If you are considering buying a house for sale in Phnom Penh you may think that the only things you need to think about are the price, the quality, and the location. Yet there are several other things you should familiarize yourself with before you select your new home in Phnom Penh.
Realestate.com.kh is here to help - with a step by step guide to choosing the right house for sale in Phnom Penh:
What are the types of houses for sale in Phnom Penh?
There are a few kinds properties you need to define first before actually deciding on what type to get. In Cambodia, these are generally Shophouses, Villas, Borey Homes and Condominiums.
Each type of house is a bit different in terms of physical specs, supply in the market and the kind of ownership available. Depending on the size of your family, your budget and your commute to work - each of these types of properties offer various pros and cons. Also, in regards to home ownership, depending if you a Cambodia citizen or not, some of these properties may not be available for you to purchase.
Shophouses for sale in Phnom Penh:
What are Shophouses?
Shophouses, aka townhouses, flats houses, or link houses, are townhouses that are typically characterized by its standard setup, and by facing a main street or road. It has a shop front at the ground floor facing the street and residential areas in the back section of the ground floor, and above the ground floor. Hence the term “shophouse”.
The shophouse units are generally 4 x 16 meters squared in size, and generally 2 or 3 floors high. Shophouses sit together in a row of houses generally.
Shophouses located in popular urban areas offer a bonus for families - as the front of the home is easily converted into a restaurant, mart or other small retail venture. Yet, the rest of the home can still be used for the family’s living. Having said this, you don’t need to have a shop just because you have brought a shophouse.
Generally, shop houses will not have front yard or garden, and likely only a small outdoor space behind the home. They won’t generally have a stand alone fence for security - but they will usually have a very secure front entrance and back entrance, and a protective screen. Car parking is often difficult with a basic shophouse, however many shophouse owners park their motorbikes inside the bottom floor room for security at night.
There are different types of shophouses. The Khmer-style shophouses have a more traditional design and more basic interior fit outs. While modern or western shophouses have incorporated a more current design and interior decoration and amenities that expats deem as necessities - such as western style toilets, baths, ovens, air con etc. It’s hard to spot the difference externally because some western shophouses only renovated on the inside.
The maintenance and upkeep of shophouses are pretty straightforward and low since the property is sectioned into smaller areas. It’s also pretty accessible since shophouses tend to be where the foot traffic is. That being said, it can also get noisy as a result of that.
Will my shophouse flood in rainy season?
Because you are on the ground floor, be careful of buying a shophouse in a flooding area. Check with the past owner and neighbours whether or not your new home is prone to flooding. If it is, you had better be prepared when the rains come. If you are buying in a flooding area, this should reduce the price.
Can foreigners own Shophouses?
Not really. Foreigners can only technically own a shophouse through a nominee structure where foreign investors enter into a trust agreement with the owner. The land or property is then held for mortgage. The property’s then leased to the foreigner. You would need a mortgage agreement, a lease agreement, a loan agreement, and a security agreement. But use this structure at your own risk. This is still a violation against the constitution of the land law in Cambodia. A 3 story shophouse will not have a strata title available for its 2nd and 3rd floor units as it is likely built before this law was activated (2010) and the owners are unlikely to have filed for strata title creation - therefore, foreigners could not buy is as they could a new condo unit.
For Cambodians, should I buy a shophouse in Phnom Penh with a hard or soft title?
For Cambodian citizens who want to buy a shophouse, note well that many shophouses are sold with just a soft title. While soft titles are cheap and fast to obtain, this raises a lot of risks moving into the future as your ownership rights are not clear. Try to secure a hard title for your new shop house home. This will incur more cost (4% of the properties value, and some bureaucratic fees), but the protection is highly valuable.
Note that if the seller can’t offer you hard title ownership, or seems reluctant to, there is probably some issues with the title. Do you due diligence and find out more about the title and the true ownership of the property before you pay any money.
