A Condo in Thailand or a Buy-to-Let at Home: How They Differ

Anyone thinking about a rental property eventually faces the same choice: another flat in your own country, or a unit in a new project in Thailand? From the outside it looks like a comparison of prices and yields. In practice these are two different kinds of investment: one at home, in your language and currency, under rules you know; the other abroad, under different law, in a different currency and market. This article goes through the differences one at a time and does not declare a winner, because what suits one household does not suit another.

You will find no prices, yields, interest rates or tax rates here. They change and depend on the property and on your situation. Prices for Thai projects are shown next to each project in the catalogue, and a mortgage adviser and a tax adviser in your own country answer the financing and tax questions.

What you are actually buying

At home a buy-to-let is usually an ordinary flat or house, let on a long tenancy to someone who lives in it all year. In Thailand foreign buyers mostly look at condominium units, in buildings with a pool, a gym and a lobby run by the owners' body (the juristic person), or at pool villas in gated estates. Many were designed with the tourist market in mind: holiday homes as much as places to live.

The purchase price is not the whole bill. On top of it come transfer costs at the Land Office, furniture if the unit is sold unfurnished, the common fee, bank charges and flights for your visits. Our guide to taxes and fees when buying in Thailand lists them. Check the sums with your own numbers rather than gut feeling; your manager confirms the current price of a specific unit with the developer.

Ownership and financing: different rules from the ground up

At home you buy as a citizen or resident and the property is registered in your name in the usual way. In Thailand you buy as a foreigner, and foreigners have their own rules. A condominium unit can generally be registered in your name freehold, provided the building still has room in its foreign quota and the money arrives from abroad in foreign currency. Foreigners cannot hold land directly, so villas are usually bought on a lease. That is not a technicality: it affects what you can sell, to whom, and what you leave to your children. The full explanation is in our guide to foreign ownership in Thailand, and an independent Thai lawyer should check the specific purchase.

Financing looks different as well. A buy-to-let at home is usually funded with a mortgage from a local lender, secured on the property itself. In Thailand a mortgage from a local bank is very hard to get without local income, so foreign buyers fund the purchase in other ways: savings, the developer's instalment plan on a project still under construction, and sometimes borrowing at home secured on a property they already own. The options and the questions to put to your bank are in financing a property in Thailand, and staged payments to a developer are explained in developer payment plans in Thailand.

The practical difference to remember: with a buy-to-let mortgage, the flat you bought is the security. When you borrow at home to fund a Thai condo, the security is usually your own home, and the repayments continue even if something over there is delayed.

Managing from a long flight away

A rental at home is within reach: you can meet the tenant, send a plumber or go and look. A Thai condo is a long flight away, so someone has to act for you: the building's management, a rental company or a person you trust. That costs money and needs follow-up: statements, bills, photos after each guest.

The letting itself is different too. At home most landlords let on long tenancies under familiar rules on deposits, notice and tenants' rights. In Thailand's resort areas many owners let for shorter periods, with demand that rises and falls with the season. Short-term letting is subject to Thai law and to the building's rules, and not every building allows it, so check before you buy rather than after. The choice between handing it to a company and doing it yourself is covered in management company or self-managed, and any income figure we give is an agency estimate with its source and date; how to read one is explained in our guide to rental yield.

Your income in one currency, the property in another

At home the loan, the rent and the eventual sale are all in the same currency as your salary or pension. In Thailand the price, the payments to the developer, the rent and in the end the sale are in baht, while your income and any loan repayments stay in pounds, euros or dollars. When the baht strengthens against your currency, every instalment costs you more. When it weakens, the rent and the sale proceeds are worth less once converted. It can work in your favour, but nobody knows in advance which way it will go.

If you are buying off-plan in instalments, leave room in your budget rather than planning around today's rate. How to send the money, what the bank will ask for and why the transfer record matters later is in our guide to sending money to Thailand.

Selling and getting your money out

At home most buyers for your flat will be locals who know the market and borrow from a local lender, and the process is familiar. In Thailand the pool of buyers is more complicated. A foreign buyer can register the unit freehold only if the building still has foreign quota. A Thai buyer does not depend on the quota but often looks for a different kind of unit. And in a new building the developer may still be selling similar units, which your buyer will compare with yours.

Then there is the money. To take the proceeds out of Thailand you generally need to show that the purchase money came in from abroad, so keep the bank records from the day you bought. A unit in a project still under construction can sometimes be sold by assigning the contract, if the contract allows it. The routes are set out in reselling and taking your money out. The bottom line: put money into a Thai condo that you will not need back in a hurry.

Tax: consequences in two countries

A property in Thailand has tax consequences in both countries: Thailand has its own taxes and fees on buying, owning, letting and selling, and your home country may expect you to declare foreign property or foreign rental income too. We do not give rates or rules here, because they depend on your circumstances and change over time. Speak to a tax adviser in your country before you sign, not after; the Thai side is outlined in taxes and fees.

So which suits whom

• A buy-to-let at home suits people who want a property close by, in their own currency and language, with ordinary mortgage finance and a market they understand.
• A condo in Thailand suits people who also want to use the property themselves, for winters or family holidays, and not only let it, and who accept management from a distance and exposure to the baht.
• A condo in Thailand suits less well anyone who may need the money back soon, or who would fund it entirely with borrowing and leave no slack in the budget.

A good question to start from is not where you would earn more, but what you want this property to do for you. If the answer includes weeks of your own by the sea, Thailand belongs in the conversation, and completed buildings let you see exactly what you are getting, such as ready condos in Pattaya or ready condos in Phuket. If the answer is simply steady income that is easy to manage, a rental at home may suit you better, and that is a good answer.

To look at the Thai side properly, a ROMA ThaiProperty manager will shortlist projects from the catalogue, say plainly what is known about each and what is not yet, and suggest questions for your lawyer and tax adviser.