Protecting investors from unfinished construction in Phuket: legislative measures and practical advice

Known for its picturesque beaches and developed infrastructure, Phuket attracts many investors looking to invest in real estate.

However, as in any other part of the world, investing in real estate is associated with certain risks, especially when it comes to unfinished properties. It is important to understand how Thai legislation protects the interests of investors and what precautions can be taken.

1. The permitting process

Before a developer begins construction, they are required to obtain an Environmental Impact Assessment (EIA) — a certificate confirming that the project will not harm the environment. This process requires careful preparation of project documentation and can take a significant amount of time. Obtaining an EIA certificate is the first step that ensures that the project complies with environmental regulations and standards.

In addition, the developer must obtain permission to implement the project from local authorities. These measures help minimize risks associated with the quality of construction and compliance with regulations. 

2. Payment stages

Unlike a number of countries, such as Russia or the UAE, Thailand does not have an escrow account system where the buyer's funds are kept until the completion of construction. Instead, according to the law, payment is made in stages. Usually, these are 3-7 payments that are made after the completion of each stage of work. This approach allows the buyer to control the process and minimize the risk of losing funds in the event of delays or poor quality work.

3. Registration of the transaction

Once the construction is completed and the property has been fully paid for, the transaction is registered with the Land Department. This is an important step that confirms the buyer's ownership of the property. Without this registration, the buyer will not be able to legally own the property, which emphasizes the importance of following all legal procedures.

4. Buyer Protection

Thai legislation includes two main acts that protect buyers' rights: the Consumer Rights Act and the Condominium Act. These laws provide buyers with certain guarantees, including the right to compensation in the event of a construction delay. A developer can delay the completion of a project for up to one year without penalty, but if the delay exceeds this period, they will be subject to daily late fees.

This creates an additional incentive for developers to complete projects on time and in accordance with the agreed terms. 

5. Developer Reputation

Despite the existence of legislative measures, it is recommended to carefully study the reputation of the developer before purchasing. The quality of the implementation of previous projects, customer reviews and the financial stability of the company can serve as important indicators of reliability. Mercury group always conducts a detailed analysis of the reputation of developers to ensure the safety of our clients' investments.

Conclusion

Investing in real estate in Phuket can be profitable and safe if you are aware of the risks and protection measures. Thailand's laws provide certain guarantees for buyers, but it is also important to be vigilant and do your own research. Following these guidelines will help you minimize your risks and make a successful real estate investment on this beautiful island.