Bringing in and exchanging money to buy a Thai property

When buying a property in Thailand you will need to show the funds have come from overseas, typically from your home country. So there will certainly come a day when you need to effect a transfer of funds, usually a fairly substantial amount.

The all important foreign exchange rate becomes a key factor because of the fact that a large amount is at play. Banks in the UK, US or Europe for example often view the Thai Baht as an "exotic currency". This means they see relatively little activity in these currencies and so, as unfair as it seems, charge a very large spread.

Buying PropertyThe spread is the difference between the buy price and the sell price. It is key because this is how much the bank is making from you, and of course at the same time it represents how much money you are losing by doing the deal with them. You can see this happening in the currency exchange market at cash kiosks, for example if you just want to exchange spending money for your trip.

Take the Thai baht against the UK pound, currently around 54. Some banks in overseas countries might quote 51 to sell, meaning you will get only 51 baht per pound if you hand over your UK money. They might also quote 57 to buy which means they will require 57 baht to buy back those same pounds. In this example the spread is 6 baht, about 12%. It means if you sold your pounds and then wanted to buy them back you would lose 12% of your money outright due to the spread.

Exchange booths such as Travelex and Thomas Cook are even worse offenders than some of the mainline banks. They often charge a spread of up to 20 per cent. That means losing up to a fifth of your money before you get to spend any of it! For the pound they might quote ridiculous rates such as 48 to sell and 60 to buy. If you accept these rates they will also have the audacity to charge commission on top of that, for the courtesy of ripping you off. And yet even these places are busy with queues of customers at airports and in high streets waiting to lose large chunks of their money just because they think these companies are reputable and have a good standing in the market or simply because of the apparent lack of any alternatives. Finding a mainline bank that offers a fair rate is quite a difficult challenge.

Still you don’t have to use the banks or exchange booths in your home country. There are some banks that offer very fair rates and very low spreads, and these are the Thai banks. You will notice that when the Pound is trading at 54, exchange booths in Pattaya are offering 53 or 53.5, just a half baht difference. Barely one per cent.

The above examples are, of course, for changing cash or travellers cheques. You may wish to buy a property using these methods but it is better to transfer money from overseas using a telegraphic transfer, also known as wiring money.

The good news is that wiring money provides for better rates than changing cash, but beware that banks in other countries still charge a much larger spread than banks in Thailand. The trick is to send your foreign currency intact to Thailand and let the receiving Thai bank do the exchange for you in Thailand. You will then get a much better rate and will save a small fortune. Thus if you are in the UK and you have the option of sending your money as Thai baht (with the UK bank doing the exchange), or simply sending British pounds over to Thailand (with the Thai bank doing the exchange), be sure to send Pounds. This will give you a very good rate, with the Thai bank doing the exchange at fair levels. With the pound at 54, you may get 53.7, very close to the mark. In contrast, the UK or overseas bank will likely change the money at 51 or 50, even for a bank transfer. When transferring millions of baht this can add up to a pretty steep loss.

To effect a transfer you will need a Thai bank savings account. These can be opened very easily at Kasikorn, TMB or other mainline Thai banks with a passport and modest initial deposit. The savings accounts are very similar to current accounts except they don’t have a cheque book. What they do have however is a SWIFT code for incoming money transfers from overseas, as well as an ATM card. Use this SWIFT information for your money transfer by giving it to the overseas bank and telling them to send money in your home currency to the Thai bank.

A transfer is the best way since you will need to obtain a letter from the Thai bank called a Tor-Tor-3 stating the funds were received from overseas. You could use cash exchange booths and change cash or travellers checks and keep the receipts but a telegraphic transfer will allow you to get better exchange rates and permit large amounts to be transferred safely.

You can then receive both the Tor-Tor-3 and the funds ready for your purchase, knowing you got a good deal overall.