Why Renting in Thailand Beats Buying a Condo
1. Foreigners Are Restricted to Selling to Other Non Thais
Thai nationals often receive preferential pricing. When they build a block of apartments (condo, whatever you want to call it), they’ll always sell it cheaper to the Thai person. So let’s just use these numbers: if we said £200,000 or $200,000 is the price that they’re asking you to buy an apartment in that building, then typically for a Thai person it might be 180,000 just for example. Don’t quote me on figures there.
What that means is when the time comes for you to sell your property, you’re going to find it extremely difficult to sell it to Thais. In fact, you won’t be able to sell it to Thai nationals because they’re not going to pay that sort of money the money that you paid for it. So that restricts your market. If you want to sell fast, change locations, or whatever, it’s a real problem to be able to sell your apartment.
2. Foreign Ownership in Condominiums Is Capped at 49%
51% must be sold to Thai nationals, typically at lower prices I’ve just mentioned that. If you don’t know this, foreigners can’t purchase land here, so you can’t buy a house on its own land where you own the land. Again, people write in and say if you form a company, there’s lots of jumping through hoops. But generally speaking, if you just want to go out there and purchase a house with land, you can’t do it it’s got to be an apartment, a condominium.
In these apartment buildings (condominiums), by law only 49% of the residents (the floor space) can be purchased by foreigners. 51% has to be purchased by a Thai. What that means is if you were in a building that was full with that ratio, you’ve got no other choice but to sell to another foreigner. So it’s just another hoop to jump through.
3. Thai Nationals Can Generally Rent Properties at Lower Rates
Due to reduced price options available to them as I’ve already touched on. Because the Thai has bought the same condominium as you have but for less money, they’re then able to rent it out for a lot less than you. So if you invest in a property here in Thailand and you think it’s a good way to make money either while you’re here or overseas, and you want to rent out the property again, the problem is because you’re paying more than the Thai person, if somebody looks at two apartments in the same block (one owned by a Thai and one owned by you), theirs is going to be cheaper. Unless yours is out of this world, they’re going to go for the Thai apartment.
4. Proposed Tax Regulations
Proposed tax regulations on foreign investments may lead to higher taxes on substantial incoming funds, potentially impacting property investment viability. This has got a lot of foreigners a bit hot under the collar, because they’re introducing tax even foreigners should have a tax code now. I’m not going to talk about that too much here because nobody really knows exactly what’s going on there, but we do know that they’re changing the law so that everybody pays tax, basically like every other country.
Imagine you’ve seen the property of your dreams. You put down a quarter of a million baht as a deposit on a say 6 million baht property here in Bangkok, and they change the tax laws and now say any money at all that you bring into the country you have to pay tax on that’s going to be a big chunk of change. So until that kind of settles down, it’s probably a little bit unwise to go out and look for property at the moment, because you never know unless the money is already here in Thailand, of course.
5. Many New Developments Face Slow Occupancy
Thai buyers tend to avoid pre owned units due to cultural sensitivities, such as concerns over previous occupants or deaths. Here in Thailand, the Thais are very suspicious they believe in ghosts and spirits in a big way. Everything to do with the dead is a very touchy subject here. Generally speaking, a Thai would prefer to buy a brand new property rather than a second hand property because they don’t know who’s lived there before, they don’t know if somebody’s passed away in the bedroom or wherever. It really puts them off it’s a cultural thing. So that’s just another hurdle that stops you selling, as opposed to buying a brand new one.
6. Despite a Saturated Market and Low Occupancy Rates (Often Around 30%) New Apartment Buildings Continue to Be Constructed at a Rapid Pace
They just throw up buildings here really fast. Although they can see there’s a lot of empty units in a lot of the buildings, they just continue to build. So your apartment could be 5 years old. People go to look at a brand new apartment at the same sort of price (a little bit more, obviously), and they’re going to go for the newer block, because yours is now 5 years old and second hand.
7. Maintenance and Management Fees Vary
Especially in properties with amenities like gyms and swimming pools. Although property taxes are low, they must also be paid annually. That’s something you’ve got to take into account.
I once owned a flat in the UK (an apartment), and I never made any money from it at all from the rent because I got charged a ground rent, I got charged a service fee for the car park, painting the white lines the agent never told me about it when she sold it. It was kind of my fault, but I do still feel she should have told me. It’s the same thing here.
