Buying a new house

[sandyf]

On 11/18/2018 at 8:11 PM, baansgr said:

No way to own land, and owning the house is worthless. Forget all the companies, leases, usufructs etc, thais will own and have control of it, dont bother.

That is one point of view, others can be a bit more practical. I have been in my house 9 years and I would estimate the savings in rent would be about 4 times what it cost to build.

I accept I will never actually own the house but it has hardly been "worthless".

 

[sandyf]

2 hours ago, Speedhump said:

I'd like you to show me legal definition of 'peppercorn lease' or did you make it up. A peppercorn is a very small payment, not a period of time (as in a peppercorn rent, which is living in rented accommodation for almost nothing).

Quite right, the term actually comes from a time when the rent could be paid in peppercorns or other small token. This moved to small money and a £1 a year was quite common.

For some years now it has been common for people on a very small lease to be offered the freehold for a token amount. The landowners, quite often the church, no longer want to administer the rent. Some years ago I think I was £25 for the freehold on a property. It was about halfway through the 99 year lease at £5/year.

[HHTel]

4 hours ago, xylophone said:

Not my post HH...…….

Sorry, I just highlighted the quote.  The system decided from who.  I will double check in future.

[Speedhump]

57 minutes ago, sandyf said:

Quite right, the term actually comes from a time when the rent could be paid in peppercorns or other small token. This moved to small money and a £1 a year was quite common.

For some years now it has been common for people on a very small lease to be offered the freehold for a token amount. The landowners, quite often the church, no longer want to administer the rent. Some years ago I think I was £25 for the freehold on a property. It was about halfway through the 99 year lease at £5/year.

Thanks for the confirmation. I want this guy to show me a legal definition of 'peppercorn lease'. I think he dreamt it.... 

[Speedhump]

1 hour ago, sandyf said:

That is one point of view, others can be a bit more practical. I have been in my house 9 years and I would estimate the savings in rent would be about 4 times what it cost to build.

I accept I will never actually own the house but it has hardly been "worthless".

 

Hear, hear. Also if you bought a house and a land lease in a commercially stable area, with all land built upon and well maintained, and if you want to renew a 30 year lease (say after 10 or 15 years) it is hardly likely to be refused. People saying its always better to lease have a different agenda, which I also understand, but they need to see there is another way (if you understand it). After even say 10 years or so I should certainly at least get back my initial investment. I luckily bought cheap anyway in a reasonably high class, well built development where more than 90 pct of homeowners are farang. Better than 10 years spent on rent.

[xylophone]

1 hour ago, sandyf said:

That is one point of view, others can be a bit more practical. I have been in my house 9 years and I would estimate the savings in rent would be about 4 times what it cost to build.

I accept I will never actually own the house but it has hardly been "worthless".

 

You have a very valid point sandyf.

 

But what some folks seem to miss is that if they "acquire" their property/land through the nominee company route then firstly they are breaking the law and secondly it can be taken from them, so it is a risk they are taking.

[xylophone]

7 hours ago, Langsuan Man said:

Posters here keep forgetting one salient point, the company route for "ownership" was set up for Thais, the foreigners have just utilized it's loophole to control property.  And really the bottom line is control which is much more valuable than ownership 

A debatable point here LM because the loophole was never designed to allow farangs to own land, but as you say they can exercise some control, but then again that is also debatable because it's very difficult to control that which you don't own, especially if someone has a mind to exercise some chicanery over the company/setup.

 

I think as long as the OP realises what he/she is letting themselves in for and is prepared to take the risk, then they go into it with eyes wide open and cannot apportion blame elsewhere if things turn to custard.

[KhaoYai]

7 hours ago, xylophone said:

In the final analysis you don't own the land, you are just a minority shareholder in a company and it has to be a bone fide operating company, and the great majority of people who go down the company route do not have a true operating company...…...many threads and posts on this, but the law states that a foreigner cannot own land here (except in the 40 mil baht investment category) and that's really the end of it.

A minority shareholder that controls the company's assets so what's the difference?  Those assets have a value and as you are legally entitled to own the shares, you therefore own their value. In terms of what that asset means to you, there's not much difference to actually owning the land - you can sell it and receive the revenue.  The 'foreigner' does not own the land, the Thai company does and in line with most countries, a properly formed company is a 'juristic person' according to the law - a Thai juristic person. If you control the company, you control the land - end of.

