Property Market in Hua Hin – Facts & Solutions Selling Property in Hua Hin We must all admit, the Market is downand Instead of running in circles, be positive. It isabout time to face the problems in a small city like Hua Hin.It is no secret which we have to learn to live with it, otherwise we just make fools of our selves.
How the Market is divided in Hua Hin – Property on the Market
This part of the property section doesn’t reallyhave problems. Especially the beach front developments sell spontaneously. Condos sales have overlapped the individual property sales by far in the last 3 years, for very simple reasons: a)80-90% of the buyers are Thai nationals. Hua Hin is an upper class destination for holiday homes for the Thai society. The upper class Thais have money to spend.
This is also the reason why condominium prices areincreasing all the time and why also many new condo developments are coming up. b)Thai Buyers but also Thai developers have access to up to 80% financing through mortgages. c)For the limited Foreign buyers, the reason ofmoving to condos instead ofHouses is SECURITY. From a point of view of investment .this market is already overvalued. 2.Land: This market is the most studied one.With land prices continuing to increase, land that could be purchased buy few years ago for few hundredths thousand baht per Rai West of Hua Hin Center, now sells for a couple of millions per Rai and will continue to grow for the simple reason that most of the land does not belong to the original owners any more but to resale agents or land investors. Our opinion is this market will continue to grow. Good investment opportunities lay here.
This is market that was hit heavily in the past years. Here we need to analyze what happened, what is happening and try to predict what will happen. This market started not so long ago. In 2003, the first pool villas projects reached the market and took it by a storm. The Buyers, mostly Foreigners,saw an opportunity to buy a second home at an amazing price value for their money. For the local developers (mostly foreigners) it was the gold era. They paid a small deposit to buy land, put some drawings on the window and sell… that easy.
The money generated by the sales paid for the land and the houses.Nobody really took the Thai lawSirius, not the buyer not developers.With the land department don’t enforcing the existing laws… and with no questions to answer, it was too easy… and everybody very happy. If I remember well, in 2003 there were 2-3 Real Estate Agents We use to wonder how all these Tailor shops around the city managed to survive. Now the situation has changed. The easy money hascreated the same amount of real estate agents as tailors.
The question is no, how can they survive? This fancy“sell and buy” situation has continued to may 2006, when the government realized that the entire situation went too far and tried to implement the laws of land ownership.Until than,there were very few developments in Condominiums,. The Golden Era was finished, followed by the Political instability in Thailand and the Financial crisis in the world. The real estate market collapsed.Many projects without sound financial background had to close down.Other projects hadstop their developments by lack of funds. This hasarisen another big problem for the Market. Many foreign buyers have found them selvesin a situation in which they would have to pay money up front to for an unfinished house or uncompletedproject.
With hundredths of cases pending in the courts and same amounts of unsatisfied buyers speaking bad about the developers in our area, sure has not helped the situation.As more problems are continuing, the Thai Government didn´t have another choice than to tighten the protecting measures more. We believe that it was never the intension of any developer or buyer to default their contracts. The general situation in the market is the one to blame.It is a fact that is unavoidable.The solution is definitely not found in the courts ( the risk for both investors and developers to lose all what they have invest is very high).
A Solution must be found not in the matter of who has to win, but how to create a win win situation in which both sites lose as little as possible. One of the biggest problems that foreigners are facing, (this includes new and formerbuyers ) is the various forms of buying or leasing contracts and the lack of correct information given to buyers by unprofessional sellers. We, as developers have created this problem and we have to solve it. The only way to solve it is for developers and real estate agents to sit together and draft sales and lease contracts based on the Thai law which everyone can use. Is practically impossible for a foreign buyer to understand the contracts as they are and what is rightand what is wrong. The facts of buying a house, condo or land are very clearly stated under the Thai law.
FOREIGNERS CANOT BUY LAND IN THAILAND AND REGISTER IT IN THEIR NAME…. this is without exception unless you are a Thai National.
