What is the Difference Between an Apartment and a Condominium?
Potential property buyers in Thailand need to be sure of their legal rights regarding the property they are purchasing. Therefore, it is crucial to understand the main differences between a condo and an apartment before deciding to invest. In this post, we’ll explore the specifics of these types of housing and the legal aspects that foreign investors should be aware of.
CONTENT:
- What is an Apartment?
- What is a Condominium?
- Condo vs. Apartment: Differences in Ownership and Maintenance
- Services and Utilities
- Advantages and Disadvantages of Both Options
- How to Choose Between an Apartment and a Condo?
- Conclusion: Your Choice Depends on Your Goals
What is an Apartment?
The terms «apartment» and «condominium» may seem similar, and they are often used interchangeably. This can confuse potential buyers, as the difference between an apartment and a condo in Thailand depends heavily on legal regulations.
Multifamily apartment buildings are typically owned by a real estate development company or an individual. The landlord owns the entire building, and units are rented to tenants through lease agreements. Tenants do not have ownership rights or shared ownership of common areas.
The owner of the apartment building manages the property, and tenants must follow the rules of residence, which may include restrictions like pet ownership bans. Since apartment buildings are not registered under the Condominium Act, they are subject to housing and land taxes. Ownership of an apartment is granted through a lease for a fixed period, usually not exceeding 90 years, and terminates upon the death of the tenant.
What is a Condominium?
A condominium, or «condo,» is an individual residential unit within a larger building, which could be high-rise or low-rise. The key difference between a condo and an apartment is ownership. Condominiums are registered with the Department of Land Resources and can be owned outright by individuals, whereas apartment buildings are leased.
Condos that are licensed by the Department of Land Management allow residents to share common areas, such as pools or terraces, and require management by all unit owners.
It’s important to note that foreigners are only allowed to own up to 49% of the residential units within a single complex. This applies to both completed and off-plan properties. Therefore, the best opportunity for foreigners to buy a condo in Thailand is often during the early stages of sales, when more options are available.
Condo vs Apartment: Differences in Ownership and Maintenance
Co-ownership of a residential unit within a condominium complex means that the owner is responsible for contributing to the property’s maintenance costs. A homeowners association, consisting of condo owners, collects annual membership fees, and important decisions about building management are made collectively. Condo owners are expected to attend meetings and provide input on issues such as building maintenance, waste removal, and other shared concerns.
Apartment tenants, on the other hand, do not participate in the management of the complex, which can be more convenient. However, strict rules regarding property use may negatively impact the quality of life. For example, a condominium owner in Thailand can make interior changes to their property, but apartment tenants cannot modify their living space without permission.
Service and Utilities
The level of service depends on the amenities offered by the residential complex. Here are some key points regarding service and utility payments:
- If the complex has amenities like a fitness center or swimming pool, both apartment tenants and condo owners must pay for access. Condo owners pay for these services through their annual maintenance fees, while apartment tenants will see these costs reflected in their utility bills.
- Condo owners typically pay metered utilities as part of their fixed costs, in addition to maintenance fees for the building. Apartment tenants may face additional charges for general maintenance within the building.
- Minor repairs in apartments are handled by the landlord, while condo owners cover maintenance through service fees.
In summary, payment structures for condos and apartments are similar. Utility costs depend on the amenities offered, the size of the unit, and individual consumption of electricity and water. Significant savings on utilities are unlikely in either case.
Advantages and Disadvantages of Both Housing Options
Let's examine the pros and cons of each housing option in more detail:
Apartment advantages: Flexibility is the biggest benefit. If you grow tired of the neighborhood or have noisy neighbors, you can easily move by returning the deposit and finding a new place. Additionally, repair costs are the landlord’s responsibility.
Apartment disadvantages: The money spent on rent could be used to purchase a property, which would give you an asset that could appreciate in value over time.
Condominium advantages: You own the property, which is a valuable asset. The Thai real estate market is growing, and property prices are increasing. In tourist regions like Phuket or Ko Samui, renting out a condo can generate profit.
Condominium disadvantages: Foreigners are limited in the number of properties they can own under Thai law. However, with the help of a professional broker, this issue can be easily managed. Given the affordability of real estate in Thailand, buying may be a more profitable long-term option than renting.
How to Choose Between an Apartment and a Condo?
If you’re considering purchasing real estate in Thailand as an investment, a condo is the better choice because:
- It can be resold later, and you can profit from the annual increase in property values.
- It can be rented out, provided it is permitted by the building's regulations.
You can rent an apartment long-term, but you won’t have ownership rights. Ultimately, the decision depends on your goals. If you plan to relocate or invest, a condo is the best option. If you're considering a seasonal vacation, education, or a temporary stay in the country, renting an apartment may suit your needs.
Conclusion: Your Choice Depends on Your Goals
It’s challenging to give a definitive answer as to whether an apartment or a condo is better in Thailand, as both options are residential units within a complex. However, since foreigners can only purchase property as private ownership within condominiums, there is less reason to focus on the advantages of non-condo apartments. Leasehold agreements, even if long-term, are generally less appealing than owning a property outright. On our platform, you can explore a wide variety of real estate options to suit every taste and budget. To view condominiums, simply apply the relevant filters in the search bar. Our experts are available to explain the details of condo ownership and assist you in selecting an apartment or villa in Thailand.