Land Management and Administration Project (LMAP) titles can also be utilized. This is considered to be the safest kind of land title because it utilizes GPS coordinates to allocate land plots for the shophouses. This accurately dictates the boundaries of a purchased land. It has no significant difference from hard titles except for the fact that it comes with more detailed information. However, if you can obtain this type of title, you will be safe from any claims to parts of your property into the future, because you have confirmation of the exact boundaries of your ownership.
Want to buy a shophouse in Phnom Penh? Check out shophouses for sale in Phnom Penh now!
Villas for Sale in Phnom Penh:
What are Villas?
Villas are a kind of detached townhouse that includes some form of yard space. The only characteristic that distinguishes a Khmer villa are that they are fully detached and has a yard space. You might also encounter a further play on these words and hear "twin villa" and "mini villa". This means the townhouse is semi-detached or smaller, respectively. The yard would typically have trees, greenery, or gardens. The bonus of the yard space is the ability to park your cars and motorbikes securely. You can also have pets and space for your family to play off of the street. Having a villa should mean a quieter, safer and more private living environment than a simple shophouse. If you are lucky, you might even have a swimming pool. Yet - this also means a bit more maintenance is necessary.
The upside to owning a villa is that even the smallest villa has plenty of space and there is a wide array of designs to choose from. These can range anywhere from traditional Khmer, opulent french-inspired styles, to modern refits. Because your villa will be suitable for families, if you buy in popular areas there is plenty of potential for rental returns from family tenants, or a group of shared renters.
Will my villa flood in rainy season?
Because you are on the ground floor, be careful of buying a villa in a flooding area. Check with the past owner and neighbours whether or not your new home is prone to flooding. If it is, you had better be prepared when the rains come. If you are buying in a flooding area, this should reduce the price.
Can foreigners buy villas in Phnom Penh?
The simple answer is no. But foreigners may opt to use a nominee structure, similar to a shophouse. But again, doing so will still be a violation against the constitution of the land law in Cambodia. The land law runs across all landed property types and offers no exception.
For Cambodians, should I buy a villa with a hard or soft title?
A soft title should be okay if you’re absolutely sure there won’t be any disputes with the villa ownership. But hard titles are the strongest type of proof of ownership. It’s an ownership certificate that’s given by the Land Management and Planning Office. It details the information recognized by the cadastral office and the Ministry of Land at a national scale. A transfer tax of 4% is usually paid when a property is sold. Land Management and Administration Project titles can also be used to determine exact GPS coordinates of the land plots.
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Houses for sale in Phnom Penh Borey Developments:
Another great option is buying a home within a Borey development. This is a good option because it means that your new home will be surrounded by all the right infrastructure, such as water, electricity and appropriate road systems. It should also mean that the community is secure and contains common areas for your family to enjoy. The downside is added costs compared to stand alone properties, a possible waiting period before you can move into your new home, and also the potential dangers of buying into a borey project that doesn’t fulfil all its promises.
What is a Borey development?
Borey is characterized by a group of low-rise residential properties located in a gated community. These includes villas, flats, townhouses, shophouses, and even the occasional condominiums. Borey developments have a variety of properties that cater to both individuals and families. It typically has its own infrastructure and services which includes roads, water, electricity, and waste management. But the biggest selling points of a Borey is its huge space and security. It also generally has a more quiet scene because of of its exclusivity.
Can I buy a Borey home if I’m not a Cambodian citizen?
Foreigners are not allowed to buy homes in Boreys because these are predominantly landed properties. Article 8 of the Land Law states that “a foreigner who falsifies national identity to become an owner of land in Cambodia shall be punished as determined under article 251 of this law. Any property bought under these circumstances will be seized as State property without compensation from the State.” Yet, some boreys do have condominium units available with strata titles fully applicable to foreign buyers. Also, foreign buyers could consider buying a borey home that is landed via a Cambodia nominee.
I’m Cambodia. Can I legally buy a house for sale inside a Borey?
