolsters, full set of cutlery including pots and pans, decorative items like paintings, flowers, placemats… etc. If you would like to be competitive in terms of rental, then the additional investment is required.
Q: What is a typical rental duration that the property owner can expect?
One to two years rental are the most common terms of a lease. However, we have noticed a trend in Bangkok where there is an influx of foreigners for work attachments or student attachments, requiring 4 to 6 months rental. Also nearing the end of the year, people who are trying to escape winter will be in Bangkok for periods of 1 to 3 months.
Q: Is AirBnb allowed in Bangkok for condominiums?
It is official! AirBnb is illegal here. You can do it at your own risk, but I have heard of landlords being forced to evict their tenants and got a warning letter for it.
Q: What are some of the avenues the property owner can use to source for tenants?
For the local Thai Landlords, there are plenty of free Thai websites where they can share information of their properties with direct tenants and agents. For foreign landlords, it is more difficult due to the lack of printed media here and also the language barrier.
Q: If the property owner does not reside in Bangkok, what is the best way for him to show his property to prospective tenants?
For foreign Landlords, this will largely depend on how credible your juristic is and how much of a risk taker you are. Some foreign owners choose to allow the juristic and random freelance agents to assist them in locating a tenant, by leaving their keys with the Juristic. There is an increasing number of condo management who forbid their juristic to deal with rental as there have been reported cases of misuse of property and it is also a conflict of interest with their job as a juristic personnel. Sometimes, freelance agents only want to deal with direct tenants given the mindset that they can earn all of the commission and this limits the pool of tenants for the rental unit. I have approached agents who refuse to cooperate in the rental even though we are aware that the unit has been available for months.
It is also not uncommon to enter a unit to find that lights and aircon are on and have been for a few days or weeks. This can be costly if you do not have a property manager to check on your unit periodically.
Also, as a landlord, I am sure you would like to ensure that your property is in safe hands. The more secure way of locating a tenant is definitely to entrust your property with a professional property management company. With the help of a professional agency, you can ensure that your property receives the maximum exposure to have it rented out efficiently.
Q: In your experience, how fast is the turnover rate for getting a tenant?
Just like in any country, location and price point are the key factors to how quickly you can rent out your property. I have seen condos which can be rented out within the week it becomes available and also condos that have been vacant for more than 6 months.
So it is essential to buy the correct property for investment.
Q: Will the tenant be allowed to have a pet in the condo?
Unfortunately, no. There is a clear classification of condominiums in Thailand, pet-friendly or not. You are not allowed to house pets in Condos that are not pet-friendly. I have seen too many pet owners who got evicted, thinking its ok since their cats don’t make noise. Only about 3% of condominiums in Bangkok are pet-friendly and often times, even if a landlord owns a unit in a pet-friendly development, he is entitled to keep pets out if he chooses to. Therefore, pet-friendly units are highly sought after.
Q: Is diplomatic clause practiced in Bangkok?
This clause is usually inserted only if the tenant requests for it. It is not widely practiced so often times we see tenants go for shorter leases like 6 months.
Q: Who prepares the rental contract? Is there a standard in Bangkok?
Usually, the Landlord or his representing agent will be the ones to providing the contract. In the past, it is common to see Contracts only in Thai. With the influx of foreign investors, it is now rather common to see contracts stated in English and Thai.
Q: Who is responsible for the water and electricity bill during the period of tenancy?
The tenant is responsible for paying the water and electricity bills. Bills can usually be collected from the mailbox or the juristic.
Q: Who is responsible for paying the maintenance and sinking fund during the period of tenancy?
This is the responsibility of the landlord.
Q: How much agent commission do I have to pay in Bangkok?
In Bangkok, the norm is 1 month rental for a 1-year lease and for a 2 years lease it will be 1.5months of the rental. As for a lease under 1 year, it will be pro-rated base on the 1-year rental rate.