A foreigner can register a Thai company in which he is a minority share owner( 49%). The Thai Company has 51% Thai owners. Fictive Thai shareholders are now banned.… The flexible nominee story as we knew it has ended… The nominees are replaced by real with bank statements and tax documents to prove that they have the funds to own 51% of the capital shares which they have to prove it every time theywant to have a land transaction. Inn order to do this procedure correctly , you must be sure of your Thai partners. And with the new law, proposed changes inforeign act still maintain Thai Partners to have the 51% of the voting power in the company. If a foreigner has a Thai spouse,the best way is for her to buy the land in her name , at the same time leasing it to her foreign partner for the legislated period of 30 years. The foreign partner can own the house but lease the land from her.
Using the Lease to Purchase Land:
The only way under the Law for a foreigner to posses land ( here it comes many misunderstandings for how to the law is interpreted) , is a simple reality; the land department accepts registration of leaseslimited to 30 years, based on the fact that you pay the relative tax up front for 30 years. The majority of developers and Land owners, offers the option to renew your 30 years lease contract for another 30 + 30 years. This is correct but we have to take under consideration this is a private contract between the land owner and the foreigner. (Private contracts in Thailand are100% valid if you supportedand regulated by the Thai Law)
1)First, the contract has to be made in Thaiand if you don’t understand or trust the Thai writing, the best way is to have it all translated in English (the translation must be certified by a certified qualified , official translator , an Embassy, etc. ). The same document must also contain additionally to the seller and buyer, the signature of at least 2 persons as witnesses. Contracts without witnesses or stamped registration are not valid in Thailand.
2)You must have clear terms and conditions in the lease agreement. If the land owner dies or sells the land the new owner is obligated to fulfillall the responsibilities and contents of the lease contract.
3)The land owner or his successors don’t have the right to use the lease land for Mortgages or Loans
4)You have a clear option to buy the land at any time you wish in your name (if the law changes) or in another person or company you choice in the future, but must be made clear that the relative tax for this transaction is paid by you.
5)Use the Superficies law to cover your lease contract, in which, you have the rights to own everything that is built on this land ,including trees ,in your own name. The difference between Lease and Superficies Agreement is: the Superficies Agreement is covered by alllaw issues (like ownership of house, heritage rights etc.) in lease agreement you must write all these issues in the contract to be valid. 6)Make sure the building permission or the yellow book is registered in your own name.
The Thai law does not allow a foreigner to apply for a building permission.When the build permission is issued, it can be transferred to the foreigner´s name after 90 days without paying tax(foreigners can own structures in Thailand by Law) To clear up one more issue: many people are buying condos only due to “security” reasons; foreigner can own the condo in their name. The truth is that even with a condo ownership, abiding under the same law, YOU CANOT OWN THE LAND THAT CONDO IS BUILD ON, and only 49% of the total number of sqm of the condo building can be sold to foreigners.The same rules here, apply as they do for land purchase. Ownership of a house condo or villa: In Thailand a foreigner can legally own any kind of structure. To do that, you must register the house in the land department in your name.
For example, you have buy a land and house in a compound under the lease agreement, make sure the land owner officially transfers the house to your name and pays all relative taxes.A registration of a lease contract don’tnecessarily meanthat you also own the house. The Blue or yellow book is only a confirmation that your name is registered officially at the address. For the existing buyers of which their papers are not complete, there is no reason to panic. No developer has made this mistake on purpose.
It is mostly throughlackingor misled information. I am sure they will be very helpful to correct the paper work, but remember you ask very politely and you have to carry the costs of any necessary transactionsand then surely you will not have a problem. Now the big question WHAT YOU CAN DO IF THE LAND OWNER DOESN`T WANT TO RENEW YOUR CONTRACT OR ACCEPT TO SIGN THE DOCUMENTS IF YOU LIKE TO SELL YOUR PROPERTY (within the 30 years lease period) ? The answer is simple; if he refuses, you have to take a court order for this by using your correct contracts.
It will take time BUT GARUANTEED, YOU WILL NOT LOSE YOUR PROPERTY, it is the same procedure as in your country and as from last year, the Thai Government has put new rules on this kind of disputes between owners and buyers that is moving much faster than normal court cases (comity of customers protection) and it is free of charge. Time is the only thing to worry about, if your papers are correct. Your investment is secure, just follow the Thai Law, a real Legal advice is necessary when you buy property, the same in our countries.