Top 5 Mistakes Foreign Buyers Make and How to Avoid them
Top 5 Costly Mistakes Foreign Buyers Make (And How to Avoid Them)
Buying property in a paradise like Phuket is an exciting prospect, but navigating the Thai real estate market as a foreigner comes with unique legal and financial pitfalls. At Century 21 Hero Phuket, we guide countless international clients through the process, and we’ve seen the same mistakes crop up repeatedly.
Avoiding these common errors can save you significant money, time, and stress. Here is our essential guide to the top 5 mistakes foreign buyers make, and how to successfully sidestep them.
Mistake 1: Ignoring Thailand’s Core Ownership Law
This is the single biggest mistake. Many foreign buyers, especially those looking at villas, fail to grasp that Thai law prohibits foreigners from owning land directly.
The Fix: Understand the Structure
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Condos: This is the easiest and safest route. Foreigners can own a Freehold condo unit outright, provided the building has not exceeded the 49% foreign ownership quota (a key check we perform).
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Villas/Houses: For land-based property, you must use a legal structure:
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Leasehold: The most common path. You lease the land for an initial period of 30 years, with contractual options for renewal (often ). You own the building on the land.
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Thai Company: A structure where a Thai limited company (with majority Thai ownership) owns the land. This requires strict compliance to avoid illegal "nominee structures," which are now heavily monitored and penalized by the Thai government.
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Mistake 2: Skipping or Mismanaging the FET Form
When purchasing a freehold condo, the Land Department requires absolute proof that the funds used to buy the unit came from outside Thailand and were exchanged into Thai Baht. The necessary document is the Foreign Exchange Transaction Form (FET Form) (or an equivalent bank letter for transfers under $50,000).
The Fix: Follow the Money Trail
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Remit Correctly: Ensure the full purchase price is transferred from your foreign bank account, in a foreign currency, to the Thai bank account of the seller (or your lawyer's holding account).
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Get the FET: The Thai receiving bank must issue the FET form. Crucially, the form must state the exact purpose of the transfer is for the purchase of the specific condo unit and list the foreigner's name as the ultimate beneficiary. Without this document, the Land Department cannot register the Freehold title in your name.
Mistake 3: Underestimating the True Cost of Purchase
Foreign buyers often budget only for the sale price, forgetting the various fees and taxes involved in the transfer process, which can add up to 5% to 8% of the property’s value.
The Fix: Demand a Full Cost Breakdown
Always account for:
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Transfer Fees & Stamp Duty: Paid to the Land Department (usually about 2% of the registered value, often split between buyer and seller).
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Legal Fees: Essential for due diligence and contract review (see Mistake 4).
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Taxes: Including specific business tax (if the seller is a company and has owned the property for less than 5 years) and withholding tax.
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Maintenance & Sinking Funds: The condo's Juristic Person will charge one-time (sinking fund) and recurring (maintenance) fees.
Your Century 21 Hero agent will provide a transparent, written breakdown of all closing costs before you sign the Sale and Purchase Agreement (SPA).
Mistake 4: Relying Solely on the Agent or Developer for Legal Advice
A real estate agent's primary role is to facilitate the sale; a developer’s is to sell their project. Their advice, while helpful, is not a substitute for independent legal counsel. Skipping due diligence is the single fastest way to invite financial disaster.
The Fix: Hire an Independent, Specialized Lawyer
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Get Independent Due Diligence: Hire a local, independent property lawyer who specializes in Thai real estate. They must be separate from the developer or seller.
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Mandatory Checks: Your lawyer will perform a Title Search (verifying the title deed is a Chanote and checking for encumbrances like mortgages), verify the developer's permits (like the EIA), and ensure the 49% foreign quota is correct.
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Contract Review: They will translate and vet the SPA and the lease agreement (if buying a villa) to protect your interests, ensuring clauses like lease renewal options are as secure as possible.
Mistake 5: Buying "Off-Plan" from an Unverified Developer
Many of Phuket’s most enticing deals are for "off-plan" (under construction) projects. Rushing to secure a low price without verifying the developer’s history or legal compliance is extremely risky and can lead to construction delays, poor quality, or even an unfinished project.
The Fix: Prioritize Reputation and Due Diligence
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Developer Track Record: Research the developer's completed projects. Visit them. Are they well-maintained? Are the residents happy?
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Permit Verification: Ensure the project has all required legal permits, including the Environmental Impact Assessment (EIA). If the developer can't produce these immediately, consider it a serious red flag.
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Payment Terms: Do not agree to a payment schedule that front-loads a huge percentage of the cost before major construction milestones are met. A reputable developer will have a fair, phased payment plan.
Your Safe Path to Phuket Property Starts Here
The Thai property market is not a place for guesswork. By anticipating and avoiding these five common mistakes, you dramatically reduce your risk and pave the way for a smooth, secure investment.
Century 21 Hero Phuket works alongside reputable, independent legal teams to ensure every step—from quota check to final title transfer—is fully compliant with Thai law.
Ready to start your property journey the right way?
Contact us today for expert guidance and access to fully vetted, legally secure freehold condos and leasehold villas in Phuket.