 

I would agree though, that the majority of those who form a company to 'own' land 'do not have a true operating company'.  As such, their 'ownership' is illegal according to the Thai Land Code which states something like 'any attempt to circumvent the Thai land laws will result in forfeiture.

 

The company must trade and must have a reason to own land - having a noodle cart on Sukhumvit doesn't qualify ????. Some have been told that provided the company pays a little tax each year, they're safe - they are not.  Granted, some have 'owned' land this way for years without a problem but if a problem crops up - they could be 'up the creek without a paddle'.

 

Another way to protect your investment, which is probably more suited to a foreigner married to a Thai who doesn't have a legitimate company is to place a mortgage over the land. Perfectly legal but not all Land Offices will accept a foreigner placing a mortgage on Thai land - mine will.  I'd guess that might be acceptable to the little lady at the time of purchase but afterwards? I doubt it.  If, at the time of purchase, my wife refused to allow me to place a mortgage over land that I had paid for - I'd be taking a long hard look at my relationship, in particular at her motives for marrying me.

[xylophone]

36 minutes ago, KhaoYai said:

A minority shareholder that controls the company's assets so what's the difference?  Those assets have a value and as you are legally entitled to own the shares, you therefore own their value. In terms of what that asset means to you, there's not much difference to actually owning the land - you can sell it and receive the revenue.  The 'foreigner' does not own the land, the Thai company does and in line with most countries, a properly formed company is a 'juristic person' according to the law - a Thai juristic person. If you control the company, you control the land - end of.

 

I would agree though, that the majority of those who form a company to 'own' land 'do not have a true operating company'.  As such, their 'ownership' is illegal according to the Thai Land Code which states something like 'any attempt to circumvent the Thai land laws will result in forfeiture.

 

The company must trade and must have a reason to own land - having a noodle cart on Sukhumvit doesn't qualify ????. Some have been told that provided the company pays a little tax each year, they're safe - they are not.  Granted, some have 'owned' land this way for years without a problem but if a problem crops up - they could be 'up the creek without a paddle'.

 

Another way to protect your investment, which is probably more suited to a foreigner married to a Thai who doesn't have a legitimate company is to place a mortgage over the land. Perfectly legal but not all Land Offices will accept a foreigner placing a mortgage on Thai land - mine will.  I'd guess that might be acceptable to the little lady at the time of purchase but afterwards? I doubt it.  If, at the time of purchase, my wife refused to allow me to place a mortgage over land that I had paid for - I'd be taking a long hard look at my relationship, in particular at her motives for marrying me.

I agree with the majority of your post, however IMO the aspect of the "controlling" of it is open to scrutiny, mainly because the company "owning" the property has to have a majority Thai shareholding, and even though some folks have found a way round this and "transfer" shares (in one form or another) from the Thai shareholders to the farang to supposedly confer controlling ownership, in effect it doesn't because it's not legal as it does not comply in law with the stipulated controlling shareholder percentages.

 

At least that's how I read the situation, however am keen to learn more if that does not turn out to be the case. Having said that, what I do know is that farangs cannot own land in Thailand and as long as that is understood by prospective house/land purchasers, then they roll the dice and take their chances.

 

[thedemon]

Reading this through this thread I am reminded of my first visit to Koh Samui. It was 1989, I was in my early twenties and working in Hong Kong. Several of my colleagues either had already invested in houses (or land to build a house) or were in the throes of doing so. Being young and pretty broke it was all academic to me but what I recall as the main point of contention between my colleagues and their friends was whether to buy the land through a company or go the safer route with a 30 year lease. The arguments one way or the other were pretty much exactly the same as in this thread today.

 

So fast forward to 2018 and the ones (still around) that went for the 30 year lease will be moving out of their houses next year. They can keep their furniture though. The ones that went the company ownership route are possibly still looking over their shoulders wondering when the authorities are coming to seize their properties. If they can't stand it any longer, they can sell up, take the 1000% profit and start worrying about how to get the money out of Thailand.

[KhaoYai]

1 hour ago, xylophone said:

I agree with the majority of your post, however IMO the aspect of the "controlling" of it is open to scrutiny, mainly because the company "owning" the property has to have a majority Thai shareholding, and even though some folks have found a way round this and "transfer" shares (in one form or another) from the Thai shareholders to the farang to supposedly confer controlling ownership, in effect it doesn't because it's not legal as it does not comply in law with the stipulated controlling shareholder percentages.