Cambodian citizens will be able to purchase landed properties in Borey developments with no issues -- provided they satisfy the legal and financial obligations.
What documents should I look for when choosing a new house in a Borey development?
Many developments will pass themselves off as Boreys. But these fake projects don’t have the necessary approvals and documentation. They simply call themselves a “Borey” in their marketing drive. Buyers need to check for five vital documents to ensure the quality and credibility of the Borey development.
These 5 crucial documents are the hard title, company registration, approved master plan, construction license, and Borey License.
- Hard Title:You have to look at two classifications of hard titles when dealing with Boreys.The first is the hard title for the whole borey development. This is called a master title - and will cover the entire piece of land on which the project sits. The second one should be hard titles that are subdivided for each residential unit included in the borey. These are called individual titles. A legitimate Borey development should be able to produce both of these hard titles to potential buyers. If they can’t show this, don’t put any money down until they do.
- Development Company Registration:Development companies will need to register themselves to gain approval from the necessary ministries to proceed with construction. However, construction is not always a sign that they’ve been approved. You can ask to see their company registration just to make sure both the project and the developers can proceed legally.
- Master Plan Approval:The Ministry of Land Management will need to approve the developer’s Master Plan first by the Ministry of Land Management before construction begins. A credible developer will be able to provide you with it or at least show you a copy.
- Construction License: The construction company then goes through a thorough background check with the Ministry of Land Management. Boreys must have a single registered construction company building the units and infrastructure to ensure consistency and quality throughout the development. Once this has been cleared, the construction company is then given a license.
- Borey License: The Ministry of Economics and Finance releases the license for the Borey once everything is in order. This means that the developer has satisfied the requirements of the Government in terms of quality, design, sales plans, and documentation.
Learn more about buying the right borey home in the ultimate Borey Buyer’s Guide, on Realestate.com.kh.
Should I buy in a Borey project with a hard title or a soft title?
You have to look at the main hard title first when looking at Borey developments because it’s a large-scale project. Ms. Lay Solida, Lawyer at CBL Law Group, said that “Borey projects should be legal and recognized by related ministries. The most important thing is that the Borey project has the main hard title.”
Having said that, it is still the most secure option to make sure you have an individual hard title for your home section. This can be achieved, but it will cost you 4% of the property price. Once you get this though, you can live without fear of any title issues moving into the future.
Check out Borey homes for sale in Phnom Penh now!
Condominiums homes for sale in Phnom Penh:
What are condos?
Condominiums units exist within a tower building with many residents. Individual unit owners share ownership of the common areas in a condominium, like recreation rooms, playgrounds, gardens, and courtyards. All are welcome to use the common areas, but the individual condo units remain the private ownership of the residents. Condominiums usually have staff on-site to help manage and assist in the needs of unit owners. They also have security and shared parking areas.
Condominiums can be great starter homes. It has a manageable space, with management-run amenities and services. This means low effort and time for upkeep by owners. Generally they are located in the inner city, so they also offer convenience and low travel times for inner city workers. They will generally have a nice view above the city, with fresh air and cooler temperatures. A unit in a condominium is also more private than a stand alone home and will have added security services. Condo units in Phnom Penh are normally quite modern in design and contain western style fixtures and interior layouts. Maintenance fees will however be charged to all residents to manage the common areas. There may also be restrictions in terms of remodelling the unit.
Can foreigners buy a condominium in Cambodia?
Foreigners can buy condominium units and gain ownership with a strata title. But they are usually only able to buy in newer condominium developments because developments older than 2010 do not have strata titles yet. They can own up to 70% of the total units in the building. The remaining 30% should be owned by a Cambodian Citizen. The 70% ownership excludes any ownership on units on the ground floor.
What is a Strata Title?
