Property Transfers – How Does Thailand Stack Up?
The relative simplicity of transferring property title in Thailand is generally a pleasant surprise for first time foreign buyers. Anyone who has traversed the waters of a land registry department in Thailand can attest to the fact that, although seemingly unorganized and, at times, inexplicable, the process is reasonably quick and painless if you have a knowledgeable Thai by your side. In just a few hours, all property taxes, stamp duty and transfer fees are paid and the name on the chenoud (title) has physically been changed.
This is not to say the process is free from frustrations – inflated transfer fees, unexplained ‘special taxes’, the expected ‘tea money’, mismatched signatures, expired visa stamps, improperly filled out Power of Attorney forms, invalid Tor Tor 3 documents – these are all very common issues that may arise. Thankfully, most issues are usually sorted through expected means and all is well. Purchasing property through professionals is a good way to deal with these potential pitfalls as most support staff will have transferred untold numbers of properties and are well prepared for most scenarios – most of which will have been troubleshot prior to arriving to transfer.
The relative ease of transfer of title in Thailand does not necessarily carry over into other Asian countries. Below are some examples of the processes and processing times to transfer title elsewhere in Asia.
Although a comparatively long process, I have to give it up that it seems to be very protective of the buyer. Basically, it’s a five-step process:
1) Check for any encumbrances – Checking for any outstanding loans, taxes, liens, etc. (dating back 30 years!) – 5 days
2) Preparation of final sales contract by lawyers – 7 days
3) Payment of stamp duty – 1 day
4) Execute final sale deed and submit documents – 1 day
5) Issuance of new title deed – 30 days
So, start to finish you’re looking at a 6 – 7 week process at a cost of about $1,000 USD plus about 6% of the property value – not far off the rate in Thailand (depending on who you ask, of course )
Malaysia is quite interesting in that the government stipulates that in a sales contract, although most terms and conditions can be set forth by the buyer and seller, a closing date of up to 3 months must be given with a mandatory extension of 1 month should it be needed – very good for the purchaser. Also, generally a small deposit of 3% is paid initially as sort of a booking fee. A notarized sales contract will be drafted within a few weeks of this with an additional 7% deposit paid.
From here it becomes quite longwinded with a pretty bureaucratic process that generally takes a minimum of 2 – 3 months for local Malaysians and a whopping 4 – 6 months for foreigners. Fees and stamp duty are quite low, averaging about 2.5% of the value plus legal fees of around 0.5%.
I can now see why the Malaysian government’s initiative to get foreigners to purchase property and gain long stay visas was a bust. Six months to transfer a property seems a little outrageous to say the least.
Did anyone expect this one to be easy? This is a 7-step process:
1) Title check and search at land office to check for any encumbrances – up to 30 days
2) Contact village chief to obtain additional information on property – 10 days
3) Check and search on seller whether it be a person or an entity, such as a company – 10 days
4) Buyer and seller apply for transfer at land office – 1 day
5) Pay transfer tax – 1 day
6) Go to secondary land office to complete registration – 5 days
7) Obtain title at initial land office – at least 30 days
So…about 3 months to have title in your hand, but in reality, the property has transferred after about 6 weeks – not so bad, but sounds like a lot of running around – and sounds like the agents really earn their commissions. At a cost of 4% of the property value plus small additional fees, it’s not so bad.
Again, quite a number of steps, but not too painful:
1) Notarize the sales contract – 1 day
2) Obtain certified copy of last tax balance sheets – 1 day
3) Obtain tax clearance letter – 1 day
4) Obtain certificate that all is clear with internal revenue – 21 days
5) Pay stamp duty and capital gains – 1 day
6) Pay transfer tax – 1 day
7) Apply for registration of title deed – 10 days
8) Obtain new tax declaration in new buyer’s name – 2 days
It’s a lot of formality with the taxman, but the fees paid are about 3.25 – 5% of the total value, making it quite reasonable. Total time here is about 38 days. Not bad compared to some of the others.
Drawing conclusions from this is a bit redundant – hopefully we’ll all just be that much happier next time we’re queued up next time at the Pattaya Land Registry.