I’ll give you an example. In this block where I am now it’s a bit of an older block we have a decent pool on the roof, a nice pool, and there’s a small gym. I know for a fact (I don’t know about the one bedrooms, but for the two bedrooms in this block, which are about 80 square meters) the owners have to pay the management company 90,000 baht a year well over £2,000 or $2,500. So again, if you are seriously looking at buying a condominium here in Thailand, make sure you ask about the prices for all the maintenance fees and everything. Very, very important you might not budget that into your original budget.
8. Due to Low Occupancy Rates Property Management May Limit Spending on Maintenance and Upkeep
This can be a big problem in Thailand. They throw up one of these brand new condo blocks it looks lovely when it’s brand new. They’re expecting to sell it out. They’ve put a price on the maintenance and service charge. For some reason, because it’s saturated, they maybe have 30 35% occupancy, maybe 40% if they’re lucky. They’re counting on 100% occupancy or at least 80 90% to bring in enough cash to maintain the building: paint the walls, the communal areas, the white lines in the car park, just to maintain the building to a good standard.
If they’re not receiving all the money from all the apartments (or the majority of the apartments), then obviously they’re going to scrimp and try and save money. This is something you need to take into account as well. If you buy a brand new unit, when you first move in it might look beautiful all the common areas look nice as well. Unfortunately, because the money isn’t coming in on the service charges or management fees, they just don’t maintain it. After 5 years, you’re living in a place that just doesn’t look very nice at all. So make sure you’re not moving into a half empty building.
9. Rental Prices Fluctuate Significantly Between High and Low Season
We’ve got two seasons in Thailand high season and low season. In low season, it is very, very quiet. The few people who come here generally stay in hotels. If you’re looking at long term rentals if you invest in a property and you’re hoping to rent it out long term you’re going to find it extremely difficult in low season, unless you’re lucky enough to get somebody in there in high season and they sign a one year agreement. But there’s a lot of people who move out here permanently like I did, and there’s a lot of choice.
So if you’re looking at rental, try to look into it during low season, not high season, because you might be overwhelmed with renters in high season, and then come low season there’s nothing happening. It’s something a lot of guys get tripped up on low season, high season.
10. Builders Are Increasingly Competitive Adding Amenities Like Communal Workspaces and Infinity Pools to Attract Buyers
This is something you might not think about. Because they’re building so many blocks all the time, although the market is saturated (it is a buyer’s market that is saturated), they just continue to throw up these condominium blocks brand new. The Thais are not stupid they know there’s so many different companies setting up these blocks of condominiums, so they’ve got to get the edge. It’s a competition.
What they’re now doing is providing a lot more amenities in the building. Whereas when they built it they maybe have a standard pool, now they’ll build an infinity pool twice as long as what they would have done 5 years ago. They’ll expand their gyms. They’ll have common work areas for people who work online they don’t want to sit in their apartment, so they’ll have online areas with free coffee on hand all day.
What that will do: if you buy an apartment and 6 or 7 years down the line you want to sell it, people will come along and look at your apartment with all the other hurdles and they’ll say, “Well, he doesn’t have an infinity pool. There’s no workspace here. The gym is a quarter of the size of this new place.” And the other place, of course, will be brand spanking new. So again, this is another hurdle put in front of you before you can hope to achieve the sale on your property.
11. Sourcing Reliable Contractors for Tasks Such as Painting and Decorating Can Be Challenging with Quotes Often Inflated
If you come here to buy a property, I would assume that you’ve been here many times on vacation and you know what it’s like the two tier pricing system here. It’s the same when you want to decorate say you have an apartment, you’ve had it for 3 years, and you think, “I want to have the lounge painted.” It’s very, very difficult to get people in Thailand to do it. Although the labor’s cheap here, the language barrier can be a problem you’re going to find it hard to find these people. And they’re going to really inflate the price.
I know one guy recently he wanted to have some work done in his apartment, a couple of rooms painted. He got a quote, and it was more than he would have paid in his own country, because they turned up and thought, “Aha, farang we can charge what we want.” Obviously he didn’t pay it. But that’s another thing you might need to think about unless you’re one of those guys who can nip down to Home Depot and buy your own paint and roll your sleeves up and do it yourself. If you don’t mind doing that, then that’s not going to be an issue for you.
12. Real Estate Agents May Not Promptly Remove Sold or Outdated Listings from Their Websites
This is another problem here. There’s no kind of consistency with the agents when it comes to selling and renting properties. What will happen is somebody will put a property up for sale, and several agents will come along and say, “Oh, I can sell your property for you very, very quickly faster than that agent.” The owner of the property is overwhelmed and thinks, “Well, if two agents are better than one, four agents are better than two.” Before you know it, there might be five agents selling one property a little bit of exaggeration, but at least two or three agents selling a property.
