Glossary of Real Estate Terms in Thailand

Navigating the real estate market in Thailand, particularly in popular destinations like Bangkok, Phuket, and Chiang Mai, can be complex due to unique legal and financial terms. Whether you’re a first-time buyer or a seasoned investor, understanding these terms is crucial for making informed decisions. This comprehensive glossary of real estate terms in Thailand will help you better understand the local property market and streamline your buying process.

Glossary of Real Estate Terms in Thailand

Borey

Borey is a Cambodian term used in Thailand to describe a gated community or residential development with shared amenities. It is popular among expatriates and locals alike.

BOI (Board of Investment)

The BOI offers incentives for foreign investors, including property ownership benefits. Properties owned through BOI-promoted companies may have fewer restrictions.

Chanote (Title Deed)

The Chanote, or Nor Sor 4, is the most secure type of land title deed in Thailand. It provides full ownership rights and is registered at the Land Department, ensuring clear land ownership.

Read more about property titles in Thaïland

Due Diligence

Due diligence is the comprehensive appraisal of a property to assess its commercial potential and legal compliance. This includes verifying the title deed, zoning laws, and any encumbrances on the property.

Read more about legal checks and due diligence before buying a property

EIA (Environmental Impact Assessment)

An EIA is a mandatory assessment for certain types of development projects in Thailand to evaluate their environmental impact. Approval is required before construction can begin.

Escrow Account

An escrow account is used to hold funds during the property transaction process, providing security for both the buyer and seller until all conditions are met.

FAR (Floor Area Ratio)

The FAR is a measure of the total floor area of a building in relation to the size of the land on which it is built. It is used to regulate the density of development in urban areas.

FET (Foreign Exchange Transaction Form)

The FET is required for foreigners when bringing foreign currency into Thailand to purchase property. It proves that the funds were transferred from abroad, necessary for registering condominium ownership.

Freehold

Freehold ownership refers to the complete ownership of a property and the land it sits on. Foreigners can own freehold condominiums but are generally restricted from owning freehold land directly.

Read more about real estate ownership in Thaïland

House Registration Book (Tabien Baan)

The Tabien Baan is an official document listing the residents of a property. Foreigners can be listed in a blue book if they own a house, while a yellow book is for foreign tenants.

LPN (Land Project Number)

The LPN is a unique identifier assigned to each land parcel by the Land Department. It is used for official land registration and transactions.

Leasehold

Leasehold refers to the right to lease property for a specified period, typically up to 30 years, with the option to renew. This is a common method for foreigners to control land in Thailand.

Maintenance Fee

The maintenance fee is a monthly charge paid by condominium owners for the upkeep of common areas and facilities. The fee varies based on the size of the unit and the amenities provided.

Nor Sor 3

Nor Sor 3 is a land title that provides the right to use the land but is less secure than a Chanote. It can be upgraded to a Chanote with the appropriate approvals and survey.

Nor Sor 3 Gor

Nor Sor 3 Gor is a land title similar to Nor Sor 3 but with fewer rights. It is not as secure and requires a public notification process before any sale or transfer.

Reservation Agreement

A preliminary agreement between the buyer and developer or seller to reserve a property. It includes a reservation fee, which is part of the down payment.

Sales and Purchase Agreement (SPA)

The SPA is the main contract outlining the terms and conditions of the property sale. It includes payment schedules, transfer dates, and responsibilities of both parties.

Servitude

A servitude is a registered right allowing the use of another person’s land for a specific purpose, such as access or utility installation. It is essential to check for any servitudes on a property before purchase.

Sinking Fund

A sinking fund is a reserve fund collected from condominium owners for major repairs and renovations. It is separate from the monthly maintenance fee.

Specific Business Tax (SBT)

An SBT is a 3.3% tax levied on property sales by companies or individuals who have owned the property for less than five years. It is applied to the registered sale price or appraised value.

Stamp Duty

A stamp duty of 0.5% is applicable on property transfers if SBT is not applicable. It is usually paid by the seller.

Transfer Fee

The transfer fee is a government charge paid when property ownership is transferred. It is typically 2% of the appraised value and is often split between the buyer and seller.

Read more about transfer fees when purchasing a property

Usufruct

A usufruct agreement grants the holder the right to use and enjoy the property owned by another person. It can be granted for up to 30 years and is a popular option for foreigners looking to secure long-term use of a property.

Withholding Tax

A tax imposed on the seller of a property. For individuals, it is calculated based on the appraised value and the length of ownership. For companies, it is a flat rate of 1% of the sale price or appraised value, whichever is higher.

Zoning Laws

Zoning laws regulate land use and development in specific areas. They dictate what type of buildings can be constructed and how the land can be used.

Conclusion

Understanding these real estate terms is essential for anyone looking to buy property in Thailand. By familiarizing yourself with the local terminology and legal processes, you can navigate the Thai real estate market with confidence and make informed decisions. Whether you’re an expat planning to settle down or an investor seeking new opportunities, this glossary will serve as a valuable resource throughout your property journey in Thailand. For more detailed advice and guidance, consult with local real estate professionals and legal experts.