My lawyer explained it to me as "the Thai directors are issued with shares that do not have voting rights and therefore the director who does have voting rights can stipulate who can and cannot sign on behalf of the company" - he tells me that's perfectly legal but I will raise the issue and double check on this next year. I trust this man implicitly.

 

I will be transferring the ownership of my house to a genuine limited company next year and will also take the precaution of placing a mortgage over the property on transfer - thankfully my local Land Office is one that accepts foreign mortgagees.

[thedemon]

5 minutes ago, KhaoYai said:

My lawyer explained it to me as "the Thai directors are issued with shares that do not have voting rights and therefore the director who does have voting rights can stipulate who can and cannot sign on behalf of the company" - he tells me that's perfectly legal but I will raise the issue and double check on this next year. I trust this man implicitly.

 

 

Sure, it's legal. Some foreign corporations use precisely this method to control their (often substantial) investments in Thailand and have done so for decades.

[khunPer]

2 hours ago, thedemon said:

Reading this through this thread I am reminded of my first visit to Koh Samui. It was 1989, I was in my early twenties and working in Hong Kong. Several of my colleagues either had already invested in houses (or land to build a house) or were in the throes of doing so. Being young and pretty broke it was all academic to me but what I recall as the main point of contention between my colleagues and their friends was whether to buy the land through a company or go the safer route with a 30 year lease. The arguments one way or the other were pretty much exactly the same as in this thread today.

 

So fast forward to 2018 and the ones (still around) that went for the 30 year lease will be moving out of their houses next year. They can keep their furniture though. The ones that went the company ownership route are possibly still looking over their shoulders wondering when the authorities are coming to seize their properties. If they can't stand it any longer, they can sell up, take the 1000% profit and start worrying about how to get the money out of Thailand.

Just they pay their taxes, money can get out; but others just sells the company limited, instead of land+house. 30-years, 1988-2018 or like, should give more than 1,000% profit – i.e. 10 times up – on Samui, in parts of the island price has got up more in less time, like a rai bought for 60,000 baht could sell for 6 million baht...????

[xylophone]

11 hours ago, KhaoYai said:

the Thai directors are issued with shares that do not have voting rights and therefore the director who does have voting rights can stipulate who can and cannot sign on behalf of the company"

Like your honest post BTW, and in law the company has to have a minimum foreigner shareholding, with the Thai shareholding being greater, irrespective who signs for what. Others shares issued with the intent of bypassing the actual ownership laws will not affect ownership per se.

 

15 hours ago, KhaoYai said:

I would agree though, that the majority of those who form a company to 'own' land 'do not have a true operating company'.  As such, their 'ownership' is illegal according to the Thai Land Code which states something like 'any attempt to circumvent the Thai land laws will result in forfeiture

IMO this is the method which most farangs are using and I agree with your comments regarding this .

[baansgr]

On 11/19/2018 at 8:33 PM, KhaoYai said:

Not true.

 

Usufruct - if its registered at the Land Office and you use a lawyer to dot the i's and cross the t's, its fine and fully legal. 30 years max - the Thai courts have recently ruled that extension clauses are not legal.

 

Company Ownership - provided the company actually trades and has a reason to own property you can hold up to 49% of the shares in that company although some Land Offices will only accept 39%. The remaining shares must be Thai owened and the shareholders must comply with all the other requirements but if their shares do not hold voting rights, you control the company and therefore any property it owns.

 

Company ownership (genuine) is also the best route to take if you wish to pass your assets on to anyone when you die. You simply leave them your shares - no property taxes involved unless they decide to sell.

 

I am not a lawyer but the information above was given to me by a respected Thai lawyer - I believe it to be correct.

Your lawyer friend is correct and has confirmed exactly what I said, a Foreigner  can't own land and any kind of super duper  idea to own property  except condos is always reliant on thais to be involved. You can say all you like about owning a house,  it is worthless without  the land it's built  on which of course again Thais will control.  

[xylophone]

10 hours ago, khunPer said:

Just they pay their taxes, money can get out; but others just sells the company limited, instead of land+house. 30-years, 1988-2018 or like, should give more than 1,000% profit – i.e. 10 times up – on Samui, in parts of the island price has got up more in less time, like a rai bought for 60,000 baht could sell for 6 million baht...????

So they take a chance by breaking the law of the land in which they live and hope everything turns out OK.