Q: If there are repairs to be done to the property during the tenancy, what is the best way to do so if the property owner is not in Bangkok?
Well, this is a very valid question. This is a common problem faced by the Landlords in Bangkok as not only is there a distance problem, there is also a language barrier. Please do not be mistaken that your agent who assisted you in the rental will need to help you with this. Also, don’t be surprised that your agent is uncontactable if your agent happens to be doing this on a freelance basis. If your rental agent helps you with this, it is good additional service that they are providing. Most of the time, the landlord will need to communicate with the tenants, the juristic personnel and the repairs companies, themselves. So, it can be an excruciating and time-consuming process especially if you encounter a very dependant tenant who expects the landlord to take responsibility for everything and doesn’t speak your language. Therefore, I will advise the landlords to seek the help of a property manager.
Q: Usually by when do we negotiate for a renewal of the tenancy?
This is usually done when the lease is one month from expiry.
Not only will a property manager be able to monitor your lease term, but they will also be able to track monthly rental payment on your behalf.
Q: Can the agent assist with the moving-out checks for potential damages done to the property by the tenant?
Yes, the agent can definitely assist on this, if they choose to offer this service. But like I have mentioned, it depends on the agent. At the beginning of the lease, a professional agent would have ensured that there is a complete documentation of photo inventory for the unit. During the moving out check process, the condition of the unit will be checked against the photographs. Any damage not initially present and not due to normal wear and tear will need to be documented. The tenant then needs to sign on the document to acknowledge the damage during the moving-out check.
The tenant and landlord can discuss and decide how the repairs can be done. Most of the time, the landlord will be the one managing the repairs, as the tenant will no longer have access to the unit.
Q: If the tenant has damaged the property during the stay, how can the landlord claim for the cost of repair?
If the tenant is the one who caused the damage, the cost of repair will be borne by the tenant. Upon the completion of the repairs, the landlord will deduct the cost of repair from the two months deposit collected and return the balance of the deposit to the tenant.
Q: By when does the landlord need to refund the security deposit back to the tenant?
This depends on the landlord and the usual time frame is within 14 to 30 days of the end of lease day. I would suggest a longer time frame of 30 days because wherever possible we prefer to wait for the final electricity and water bill to arrive to provide the fairest estimate of usage. Also at the same time, with the additional time frame given, we can usually ensure that repairs are completed and should there be additional damages discovered with checks made by the contractors, there is more time to manage.
Q: Can you share about how property management services work and the benefits of engaging a property management company to take care of the condominium?
In a perfect world, you would rent your property promptly to a long-term tenant who would keep your property in perfect condition. However, the real world would often present unexpected issues such as a burst pipe or default in rental payment. As a property owner, you are probably aware that property management, if handled inefficiently, can sometimes result in a costly loss of rental income and precious time.
In Bangkok, the cost of engaging a property management company to take care of your investment property is still very affordable. Yet, the benefits are immense. Of course, the caveat is that you have to engage a responsive and responsible property management company.
Over at TRC Property, we take care of the monkey business while leaving you the time to take care of your money business.
Q: For landlords who are interested to find out more about what TRC Property has to offer. Where can they go to for more information?
You can visit our TRC Property company website for our list of property management services provided. Alternatively, you may also write to us at [email protected] or contact us at +66 (0) 2033 2818 and WhatsApp +66 9255 21933
by kevinyeo | Jun 18, 2018 | Buying Guides
In Bangkok, rental can be a bit confusing as there seems to be a lack of reliable online resources to guide landlords and tenants through the rental process. There are also no fix rules that apply, just standard practices. If your property is ready to let and this is your first time being a landlord in Bangkok, here’s 7 things you might want to take note of.
#1. Is it legal to Air BnB condos in Thailand?
The promise of high yields from short-term rentals would definitely attract any landlords. This is a grey area and it is an open secret that many landlords are doing short-term rentals. However, under the Hotel Act, you require a license in order to provide short-term accommodations. Recently, the authorities have punished a few owners in Hua Hin for contravening the act. We would urge you to err on the side of caution and not subject yourself to such unnecessary risks.
