Real estate vocabulary: words you need to know before buying property in Phuket
The glossary of Thailand property market. The main terminology of realtors, lawyers, real estate developers of Phuket.
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Real estate agent is an intermediary between a seller and a customer of Phuket real estate. Seller is the one who pays for agent’s services.
Budget collected from all condominium customers in case of full repair of the building, elevators, common driveway or any other co-property. It is not used for current needs. It is collected one time and is refilled as it is spent. Payments for the fund are made by each customer after formalization of ownership. Payments are counted from sqm of real estate floor area.
This is the term for a separate room in condominium. For Russian property market we use more common term – flat.
Separate apartment building without condominium license. Apartments in apartment block cannot be sold to a foreign customer. It can only be rented out for 90 years (refer to leasehold).
Blue-book or House Book
Registration certificate of an apartment. It is a small book of blue color that is why it is called this way. Information about an owner and property address are registered in this book.
Relative index of invested capital return. In real estate market it is counted in percent (%) of the amount spent on property purchase without cost of current maintenance and legal arrangements.
For example, annual 5% investment return means refund in the amount of 5% of property cost. It is paid to bank account of property owner.
Built-in furniture includes built-in wardrobes, kitchen furniture and bathroom fitment. Usually all apartments in Thailand are built and sold with built-in furniture. It is possible to order additional furniture package for an extra charge.
Guaranteed Rental Return, Rental Program
Obligation of a tenant (property management company) to pay an owner of rented property money in amount of Y% of property price during X years. For example, owners of VIP Kata 2 Condominium apartments sign a contract of rental program with property management company for 8 years and receive fixed annual income in amount of 7% of property cost.
Established by developer schedule of payment for property bought by a customer. As a rule, it consists of reservation deposit, payment after signing purchase/sale agreement (in amount of 20 to 30% of property cost) and 4-5 payments during all stages of construction works. For example, if you buy an apartment in condominium in process of construction works with 24 months construction period, payment schedule can look like this:
Rental guarantee agreement
An agreement signed between owner of apartment (landlord) and property management company (tenant) which allows a tenant to rent out a property on its own terms, it takes all the risks of damages recovery and pays a landlord fixed payment in % of property cost. Payment frequency: monthly, quarterly, half-yearly – established by an agreement.
A company that is a project investor. Developer hires contractors (architects, designers,construction brigades), also maintains or hires sales department, cooperates with real estate agencies. Developer implements a project and undertakes commitment to customers. For example, Phuket9 company is a developer. However, its staff includes engineers, marketing and sales department and also more than 150 builders. The company hires designers, architects, contractors, heavy equipment and also cooperates with agents for construction of major projects.
Property bought with an aim of gaining income. Generally, such property is situated in a resort zone, walking distance from the beach and it is popular in tourist sphere. Investment property brings owner income from rent. It can be a fixed income gained according to rental program agreement or income from property rent at the discretion of owner. Also investment property means that owner intends to sell the property as its cost will grow.
It is swimming-pools, parks, halls, restaurants, fitness centers, parking space belonging to common property of condominium owners. Availability and contents of area facilities influence condominium price – the more contemporary and rich area facilities are, the higher apartment price in such condominium. Condominium can be compared to a luxury apartment in Russia with gated yards, kids playgrounds and parking space.
Drive ways (their condition), accessibility of shops, supermarkets, markets, restaurants, cafes, bars, pharmacies, massage parlours and other places of housekeeping and service industry in the area of property, briefly, everything what makes staying in resort zone simple, convenient and pleasing. Phuket districts differ in terms of area facilities availability and contents. For example, the best area facilities for tourists in Phuket are in Kata, Karon and Patong beaches. Districts situated in the Northern part of Phuket such as Bangtao, Laguna, Naithon, Nai Yang, Mai Khao don’t have rich area facilities that’s why they can be classified as future-oriented.
Residential complex with common territory and special condominium license. Condominium apartments can be sold to foreign customers. Apartments have individual owners (under the law there are two types of ownership: freehold and leasehold). Common territory is in co-ownership of all owners.
Literally it is a long term rent. In this case owner (developer) rents out property to a customer (landlord) for 90 years term (for three periods 30 years each).
Quota of total amount of condominium apartments which cannot be sold to foreigners. They only can be rented for a long term (leasehold). Under the law, it is 51% of apartments in any condominium.
Document that confirms the status of condominium. To become a condominium residential complex should meet the following conditions: common area should be not less than 30% of land property. There should be common road not less than 7 meters width leading to condominium to provide an easy access to the building.
Furniture and Decorations Package
Includes built-in and portable furniture, household appliances, bathroom fitment, interior items (carpets, curtains, bed linen, towels, cutlery). Developer can offer these items for additional pay to apartment price or it can be already included in the price of apartment. As a rule, apartments should be already furnished with furniture and decorations package offered by developer to take part in rental program.
It is small interior items like dishes, bed linen and bedding, paintings, souvenirs, etc. – everything what makes apartment cozy.
Set of quality checking measures in constructed property. It is held after construction is finished. Customer examines an apartment for construction defects. Developer should remove the defects found. As a rule, after all defects are removed a customer makes the last payment for an apartment according to the established payment schedule. After that registration of ownership for an apartment is made.
One of two factors of property investment attraction. It is % of apartment value increase during holding period. In terms of resort real estate it happens due to value increase of land where property is built. For example, in Phuket land value increases to 5-10% annually because of island territory limitations.
Complex of measures taken by property management company to rent out property in accordance with agreement signed by owner and property management company for an established period and % of income. Percent of income is counted from property cost.
Document allowing construction. It is widely spread in Thailand that developers receive this document not before construction works start but in the process of construction. It bears certain risks for customers. We recommend you to make sure first that developer has construction permit before you decide to buy property.
Sum of taxes and fees for change of ownership which is paid during purchase/sale agreement. For freehold it is about 2.5% of appraised value of property. For leasehold it is 1.1%.
Deposit paid by a customer for property. As a rule, this sum comes to 100 000 THB. It is paid under purchase/sale agreement or separate reservation agreement for 30 days period (reservation period). Deposit is non-refundable in case a customer refuses to buy property.
Period during which property is reserved for a certain customer, in other words property cannot be sold for the second time to another customer. Usually this period lasts for 20-30 days. During this time developer prepares purchase/sale agreement and sends it to customer for signing.
Common Area Fee
Fee paid for the maintenance of condominium common area: cleaning territory and swimming-pool, maintenance of park zone, lighting elements change, etc. It is paid annually in advance, counted from sqm of apartment floor area.
For example, the owner of apartment with an area of 35 sqm at a rate of 60 THB from each sqm monthly will pay 35*60*6 = 12 600 THB annually.
Common places that belong to all owners of condominium: halls, corridors, foyers, reception, elevators. Under Condominium law all owners of condominium apartments pay fees for common area maintenance to keep the territory in a good condition.
Freehold, Foreign Freehold
Literally it is a free possession. It is the way to register property under complete ownership of a foreign customer. Under the law the amount of apartments registered as a freehold shouldn’t exceed 49% of all apartments in condominium.
Quota of total condominium living space designated for foreign customer ownership registration. Under the law of Thailand up to 49% of total living space can be sold to foreigners.
Land use inventory. Certificate confirming ownership of land property. Land property borders are accurately established using GPS. Issued on paper of a standard form with national emblem and watermarks. Has information about all land property owners.
Environmental Impact Assessment (EIA)
One of two main documents allowing construction of the condominium. It is widely spread in Thailand that developers receive this permission in the process of construction.