A law was created back on the 24th of May in 2010 regarding foreign ownership of real properties. This began the issuance of Strata titles. Strata titling basically allows private ownership in co-owned buildings. The conditions are that foreigners are only allowed to own up to 70% of the building, excluding the ground floor. So, this cannot be used to buy a landed house for sale in Phnom Penh. But it’s helpful to know that citizens can benefit from it if they choose to develop a strata-titled property. Strata titles are recognised at the Ministry of Land Management, Urban Planning and Construction - and are as safe as any other hard title in Cambodia.
How do I obtain a strata title for a condo for sale in Phnom Penh?
Creating a strata title involves the developer’s acquisition of land and obtaining a hard title for it. It is important to note that private unit ownership cannot be directly transferred by way of the original master plan. This can only be done by transferring the collection of the split titles under the ownership and name of the developer.
The next step is for the Ministry of Land Management, Urban Planning, and Construction to check the created regulations and practices regarding the insurance and management of the property. Once this is set and approved, a strata title will be released by the department to the developer. This is when the individual titles can already be distributed.
The transfer will call for the presentation of personal identification and marital status of the buyer to the Ministry of Land Management, Urban Planning, and Construction. These documents must be in Khmer. The buyer will also need to have their name translated into Khmer because the strata title will be in that language. Buyers can opt to use the services of professional translators and legal assistance to inspect the contract.
The title transfer costs 4% of the value of the condo unit. There’s also a public service fee for the issuance of each individual strata title under the buyer’s name.
Check out Condos for sale in Phnom Penh now!
How about the general Home buying process for houses for sale in Phnom Penh:
What information do I need before buying a House for Sale in Phnom Penh?
Conducting a title search before you purchase property is always ideal. This will reveal whether there are legal disputes or discrepancies with the land. The next thing you can do is to gather information about the property through a Commune council official.
How can I secure myself from frauds or fake companies?
The buyer should ask for a copy of the ID of the company’s representative if the seller is a company. A notarized copy of the Ministry of Commerce-issued certificate, power of attorney, and a signed resolution by the board of directors that authorizes the representative to deal with the land office is also needed.
What happens when a buyer and seller make a deal?
An initial 10% deposit is usually made first. The purchase must then be submitted to the Ministry of Land Management, Urban Planning, and Construction’s district office. This is otherwise known as the Cadastral Office. Both buyer and seller have to make an appearance at the Cadastral Office for the signing and preparation of the required documents.
The seller then has to show the original title certificate to the Khan during the deed signing in order to amend it with the new owner’s name. A down payment of 10% payment is given by the seller after this. The total processing time can range anywhere from 20 to 30 days.
What are my tax responsibilities?
A 4% transfer tax is required by the General Department of Taxation. This process usually takes around 1 day. A transfer tax is only required it there is a hard title in place. Both the buyer and seller must return to the Cadastral Office with the transfer tax receipt. They will need to sign a buying and selling form in front of a local authority. The whole process usually takes around 5 days.
A soft title does not incur this tax - however, by dodging this cost you may cause yourself more issues in the future.
The certificate of title under the new owner’s name will be released by Municipal Land Office once the Cadastral Office sends all the necessary documents and once 80% of the payment is made by the buyer. The processing time for this step takes around 5 to 21 days.
Be aware of scammers!
There are some common real estate scams that occur in Cambodia. Be aware of these when you are searching for a house for sale in Phnom Penh! If anything seems suspicious, seek the advice of an independent real estate agent or lawyer with property law experience.
Should I work with a Realtor/Real estate agent when buying a house for sale in Phnom Penh?
Cambodia has seen the stabilization of the real estate sector as more security measures are enforced. And this is an important aspect in investment. But since Cambodia is growing rapidly, its policies and enforcement also evolves in a quick succession. This is why working with a realtor is helpful because they are familiar with the ins and outs of the industry. They can offer sound advice and can help you ease your worries on your housing security. They can also give you a good comparison of prices and types of houses to choose from. They also have connections to mortgage professionals who can assist you.
Having said that, agents in Cambodia are not all equal - you need to choose the right real estate agent!