[Langsuan Man]

9 minutes ago, xylophone said:

So they take a chance by breaking the law of the land in which they live and hope everything turns out OK.

Almost every visitor to Walking Street in Pattaya or Nana Plaza in Bangkok is breaking the law in some form or another, as are most drivers on Thailand's roads

 

But when it comes to property the Thai Visa Brigade always become the law and order party;  concerned about the sanctity of the Thai legal system 

 

And once again WE are not hoping that everything turns out OK, WE are living the good life that most of us could never afford in our home countries, the only people who appear to be worried are those who want to rain on someone else's parade 

[KittenKong]

4 minutes ago, Langsuan Man said:

Almost every visitor to Walking Street in Pattaya or Nana Plaza in Bangkok is breaking the law in some form or another, as are most drivers on Thailand's roads

Speak for yourself. I never break the law when I drive, and the last time I was in Walking Street I was eating a curry. Last I heard that is not yet illegal.

[thaiguzzi]

36 minutes ago, Langsuan Man said:

Almost every visitor to Walking Street in Pattaya or Nana Plaza in Bangkok is breaking the law in some form or another, as are most drivers on Thailand's roads

 

But when it comes to property the Thai Visa Brigade always become the law and order party;  concerned about the sanctity of the Thai legal system 

 

And once again WE are not hoping that everything turns out OK, WE are living the good life that most of us could never afford in our home countries, the only people who appear to be worried are those who want to rain on someone else's parade 

Well said.

4 pages and counting of the usual glass half empty, selfish, twice bitten shysters.

Had a divorce in the West, lost everything or half, get all bitter and twisted, come here, fall in love with a girl half their age or younger than their ex's daughter, and get all mardy, bitter and selfish when it comes to building a house and putting the paperwork in their new wife's name.

 Says a lot or everything to me about their perceived "Love & Trust" in a relationship.

Or even more so, their opinion, taste  & choice in marriage material.

If you don't trust your own wife, who do you trust fer Chrissakes?

And if it's like that at the beginning, you generally know it aint gonna last, and the Expat can join the ever growing list of bitter, told-you-so bar stool experts who spout the usual "don't spend more than you're prepared to walk away with" crap.

[xylophone]

1 hour ago, Langsuan Man said:

Almost every visitor to Walking Street in Pattaya or Nana Plaza in Bangkok is breaking the law in some form or another, as are most drivers on Thailand's roads

 

But when it comes to property the Thai Visa Brigade always become the law and order party;  concerned about the sanctity of the Thai legal system  

 

And once again WE are not hoping that everything turns out OK, WE are living the good life that most of us could never afford in our home countries, the only people who appear to be worried are those who want to rain on someone else's parade 

A big generalisation LM and as for me I certainly don't want to "rain on someone else's parade"...……..just try to live within the rules here (including driving and walking) and to try to help others who may want to know (or follow a thread) about owning a house/land etc.

 

As for becoming "the law and order" party, I have a couple of friends who fell into the "everyone else has done it and so will I" trap with regard to house purchase through a Thai nominee company and lost property and money, so I try to stay within the guidelines so to speak...…….and no malice intended here.

 

 

[HHTel]

2 hours ago, baansgr said:

Usufruct - if its registered at the Land Office and you use a lawyer to dot the i's and cross the t's, its fine and fully legal. 30 years max - the Thai courts have recently ruled that extension clauses are not legal.

That's the rules for a lease, not a Usufruct, which is entirely different.

[sandyf]

19 hours ago, Speedhump said:

Hear, hear. Also if you bought a house and a land lease in a commercially stable area, with all land built upon and well maintained, and if you want to renew a 30 year lease (say after 10 or 15 years) it is hardly likely to be refused. People saying its always better to lease have a different agenda, which I also understand, but they need to see there is another way (if you understand it). After even say 10 years or so I should certainly at least get back my initial investment. I luckily bought cheap anyway in a reasonably high class, well built development where more than 90 pct of homeowners are farang. Better than 10 years spent on rent.

I don't know anything about a lease, the land I am on belongs to my wife's family so the house will always belong to them. After 9 years of rent free comfortable accommodation of my own design, if I had to walk away tomorrow I would have gained a lot more than the million or so it cost to build.

[sandyf]

18 hours ago, xylophone said:

You have a very valid point sandyf.

