Overview On Buying Vs Renting Property in Phuket
Should a newbie to Phuket purchase or rent a home? Newcomers to the island frequently ask this question when considering buying vs renting property in Phuket. Of course, like with most choices we make in life, both options have advantages and disadvantages, and the best course of action depends on the circumstances.
So let’s cover some of the major dilemmas people are going through when trying to decide on buying vs renting property in Phuket.
Does Renting Suit Your Needs?
To begin with, it is dependent on the sort of person you are.
If you’re young, impulsive, and are unable to stay in one place for more than 5 minutes at a time, buying a home in a country where you have a good chance of “up and leaving” in a short amount of time is a risky option.
A property acquisition is a long-term investment, and unless you’re investing with the intent on “flipping,” it should be something you intend to keep for at least a few years.
A rented property, on the other hand, can be abandoned at any time. You have the option of renting the property for the period of time that it suits you with the option to leave at any time.
In general, the longer your rental agreement is, the better the price. However, your only obligation is the rental agreement’s expiration date, leaving you as free as a bird to take flight whenever the mood strikes.
What Are The Advantages Of A Phuket Rental Property?
Some individuals like renting because of the freedom it provides, but more crucially, since it relieves them of responsibilities. When you rent, you are relieved of the responsibility of fixing items when they break. Instead, you just call the landlord or the property agent, and they bear the responsibility — as well as the cost.
Overall, renting requires less financial commitment, while there will always be a case for the long-term financial benefits of purchasing.When compared to the cost of a home purchase, the financial commitment for short term rentals, even up to a year, is modest.
Short Term Rentals Thailand
This is particularly the case for foreigners who live in Thailand and are unlikely to be able to secure a loan. This implies that most purchases are made entirely in cash.
The sole financial expenditure for tenants is the rent itself plus utilities, in addition to any requested security deposit, which is usually totally refundable.
Renting makes the most sense in the short term, merely financially, especially if you are unclear if Phuket will be a brief chapter in your life or the setting for your whole life narrative.
What Are The Advantages To Buying Property In Phuket?
As time passes, the benefits of renting diminish, and buying starts to look like the most sensible option. Some people refer to rental payments as “dead money” because once that monthly rental money has been handed over, it will never be seen again.
With buying, you expect to see that money again, in one form or another. It may come in the form of future rental income, or from the eventual sale of your property.
Property is always one of the most emotional purchases you will make in your lifetime. If you buy a property to live in, you’ll spend most of your waking and sleeping hours in it, so it really needs to feel like home.
You really can’t put a price on sentiment and emotion, although they are two of the key determining factors in your choice of property.
Advantages of Owning a Property
Homeowners have ultimate control over their property. You are the king of your castle, whether it be a condominium or a manicured pool villa. Buy owning a Phuket property, you have more:
- Peace of Mind
- Creative Freedom
- Investment Potential
Want to hammer some hooks into the wall to put up a picture, redecorate or knock down a wall, plant or unearth some trees? You are free to do whatever you want with it, and you are not required to get permission beforehand.
Home ownership provides you with a sense of self-sufficiency and independence, and each alteration you make reveals a little more of your individuality while also providing you with a sense of joy and happiness.
However, purchasing a home or villa, particularly one with a pool, entails taking full responsibility for ongoing upkeep, maintenance, and repairs. This invariably necessitates an additional financial commitment, which is not always inexpensive.
Buying a Villa in Phuket
While regular maintenance will help you avoid more costly repairs, things will unavoidably start to break apart after a few years, especially in Phuket’s tropical environment. From the searing heat between November and April to the humidity and constant barrage of rain during the “wet season,” the weather is always a concern.
Roof tiles, sewage systems, and air conditioning units all need to be replaced or repaired at some point, and the costs of maintaining a tropical house should never be underestimated. If you are retired and enjoy taking on the role of “handy man”, some of those larger repairs can be pushed forward years into the future.
However, if you work full-time (or buy the house as an investment for rental), you will have to hire someone full-time to look after the property for you, which is an additional running expense of home ownership.
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Overview Of The Property Prices In Phuket
Because of Thailand’s land ownership rules, some people are hesitant to buy a home in Phuket.
When deciding between owning and renting, these people would prefer sign a long-term rental agreement for their ideal home (such as a pool villa) than try to go around the law.
While it is possible to purchase a freehold condominium in Thailand, giving you a permanent title, foreigners are typically not allowed to possess freehold land. Other possibilities are open to you (including landed property), but you must adhere to the law to the letter.
It is also feasible to acquire property on a leasehold basis if you have your heart set on a home. This provides you with all of the advantages of home ownership while also protecting you against future rental price rises, which are unavoidable for long-term renters.
Leaseholds can be extended, allowing you to stay in your Phuket dream home for a prolonged period of time.
In addition, any expatriate married to a Thai spouse has the option of purchasing a house in their spouse’s name on a freehold basis. There are several boxes to check, but the house and land can be held outright by anyone except the foreign spouse.
The Extra Costs of Buying
We’ve previously discussed the expense of house upkeep, but there are additional upfront costs to consider when purchasing a property.
The purchasing price is, without a doubt, the most significant expense. However, there are legal expenses as well as local government transfer fees to consider (normally around 2 percent of the purchase price). On fresh builds, however, the latter are usually shared with the developer.
If you determine that a leasehold is the best option for you, you’ll have to pay legal fees as well as a 1% leasehold registration charge. Be aware that this is normally shared between the two parties involved, so make sure this is spelled out in the contract before you sign it.
Condo owners must also contribute to a sinking fund up front. The sinking fund is similar to an emergency fund for large common area repairs, such as the swimming pool area and pool itself, or the elevators and stairwells in your building, in addition to the continuing maintenance or service fees (for gardening and upkeep).
What’s the Best Strategy?
The most crucial piece of advise for anyone considering buying vs renting property in Phuket is to think about their individual motives, circumstances, and budget. A good grasp of Thai property law is also essential (or to be advised by a trustworthy lawyer who has).
When people first arrive on the island, they often begin by renting while deciding if Phuket is the perfect spot for them. If Phuket meets all of your criteria and you believe it is worthy of a long-term commitment, you should go to the next level.
When you’re certain that your Phuket love affair isn’t a fleeting whim, you may make the switch from renting to buying.
Other Factors to Consider
Finally, unless you intend own your home until the day you die, at some stage you will have to sell it. This also comes with additional costs. There are new developments opening in Phuket virtually every month, offering plenty of options to foreigners looking to buy in Phuket. Your property must stand out! Every month, new complexes pop up in Phuket, giving foreigners wishing to buy a home in the island a plethora of choices. Your house has to stand out!
To make sure it does, you must have the forethought to keep the property well-maintained from the start. You can ensure that your house will appeal to discerning purchasers when you come to sell it by maintaining the interior pleasant and trendy.
To ensure that it does, you must have the foresight from day one to keep the property well-maintained. By keeping the interior attractive and stylish, you will guarantee that when you do come to sell, your property is still attractive to sophisticated buyers.
You must next devote time to properly advertise your home, ensuring that it is seen both electronically (online) and physically (in person) by potential purchasers visiting Phuket.
If you don’t make your house as appealing to potential buyers as it was to you when you originally bought it, it might become a millstone around your neck, sitting unsold for months or even years after you put it on the market.
We hope that’s shed some light on the different between buying vs renting property in Phuket for you, happy house hunting!