The Difference Between Condos and Apartments Explained
The differences between condos and apartments in Thailand. One of the major differences between the two types of properties have is on the legal side. Condos are properties that are licensed and registered under the Thailand Condominium Act and on the other hand, apartments are leasehold properties. Although you might not see any difference from the outside that would set the two apart, there can be a huge difference between the two of them when it comes to buying one.
Condo vs Apartment Ownership Type
If you happen to buy condominiums that have been registered with the Land department and licensed from the same, then you can have outright ownership of the individual units. On the other hand, apartments that are not built according to the Condominium act can never give the owner full ownership. This is because Business developers that constructed the apartments can only give “possession” of the individual units to buyers and that too under their own terms and conditions. Condos that have been licensed from the Land department grant full ownership of the individual units to buyers, joint ownership of the common areas such as the terrace or stairs, and the maintenance of the building are jointly managed by all owners. If you are a potential buyer, be sure to check if you are actually purchasing a property or you might end up “leasing” one.
According to the Condominium Act, the owners are issued title deeds that they might later sell or dispose of, as they deem fit. Since the properties are registered under the Condominium Act, the properties do not offer that much consumer protection, which means that the governance of the building has to be managed by the owners. However, the ownership of the property is exclusive and absolute and the properties are not subject to land or housing tax for that matter.
In case you buy an apartment, you as a lessee will not have any ownership over any area of the building, be it of the individual units or the common areas. The management of the building and its premises have to be undertaken by the owner and the tenants have to comply with any and all rules that he may have to offer. Properties that are not registered under the Condominium Act are subject to housing and land tax and the possession of the leased property is limited to a maximum of thirty years and gets terminated if the lessee dies.
The reason condos are popular among buyers is that the owners can do any changes that they seem fit within their individual unit since the ownership is exclusive. Although they are not allowed to reconstruct any portion of the building that is owned jointly by all the owners. The owners have to contribute towards the maintenance expenses and any duty that comes with them living in the complex. Such as the task of garbage disposal, cleaning of the swimming pool if there is one, maintaining the saunas and spas, proper management of the gym, and any other amenities that are present within the complex have to be managed by the owners.
The members are encouraged to have owner meetings where they can discuss in length and detail, how they would like to proceed with the tasks at hand. Especially times when repairs are due or the garbage disposal methods need to be discussed. A meeting is also a must for the owners to get to know each other better because at the end of the day they have to stay at the same complex. What happens is when a person buys a condo, they own a certain share of the building, this is why they are the owners in its true sense, just like you would also be a joint owner of a company if you invest in their shares. A condominium is a Latin word and according to the language it means, together with ownership, which of you think is a perfect
This does not happen if you buy a leased apartment because it is in fact owned by someone else and they are just giving you the possession of the individual unit for a sum of money that they deem fit and profits them. This is why developers can place any condition they want on the buyers. If you happen to buy a leased apartment you would not be an owner but a tenant who can enjoy limited time on the property. The time limit is fixed to a maximum of thirty years or if the “owner” dies, whichever happens first.
Ownership also influences the guidelines overriding a condo and an apartment. While the basic can and can’t dos be similar most of the time, implementation and administration of the rules fluctuate.
For instance, in an apartment, the property management company enforces rules, and those same rules apply to all the units. According to the Department of Housing and Urban Development, the most basic responsibilities include:
- Following the rules and guidelines of your lease.
- Paying rent on time.
- Maintaining noise levels that won’t cause a disturbance.
- Keeping your apartment reasonably clean, especially around the entrances to the unit.
- Disposing of garbage and waste properly.
There may be additional rules to follow, particularly if you live in a pet-friendly building, but assume basic regulations like these will be strictly enforced.
Rules can be trickier with a condo. Aside from guidelines set by the HOA for common areas outside of the units, restrictions within condos may vary. Owners have the ability to set their own regulations and could have some unique requests. Make sure to ask about the “house rules” before signing a lease.
Many of the rules set by the HOA impact the owner directly and not necessarily the renter. They can include stipulations for paying fees, which help cover maintenance for common areas and the building exterior.
In some cases, HOAs have restrictions on the number of units designated as rentals. This is something to keep in mind when thinking about purchasing a condo with the intention of renting it. Rent for an apartment is almost always a fixed amount for the extent of the lease. Most increases, if they’re going to happen, occur when it’s time to renew, although, with enough notice, it’s legal for your rent to go up mid-lease. Some apartments offer month-to-month or short-term leases, but the agreements are usually for a year.
Apartment rent often depends on the market rate and unit availability. It’s also a good rule of thumb to factor in a few extra costs when calculating what rent you can afford. Some apartments will require you to have renter’s insurance, which is a minimal, extra cost. Utilities are also often not included in your rent.