 

But what some folks seem to miss is that if they "acquire" their property/land through the nominee company route then firstly they are breaking the law and secondly it can be taken from them, so it is a risk they are taking.

I wouldn't disagree but you should be more explicit in you posts and not generalise, depending on circumstances it can be well worth "the bother".

[khunPer]

2 hours ago, xylophone said:

13 hours ago, khunPer said:

Just they pay their taxes, money can get out; but others just sells the company limited, instead of land+house. 30-years, 1988-2018 or like, should give more than 1,000% profit – i.e. 10 times up – on Samui, in parts of the island price has got up more in less time, like a rai bought for 60,000 baht could sell for 6 million baht...????

So they take a chance by breaking the law of the land in which they live and hope everything turns out OK.

No law breaking. Either the company limited is the seller – which is absolutely legal – or the shares of a company limited is sold, and that is also legal; in both cases any applying taxes, if any, are paid...????

[Neeranam]

On 11/19/2018 at 10:56 PM, khunPer said:

It's a rubber band, depending of how big a house you are talking about, and choice of materials.

If the land costs 5 million baht, you'll have 10 million baht left for everything else, in a 15 million baht budget. A pool and surroundings will be in the level 1.5 million to 2 million baht. A relative good quality house will cost you in the area of 25,000 baht to 30,000 baht a square meter, so for up to 8 million baht you can build about 250 to 300 square meters. If you choose more luxury – like marble bathrooms, and high-end brand name fittings; teak and slate, or sandstone floors; teak window frames and doors; expensive decoration tiles; etc. – your price could well be from 50,000 to 70,000 baht a square meter, leaving you with not much more than a 100 square meter house for the same price.

 

When seeing a turn-key house, there might be things in construction that you cannot easily spot, whilst when building your own house, you have a change to select everything yourself, and follow the construction in details. An already build house might have a nice make-up, but how will it be five years, or 10 years from now?

 

However, a building construction company may have some quantity discounts, that makes them able to build a house for a reasonable price, and still make a nice mark-up. A building construction company will also add a profit when quoting you, plus a percentage for unforeseen costs, so might not be that much of a difference. On the other hand, there could also be a big difference.

 

A second hand house that is already five years old, or 10 years old, should be cheaper than building a new house, but how much is depending of the level of maintenance. Location is also a major factor in pricing, chosing a different location often means a different price.

 

So if you think you can do it cheaper for a nice house, you need to think of what you might be able to get, for example for an average of 25,000 baht a square meter, and 20,000 baht, and 15,000 baht; and then compare that to the house prices you see, minus value of land.

????

Good advice and info. Thanks.

[Neeranam]

On 11/18/2018 at 8:11 PM, baansgr said:

No way to own land, and owning the house is worthless. Forget all the companies, leases, usufructs etc, thais will own and have control of it, dont bother.

There is a way. I applied for Thai citizenship a year ago. Hopefully will be granted it in another year or so.

Alternatively, I could put it in my wife or kids' name.

 

 

 

 

 

 

[Neeranam]

On 11/19/2018 at 12:27 AM, AtoZ said:

I find the properties in Hua Hin horrible. It's all prefabricated Type A or B sort of box.

 

Is it for living or investment?

 

You can find so many "wow" properties in Ko Samui while everything in HH is "meh" with the same sort of expected return on investment.

I heard it's a buyer's market there.

[Neeranam]

On 11/19/2018 at 7:04 AM, KittenKong said:

A 99 or 999 year lease might be considered as being similar to freehold ownership but anything less is not, as far as I'm concerned.

 

For me the whole point about leases is that in order to be worthwhile they should last longer than your expected lifetime and also that of your children. Leases here are just advance rentals.

I really can't see the point of a lease, although might work for some. 

[xylophone]

40 minutes ago, khunPer said:

No law breaking. Either the company limited is the seller – which is absolutely legal – or the shares of a company limited is sold, and that is also legal; in both cases any applying taxes, if any, are paid...????

What I was referring to was a case in which the "company" was a nominee company and not a bone fide operating company. Real operating companies/a business, then no problems.

[Neeranam]

On 11/20/2018 at 11:31 AM, Peterw42 said:

Yes, there is no such thing but it doesnt stop real estate agents using the term. I explained about freehold and leasehold and explained that its a "made up" real estate term. They "present" a long lease and "imply" it means ownership.

Thanks, seems a little dishonest. I've heard a lot of negative things about hua hun estate agents.

I'll look out for this.