If you’ve wondered what the deal is with buying property in Cambodia, you aren’t alone. Today we talk to Leah Valencia, one of the co-founders of Elevated Realty*. Leah filled us in on what’s required for a foreigner to buy property in Cambodia and explains the difference between a hard and soft title.
Considering buying a house in Cambodia? Here’s what you need to know.
Can a foreigner own property in Cambodia?
“Yes, foreigners can own property in Cambodia but there are restrictions. Foreigners can only own properties on the first floor or higher (not the ground floor), up to 70% of any one building, however this only applies to buildings with a strata title. A strata title is a type of hard title that allows an owner to divide a building into multiple individually saleable properties, this is also known as the “condominium law”, it is generally only granted to new condo buildings that are being built for this specific purpose.
Alternatively, foreigners can own 49% of private property, with or without a structure, if they are partnered in a Cambodian legal entity. A Cambodian legal entity is defined as any legal entity that has 51% or more of its shares held by Cambodian citizens. So as long as you own the property in conjunction with a Cambodian national, you can own any type of property you desire.
Currently, this law is not being regularly enforced, this is why you will hear stories of people who hold titles to properties around the city. There is a level of risk assumed with acquiring property in this way as it is subject to enforcement at anytime.”
What are the requirements for a foreigner to own property in Cambodia?
“To purchase property in Cambodia all you need is a current passport and visa. However, I would strongly recommend that you have someone advise you through the process, such as a real estate agent or a lawyer. It is important to conduct a title search before purchasing property. The title search will confirm who holds the title to the property and reveal registered mortgages or other encumbrances. Bear in mind that there can be other impediments to transferring which are not visible through a title search, e.g., a claim by a senior politician to the property. The buyer will not be given the actual title to conduct the search, because this is the sellers’ only evidence of ownership. The buyer will instead get a copy of the title, and it is important to confirm that it is a recent copy.”
If it’s not the ground floor, you’re good to go.
What are the advantages and disadvantages of long-term leases over buying?
“Long-term leases, lasting between 15 and 50 years, are an alternative way for foreigners to invest in Cambodian property. Prior to December 2011, leases could be granted for up to 99 years in accordance with the Land Law (2001). However with the entry into force of the new Civil Code, the maximum term of a lease has been reduced to 50 years. Leases granted prior to December 2011 will still be respected, up to a maximum of 99 years.
A clause can be inserted into the lease requiring the owner to get the lessee’s permission to sell, and/or entitling the lessee to convert to full ownership with the lessor’s cooperation. In addition, a ‘block sale notice’ can be registered with the Land Office, instructing the office not to sell the property without the lessee’s permission. Also it is often possible to put a renewable clause in the agreement.
Long term leases can now be registered at the national Cadastral Office and noted on the property title deed. In addition, a separate certificate may be issued to the title deed noting the lessee’s interests in the property. This Certificate of Perpetual Lease of Private Unit can be used as security to obtain financing. Additionally long term leases are assignable, sellable and bequeathable. This makes them similar to a freehold property but only for a limited time, which has both an advantage and disadvantage.”
What is the process if a foreigner wants to buy a ground-floor apartment or land in Cambodia?
“During the Democratic Kampuchea regime (1975-79), the Khmer Rouge abolished ownership of property and destroyed all existing official property records in Cambodia. At that time, all property belonged to the State and there were no private owners. After the Khmer Rouge fell, and for the next ten years, the right to own property was still not recognized and all property was owned by the government. In 1989 a Land Law was issued which established a framework for the recognition of property and property rights throughout Cambodia. In 2001 the Land Law was updated in an attempt to further clarify property ownership.
Under the Land Law property can be registered in two ways, systematic registration and sporadic registration. In the systematic system, the government targets plots of land to measure, register and title, this will continue until the whole country is complete. In the sporadic system, the owner initiates the title registration through the central Cadastral Office. There are currently two types of titles legally recognized in Cambodia, soft titles and hard titles.
Or, you can buy land (or 49% of it) and build your own.
The majority of property in Cambodia is legally held under a soft title. Property held under a soft title is registered at the local sangkat (council) or district level but not at the national level. soft title documentation can take a variety of forms, such as a letter of transfer from the previous possessor stamped by the sangkat or district office, a possession status certificate from the local sangkat or district office, or a building application. Buyers wanting to purchase a soft title property should conduct their own due diligence, at the sangkat or district office to confirm whom holds the soft title to the property. Similar enquiries should be made with the property’s neighbours. The property boundaries should also be carefully checked, as borders are often not properly demarcated and overlaps can exist. Often a soft title is prefered due to the taxes, fees and the processes involved in obtaining a hard title. However, the option to convert from soft title into a hard title is a right, either when systematic registration occurs or via sporadic registration.
A hard title is an ownership certificate which is issued by the Cadastral Office and recognized at the national ministerial level as well as at the sangkat and district level. A hard title is the most secure form of ownership, its registration should be the only evidence required of an indefeasible title.
There are pros and cons to both hard and soft titles. The most recent numbers accounting for title types in Phnom Penh found that currently only 10% of properties have hard titles, whilst 82% have soft titles, and 8% have no title at all. That being said, it is obviously much easier to find properties with a soft title, processing is faster, goverment fees are excluded, and it can later be converted to a hard title. hard titles on the other hand, though they include fees and take longer, offer you indisputable ownership, the history of the property, and leverage for bank financing.”
If a property only has a soft title available, is it still worth considering?