If you’re renting a condo, your payments will also be a fixed amount for the rental period unless your agreement states otherwise. Property owners decide on the cost of renting a condo, which means it can differ between units. Some owners include HOA fees and utilities as part of the rent for a flat fee, so you’ll pay once per month for all the basics. Utilities will average out in a condo at about the same as the apartment numbers above. HOA fees can vary.
Condo vs Apartment Common Amenities
Units in apartment complexes have pretty standard features that are the same across the community. Sometimes there are different floor plans available and options for standard or upgraded appliances if the property owner is investing in updates for within units. In the building itself, apartment amenities can include any of the following:
- Free parking
- On-site laundry
- Community room available to rent for events
- Business office
- Car wash
- Vending machine
Any conveniences that make a property more appealing fall into this category, and can be what makes an apartment building stand out, especially in newer apartment complexes. The more luxurious the apartment, the wider the range of available niceties.
Condo community amenities are pretty much the same as what you’ll find in an apartment complex. Inside the units is where things will differ the most. The features here are sometimes more unique and upscale with things like granite countertops, hardwood floors, and vaulted ceilings.
This is because quality amenities can create higher property value for the owners. According to customer reviews, washers and dryers, high-end kitchen appliances and hardwood floors are the most common upgrades owners prioritize.
An apartment Unit
Apartment building is generally owned by one individual or an entity and can be rented for a fixed monthly rate. therefore, there is no common ownership of the building that may help to manage the building or in some case is the reason of issues in the building. Apartment will have similar amenities that are commonly found in condominiums, this makes potential tenants very convenient to reside in the city only for a short period.
Condo Title Deed
The condo ownership will be register at the land office and the new owner will receive a formal title deed on his or her name. The title deed contains the following information: position, location of the property area, land of the condo project, plan design of condo unit showing the width, length and height, name and surname of the person having the ownership of the condo unit and any other previous owners. The transfer of Title deed always takes place at the Land Department.
Foreigner Quota (49%)
Any foreign nationality can qualify for condo ownership, he/she can purchase a condo if the condo unit can be sold under the foreigner quota. Only 49% of all unit’s space can be sold to foreigners, at least 51 % of the condo area must be registered under Thai nationality.
When buying a secondhand condo, the seller must obtain a letter issued by the condominium juristic person that indicate the condo unit falls within the quota of 49% of the condo building. The seller will also require obtaining a letter from the juristic person that all building maintenance were paid.
The Condominium Act
Property Law in Thailand - there are two types of residential buildings registered in Thailand, Condos registered under the Condominium Act with a condominium license and Apartments buildings which are not registered under the Condominium Act.
Only registered condos can offer full individual ownership with a government issued ownership title deed. The Condominium Act specifies for example the procedure and requirements for a multi-unit apartment building to be licensed as a condo. The latest Condominium Act passed legislation in 2008.
New Law for Property “Business Operators”
Under the new law, residential leasing of 5 units or more will officially be classified as a “contract-controlled business” and the property owners will be classified as “Business Operators”
These new laws are here to provide a greater consumer protection to Lessees/Tenants. The new regulations will be enforced to ensure Lessees are not unreasonably disadvantaged by unfair Rental Agreements.
The New law define a residential leasing business operator as:
“A business operator that leases at least five or more property units in one or more buildings for residential use. Property types, include condominiums, apartments, houses and any other type of property used for residential leasing (Excluding Hotels).”
There are 3 main changes this law brings:
1. Lessors (Landlord - Property Owner) can only request one-month Security Deposit and one-month Advance Rent.
Common practice of renting in Thailand, for Lessors (Landlord - Property Owner) to request 1-month advance rent and a 2 or 3 months Security Deposit.
This refundable security deposit is held by the Lessors (Landlord - Property Owner) to secure of liabilities caused by the tenant such as property damage (Beyond ordinary wear and tear), unpaid electric or water bills, default of monthly rent payment or early termination of the lease.
The new law requires the Landlords to request only one month of Security Deposit, potentially leaving them exposed to extra irrecoverable liabilities in the case of a bad tenancy.
2. Lessees (Tenants) can terminate their Lease Agreement by simply providing a 30-Day Notice without risking their security deposit been forfeit.
3. Lessors (Landlord - Property Owner) are prohibited from charging Premiums rate on Utility services such as Electricity, water, WiFi, etc
These laws are effective as May 1st, 2018
This particular topic has deluded many a prospective property buyer and people often make a mistake and end up buying something else rather than what they intended. Here you will get to know in detail what exactly is the difference between the two types of properties.