Can You Buy A Hotel-Licensed Freehold Condo In Thailand?

Purchasing A Hotel-Licensed Freehold Condo In Phuket

A Condotel is a style of Phuket real estate that combines the advantages of both a condominium and hotel. Individual units can be privately acquired and then leased as hotel stays, which is a popular concept in other areas of the world.

In short, this type of ownership is for anyone purely interested in investment, not for someone seeking a second home.

Condotel owners can rent out their units on a monthly, weekly, or even daily basis. This is a significant benefit for any property investor if you’ve been following the regulations being imposed on Airbnb by towns and countries throughout the world.

The owner is generally given a set number of days to utilize their unit each year. The management company treats the room like a regular hotel room for the rest of the period.

The owner is usually allocated a fixed number of days per year to use their unit. For the remainder of the time the management company treats the room as a normal hotel room. They also take care of the unit’s upkeep and repairs in most cases.

Most Condotel projects provide either a guaranteed return or the opportunity to join a “rental pool.” This compels the owner renting out their property together with the other owners that participate in the agreement.

The owners of the units will then “pool” the rental money and split the profits equally.

Foreign Investors Buying Condotel Properties in Phuket

The Appeal For Foreign Investors To Buy A Hotel-Licensed Freehold Condo

For a foreigner, the appeal of a Condotel investment is clear. For starters, they are allowed to own a freehold condominium apartment in perpetuity.

Second, they have the legal right to have their unit’s rental managed by a qualified and licensed hotel management firm.

They may therefore benefit from Thailand’s rising real estate market while also benefiting from Phuket’s expanding tourism economy.

Simultaneously, they will be able to stay in Phuket for “free” for a few weeks each year.

Are Condotels A Commercial Business?

A Condotel development should apply for commercial use from the start in order to function efficiently as both a condo and a hotel.

The legal person in charge of a condominium might potentially approve (or at least condone) short-term rentals, essentially “commercializing” the unit for usage as a Condotel.

The owners’ consent is not necessary if the juristic person chooses to allow it.

However, in order to apply for a hotel license, converting the property into a Condotel, not only must the legal person accept, but the legal commercialization of the common space must also be approved by 100 percent of the owners.

Is There A Lack Of Condotels In Phuket?

Phuket’s Lack Of Condotels

Many condominium buildings were pushed into development without first considering its usage as a hotel, which is unfortunate.

Without a hotel license, shorter-term rentals (e.g. daily and weekly) are essentially unlawful in Thailand. However, a number of ventures, mostly centered on the short-term rental sector, provide assured profits.

It’s also probable that many of those who earn from short-term rentals aren’t paying their fair share of taxes. Anyone who spends time in Thailand quickly learns that nothing is an issue unless legislators decide to act. To put it another way, everything is fine until it isn’t.

If Phuket’s tourism suffers a setback, hotels may band together to push for a stop to unlawful short-term rentals. Those developments that already have a hotel license, on the other hand, will be fully immune to any such reaction.

And if hotels are successful in their fight against short-term rentals, Condotels will reap the benefits as well.

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