What they tend to do is go onto all the websites that advertise properties and list these properties. You might have four or five listings for the same property. The other problem is you’re not dealing with one person all the time you might call this company, and the next time you get somebody else. And because there’s no consistency, a lot of them don’t bother removing the listings. It’s in their interest to come to the apartment, take photographs, make a nice listing, put it up on several sites and if they get a sale, they get their commission. But as far as they’re concerned, they’re wasting their time taking the time to delete it.
So it just becomes a big mass of confusion. You go onto a property website like we all do, having a look maybe you want to buy something. You see the perfect property. You phone up, and they say, “Oh, I’m sorry, that’s sold” and it could have been sold 7 months ago. So it’s a real minefield out there. These property websites I’m talking about sales mainly, rather than rentals.
13. Selling a Property Within a Short Time Frame (Such as After One or Two Years) Can Be Challenging Due to Market Conditions
This is what I touched on before with all the new properties going up rapidly, and also inflation problems in the economy. If you want to sell your property and there’s something in the economy that’s given a hiccup (not like COVID, which can happen anywhere in the world), you know that could be another issue with selling. And you’re in a foreign land it’s not like you can just nip out in the car and be back in half an hour.
14. Renting in Thailand Is Very Very Cheap
At the end of the day, renting in Thailand is very, very cheap compared to the UK, probably where you come from (US, anywhere in Europe, and Australia). I’ve got 51 square meters here. I’m in the heart of Sukhumvit, and I pay 20,000 baht a month. My rent’s just going up next month actually after 2 years, it’s going up to 21,000 baht. That’s the equivalent of just under £500 or $600. You wouldn’t get a rabbit hutch for that in London for something this size where I live, you’d be paying thousands of pounds, literally. And I’m not exaggerating.
I don’t really see the reason for somebody wanting to purchase a condo. If you marry a Thai and you’re in the position where you can buy a nice two or three bedroom house with a garden, and it’s on the land (it’s in her name), you’re married I can understand that. But to buy an apartment they’re so cheap to rent here wherever you go. Don’t forget, I’m in the center of Bangkok here. You go down to somewhere like Hua Hin or Pattaya, or even up north to any of the cities or towns up there it’s even cheaper.
I just don’t really see the point in tying up 5 or 10 million baht. It’s going to take you a long time to get that money back. Unlike in the UK (I’ll use the UK as an example), when you buy property, generally speaking it goes up every year. So when you sell it in 5 years’ time, it’s maybe 30 40% more value than when you purchased it at least. That doesn’t happen here, because the market’s saturated. You could own a property for 5 years and you just can’t sell it. I’ve known guys to take a hell of a loss because they just wanted to get away from it they just wanted to get rid of the property, so they’ve taken a loss.
Rental is a great option because it’s very, very cheap. You come from another country you go to an area like where I am here in Bangkok. I’ve been here for 2 years now, I’m still happy with it, but there’s guys who’ll be here for a year and they’ll say, “You know what? I don’t like it in Bangkok anymore. I want to go and live by the coast, or I want to go and live in another city like Chiang Mai or Chiang Rai.” And if you’ve purchased a property, you’re stuck with it. If you’ve rented, it’s a month’s notice you have to wait till the end of your tenancy agreement, of course but at the end, you can just pack your bags and move to wherever you want.
Renting is a really, really good option in my opinion here in Thailand much more so than buying property. Don’t forget when you buy properties, you’re dealing with all the contracts being in Thai, you’re dealing with Thai lawyers and of course you can get them translated and you can pay for these services, but it’s all extra cost, isn’t it? Which you really wouldn’t take into consideration in your own country.
Final Advice If You Still Decide to Buy
The last thing I’ll say on this because there will be guys who watch this and they’ll think, “No, hasn’t put me off. I want to buy a condo in wherever it is in Thailand,” and they will go ahead. So what I’d say to you my last point I put here: if you still decide to buy a property, make sure you check sites like Thailand Property for the going rates and see what other units are going for in the same building. Because at the end of the day, if somebody puts an apartment (a condo) up for sale for say 4 million and you take it at face value, but actually all the other condos are 3.5 million, then you’re losing half a million baht for nothing. You need to check this out.