#2. Recently, there was a new Thai Rental Law enacted. Does it affect me?
The new law only applies to landlords who are classified as “business operators”.
The definition of “business operators” is as such: A business operator that leases at least five or more property units in one or more buildings for residential use. Property types include condominiums, apartments, houses and any other type of property used for residential leasing (Excluding Hotels).
So in other words, if you own less than 5 residential properties for lease in Thailand, the new changes do not apply.
#3 How long is a typical lease?
Mostly, you will see agents or landlords advertising for rental of 6 to 12 months. 12 months is a rather common arrangement. Anything lesser than 6 months, tenants would usually prefer apartments where there are concierge and room services provided.
#4 How much commission do I have to pay when engaging an agent?
In Bangkok, for 12 months lease, you as a landlord will have to pay the agent a commission equivalent to 1-month rent when the agent secures a tenant for you. This is market practice.
#5 How much security deposit do I collect?
Again, market practice is that the landlord collects 2 months equivalent of security deposit. This is to be returned to the tenant at the end of the lease. (less any chargeable damages caused by the tenant).
But if you are a landlord with more than 5 rental residential properties, the new law will dictate that you can only collect 1-month rent worth of security deposit.
#6 Should I furnish my property for ease of securing a tenant?
Generally speaking, you should. More than likely, you would have invested in a studio or 1 bedroom condo. Thus, your tenant would also most likely be a single or at best a couple. It is highly unlikely these tenants will bring along their big pieces of furniture when they relocate to Bangkok.
Dolling up your condo in Bangkok would not cost you much but it will go a long way to attracting a good tenant.
In fact, for some developers such as Sansiri, they will fully furnish the properties that they sell to foreigners.
#7 Who bears for other costs such as maintenance and utilities?
The landlord is responsible for all the applicable property taxes and maintenance payable to the condo management. The tenant will have to bear their own cost for utilities, cable, and internet.
Last words: It is advisable to engage a responsible and pro-active agent/agency to assist you with your property. Most of the time, for a fee. the agency also provides property management services.
![[Commentary] Why Are More And More Chinese Investing In Thailand Real Estate?](https://investbangkokproperty.com/wp-content/uploads/2018/05/sansiri-china.jpg)
by kevinyeo | May 22, 2018 | Buying Guides
In recent years, a lot of the Chinese have amassed a fortune from investing in real estate in China.
However, in light of the fear of an imminent bubble, most cities have implemented measures to keep prices down, including eligibility restrictions, increases in required down payments and limits on reselling, for example, no resale of a property within three years of purchase.
In the second-tier cities, the measures have also included price caps on the new property, with local authorities refusing to grant developers sale permits if they deem the prices set for the homes to be too high.
With so much capital controls, what’s next for the Chinese investors?
Individual investors who have been “limited” in China have brought their love of real estate abroad.
The Chinese investors looking for exponential growth would have their sights set on the real estate markets in South-East Asia. Especially Thailand, Malaysia, Cambodia, and Vietnam.
Out of the above mentioned, Thailand would probably be the foremost considered investment destination. Low prices, convenient transportation, beautiful environment, friendship with China, makes Thailand the preferred holiday destination. Thailand also attracts a large influx of foreign population each year.
At the same time, Thailand, as the second largest economy in Southeast Asia and the heart of ASEAN, has a relatively stable political environment and healthy economic exchanges with China.
At present, Thailand has a population of 64 million. Thailand’s foreign exchange reserves rank 13th in the world, reaching 183 billion U.S. dollars, surpassing the economic powers of the United Kingdom, France, and the United States. Thailand has obvious advantages in foreign exchange reserves and can better maintain the stability of the Thai baht.
Thailand is still a developing nation, undergoing a rapid urbanization that was experienced in China during recent years.