“A soft title is definitely still worth considering, depending on what you intend to do with the property. Current trends in Cambodia include “flipping” property – buying, renovating, and reselling at a higher value. Also very popular, is buying and reselling to locals for development. In both of these scenarios the intention is not to hold the property, but rather resell it in a relatively short time period. In this case, regardless of the title type, with conditions as they currently are you should have no problems selling your property in the current market. However, If you plan to live on the property or invest a great deal of money in hopes of value appreciation, then a hard title would be the better choice, as it is more secure and will stand the test of time through varying market conditions. soft titles are currently the norm, and are being bought and sold without any problems. However, they do not hold the same security that a hard title does. ”
*Elevated Realty is no longer in business.
Hi there! I was wondering that whether it’s easy(or even possible?) for a foreigner to get a house loan in Cambodia? And if so, any collateral needed？ Thanks so much!!!!
I’m looking to start a safe house in Cambodia. Would buying property from the government be a better option for this?
A safe house for what?
Unless your property is a land or a very isolated property, you might be able to do it yourself first using maybe the services of a translator. There is no proper fee established. Usually the Songkats ( small police station in charge of everything if the titles are soft titles ) knows absolutely everything about everybody, most of the times families under a soft title deed principle are by facts owners but they dont have a proper title in Hand, Soft titles are “occupations titles” delivered after the war. Like in the 19th in the US, the law establish than over a certain number of years of occupation of a unclaimed – registered property – khmers families becomes automatically owners of the space they leave in. In many cases the title is delivered when the property is re-sold. Mortgages are also recorded at those police stations. They can communicate to you all these informations i guess 50$ are good amount to encourage them (its legal the songkats source of revenues are precisely little services sold, donations, they are free to set up their own fees without limitation.
Dear shane, your idea is not simple to achieve in Cambodia, on a legal aspect first. You will need to to work with a law firm, able to provide you nominees, producing a lease agreement and (long term the law is not very clear about possible durations 50 years are the practice, but i saw cases recently were 100 years contract were signed). Over it you will protect yourself signing between you and the law firm a mortgage or loan agreement. These way the law firm borrow from you (techniquelly only) the amount of money in order to buy the land on your behalf, and as they will never payback in case things turn bad you can claim your money back. The second tricky point is building. It could turn rapidly to a total nightmare, due to the fact than there is not enough experienced local people, in all sectors. Even foreign firms at the end use a local workforce and they face also big issues. The best move might be if your project is big, importing from china pre-assembled structures, movable structures. This way you will stay owner of the facilities forever. Please avoid any deal were the locals provide the land and you r in charge to build in 90% of the case that kind of deal is not sustainable for both parts involved.
Hello not sure I will get any reply but in case some one there I am also ready to pay a bit for advise, I would like to know I am about to buy a land with a house from another foreigner who just acquired the hard title, the official local owner is as well the real estate agent is that recommended or should I prefer transferring the title to someone I know, shall I do it before the sale or can I do it afterwards ? How long does it take and costs? Hope fo ryrou reply Thanks
hello Christine, my name is olivier i used to found and manage real estate agencies here. My advise is definitely meeting a Foreign-khmer law firm and i see only 3 able to handle things properly, i invite you to scout for the best law firm and meeting them. The practice is you will not have to pay for the first meeting. Becoming owner leasing for 100 years is the best formula, but laywers will provide you a good expertise. Thats quiet important especially to make sure your law firm is ready to follow you in case of future issues, wich its not the case today as you describe your project. Hope it helps
Hello,
I work at a company in Japan that wants to lease/rent some land in Cambodia to be used to receive containers full with car parts. What are the criteria for renting land in Cambodia? Does one need to have a Cambodia bank account? Can non-Cambodian people set up branch offices in Cambodia?
Looking forward to your reply.
Dear Mister Inoo you are totally free to rent a property, whatever the duration (under a private agreement), if big amounts of money are involved better to consult a law firm. cost might be 1500-2000$ for the best law firm in town.
You dont need to leave in Cambodia, but you might be asked to provide a copy of your business visa. Its quiet easy to get. Hope it helps
Hi, If I invest in The Bridge condo in Phnom Penh, can I rent it out to local and expat?
Thanks
Kathryn
For buy condo in Cambodia, can we live only 99years or what? Is there any rule for this case in Cambodia or not?
Dear Tharoth, if your project is buying a condo you can hold legally a property deed on you own name, the lease is not nescessary. Its actually the only case, whatever your nationality.
Hi, I’m considering buying a condo for rental investment in Phnm Penh. How many bedroom condo is the easiest to rent? The target customer is expat.
Thank you in advance!
Hi Mary, returns are quiet different depending the Condo, you might take a paper and writing down all costs (purshase, maintenance costs, financial cost if any) comparing the possible revenues with other offers on the market. About the demand i would say there is two kind of products who might find tenants but again it depends how nice are your apartement, a studio ideally of 40sqm might be easy to rent you dont need to invest a lot here, you dont need to do any particular effort in terms of decoration, actually just target the minimum required, and the maximum profit. Buying a 3 bedroom can be a good move too. But you will have to provide a high standard of facilities.The offer is very low, if we are speaking about nice-big flats, and they are very very profitable from the owner Point of view. (you cannot find an high standard three bedroom for less than 3000.00$ Monthly) The short terms rentals are also a good way to rent luxury big sizes appartment as the local villas meets rarely the specs expected by that type of clientele.
Hi, How much should I pay for a title search (due diligence)? How long should it take? Thank, Pegter