Thailand: Overview

RENTAL YIELDS

Last Updated: Apr 16, 2009

Property prices slightly higher this year

Gross rental yields on apartments in Bangkok average 7.18%. Thai property prices have risen very slightly since we last surveyed them, and they average of US$2,425 per square metre (sq. m.) for Bangkok apartments, US$40 more than the previous year.

Average-sized apartments (i.e., apartments measuring around 120 sq.m.) have the highest gross rental yields, at 8%, and sell for US$2,455 per sq. m.

These are quite good yields, given the turmoil in Thai politics and generally weak sentiment – quite surprising, really.

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TAXES AND COSTS

Last Updated: Jan 05, 2009

Income taxes in Thailand are high

Effective Tax Rate on Rental Income
Monthly Income	US$1,500	US$6,000	US$12,000
Tax Rate	6.3%	12.7%	15.8%
Click here to see a worked example
Source:			Disclaimer

Rental Income: Non-residents pay tax on income derived from property located in Thailand at progressive rates from 10% to 37%. Gross rent is subject to 15% withholding tax, which can be credited to the actual income tax due.

Property Tax: The House and Land Tax, levied on rental properties, is payable annually at a flat rate of 12.5% of the assessed annual rental value of the property

Capital Gains: Gains derived from the sale of immovable property are taxed at standard income tax rates.

Inheritance: There are no inheritance or gift taxes in Thailand.

Residents: Residents are taxed on their worldwide income.

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BUYING GUIDE

Last Updated: May 05, 2008

Buying costs are now low

With the government's tax incentive programme implemented since March 29, 2008, total roundtrip costs are now low at around 4.8% to 7.1% of the property value. The Special Business tax has been reduced to 0.11% from 3.3% while transfer tax has been cut to 0.01% from 2%. Real estate agent's commission range from 3% to 5%.

There are complications surrounding the computation of the buying costs; stamp duty and specific business tax are based on the assessed value or declared value, whichever is higher.

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LANDLORD AND TENANT

Last Updated: Jun 27, 2006

The landlord can call the police in Thailand

Given the absence of formal legislation, Thailand is pro-landlord.

Rent: The contract prevails on issues regarding the rent, rent adjustments, and notices.

Tenant Security: If the tenant refuses to leave after the contract and/or the notice to vacate expires, the police can be called upon to forcibly remove the tenant. However, landlords are not allowed to take abandoned appliances and furniture as compensation for unpaid rent and damages.

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ECONOMIC GROWTH

Last Updated: Sep 07, 2009

Political uncertainties damage weak economy

Thailand is a middle income, constitutional monarchy with a GDP per capita of US$4,115 in 2008. It is the only country in the region which was never colonized.

Thailand used to attract millions of tourists because of its culture, beaches, cuisine, and heart-warming hospitality. Apart from the metropolitan cities of Bangkok and Chiang Mai and the beach havens of the South (Phuket is the most popular), most of the country remains rural.

However, tourists and investors are shying away from Thailand due to persistent political uncertainty surrounding ousted Prime Minister Thaksin Shinawatra. Since the restoration of democracy in December 2007, political tension between pro and anti-Thaksin groups has continued.

The rural majority, who benefited immensely from Thaksin’s pro-poor programs, remained loyal to him. This led to electoral victories for Thaksin’s allies in Parliament. On the other hand, anti-Thaksin groups include students, blue-collar workers, the urban elite, royalists and military-connected elements. They have been protesting against corruption, and the populist programs of Thaksin and his cronies.

The global financial downturn pushed the economy into recession in Q1 2009. GDP contracted by 7.1% q-o-q in Q1 2009, after a 3.4% q-o-q contraction in Q4 2008.
From January to July 2009, exports fell by 23.1%, while imports plummeted by 35.1%. Private investment continued to decline in Q1 2009 due to uncertainties in both the domestic and global economy.

Despite two stimulus packages announced by the government in 2009, the economy is expected to contract by 3% in 2009. A minor recovery is expected in 2010 with 1% GDP growth.