In the past two years, China’s investment in Thai real estate has reached an unprecedented high.
Capital Control
China’s capital outflow control has reduced China’s total overseas investment in housing from its high in 2016 to the level in 2015.
Such restrictions have also redirected the capital flow. Markets such as Thailand which is relatively less expensive has attracted a lot of Chinese investors.
This stem mainly from the fact that to invest in Thailand real estate, there is no need for a huge capital outlay. Thus effectively mitigating investment risks as well as creating a low barrier to entry for many.
Of course, it would be good to note that for prime luxury in downtown Bangkok, prices have already passed the THB350,000 per square meter mark, equivalent to approximately 70,000 yuan per square meter.
More importantly for investors, the Thailand housing market is robust and have seen a gradual increase over the years plus being able to give rental returns averaging 5-8% per annum. Such conditions make it favorable and attractive for the Chinese investors.
Benefitting From China’s One Belt One Road Initiative
The Chinese government supports investment in countries that participate in the “Belt and Road Initiative.” These investments are in line with China’s strategy of increasing the number of new infrastructures in China’s neighboring countries and encouraging cross-border trade activities in the region. China’s leading position in the regional economy.
Thailand, with its superior geographical location, has obtained many benefits from regional trade growth, cross-border investment and economic cooperation.
It is worth mentioning about the pan-Asian high-speed rail hub.
The Trans-Asian Railway is one of the key elements of the economic corridor. Three of the high-speed rail lines will converge in Bangkok.
The convergence of three railways will make Thailand the transport hub of Southeast Asia. For the first time, the high-speed rail link connects Singapore, Malaysia, Vietnam, Laos, Thailand, Cambodia, Myanmar, and of course China with Kunming.
Geographically, Thailand happens to be at the center of this railway network and will take on the North-South railway line. Other countries connect through the East-West line.
It should be noted that the purchase of commercial and residential real estate is almost the cornerstone of every large project, whether it is a new city, a new manufacturing center or a railway facility.
Many Chinese believe that investing in the real estate of the “Belt and Road” countries is not only a shrewd move but also a blessing from the government under the upcoming development boom.
The Number Of Chinese Travelling Overseas Is Set To Grow Further
Thailand’s proximity to China, its well-developed tourism infrastructure, reasonable housing prices and acceptable culture have attracted these first-time investors to make their first investment here.
At present, only 9% of Chinese citizens hold passports. This figure will double in 2020 to 240 million people.
Such a low passport holding rate means that many Chinese who have the ability to invest in the international real estate have not yet got into the action yet.
It is not difficult to predict that the number of overseas buyers from overseas will still increase in the next five years.
We expect this group of emerging cross-border investors to flock to markets that are both familiar and relatively low-priced to find investment opportunities. Thailand will undoubtedly be one of the easiest to meet these standards.
The Conditions For Owning Real Estate In Thailand Is Simply Attractive.
Freehold property, no estate tax, no need to pay for the public area, fully renovated apartments and no limits to purchase, not limited to loans, can flip properties, stable economic growth, low taxes and fees.
In Thailand, the Chinese investors get to own freehold properties.
Compared to countries like Singapore, the taxes are not punitive at all.
eg.
Thailand: Deed 2% (50% each for buyers and sellers)
Canada: Transaction Stamp Tax 15%
Singapore: Foreigners need to pay 3% stamp duty and an additional 15% stamp duty on overseas investors for home purchases.
In Thailand, investing in real estate is not just about buying a physical property, but it’s also buying a lifestyle.
Nowadays, Thai developers spare no effort to equipped the property with the best possible facilities. (swimming pool, gym, sauna, tennis court, sky lounge, co-kitchen, etc) It is something that has come to be expected when buying a property in Thailand.
Barring any unexpected economic or regulatory change in the investment environment, the demand for Thai real estate by individual investors in China will be expected to continue to grow.
