Rent to buy >with private company as third party between developer and buyer<

[carbuyer]

There is a private company that is offering 4.5% p.a interest on a 'rent to buy' contract for a house I want to buy.

I'm very keen to proceed with them, their terms seem agreeable, but doing my due diligence first.

The payment plan is 15-20 years of payments, but the contract only covers the first three years. They say (verbally) they would be happy to repeat the contract after those 3 years. My concern is that we run into problems after the initial 3 years is up. They say the interest for the remainder would be 5%, but that's not in writing. What if we can't find financing for the remaining sum? There could be other potential problems I'm missing.

Anyone have any advice? Or can recommend a good legal advisor who can give the contract a look and give their thoughts on it?

Thank you

Edited September 28, 2022 by carbuyer

[ThailandRyan]

Walk, no do not walk, instead run as fast as you can and stop the thought it is a wise investment.

[carbuyer]

3 minutes ago, ThailandRyan said:

Walk, no do not walk, instead run as fast as you can and stop the thought it is a wise investment.

Could you elaborate a little please?

You're not just saying that because it's property in Thailand, I assume

[ThailandRyan]

10 minutes ago, carbuyer said:

Could you elaborate a little please?

You're not just saying that because it's property in Thailand, I assume

If it sounds to good to be true and the contract is not a solid one that covers the entire time of finance then it can be viewed as a scam to separate you from your money as they walk away and leave you holding the bag, if it even gets registered to you at the Land Office.  Remember you can not own the land the house sits on.

[carbuyer]

16 minutes ago, ThailandRyan said:

If it sounds to good to be true and the contract is not a solid one that covers the entire time of finance then it can be viewed as a scam to separate you from your money as they walk away and leave you holding the bag, if it even gets registered to you at the Land Office.  Remember you can not own the land the house sits on.

Well, I wouldn't say it sounds too good to be true.
They charge 4.5% interest for 3 yrs then 5% afterwards, that's a reasonable business model. But the 3 years thing is a big concern, they could fold and walk with the deposit, some stunt like that.

I've been married here for 10 years and have a kid with my wife, and would not mind putting it in her name. So she'd own the land. I know the risks there, can leave that aside for purpose of this conversation.

They have many customers in the area (some in this same development), it might be safe. But I need to KNOW that it is, ofc.


 

[tomazbodner]

31 minutes ago, carbuyer said:

I've been married here for 10 years and have a kid with my wife, and would not mind putting it in her name. So she'd own the land. I know the risks there, can leave that aside for purpose of this conversation.

Why not asking a loan from the bank in her name, with you as a guarantor, then? It might have 2.x % per annum interest (OK, now it might be higher as base interest rate just increased) for the first 3 years, after which she could refinance it like most Thais do. She could get 90% or even 100% loan from the bank if approved.

 

Avoids the hassle of you paying something to private company that has lower registered capital than the value of your house, and when you're done paying, they disappear and your paid off house gets confiscated as assets of bankrupt company owing others tons of money.

 

Well, you could say then... at least you could live in it while paying rent...

[carbuyer]

12 minutes ago, tomazbodner said:

Why not asking a loan from the bank in her name, with you as a guarantor, then? It might have 2.x % per annum interest (OK, now it might be higher as base interest rate just increased) for the first 3 years, after which she could refinance it like most Thais do. She could get 90% or even 100% loan from the bank if approved.

 

Avoids the hassle of you paying something to private company that has lower registered capital than the value of your house, and when you're done paying, they disappear and your paid off house gets confiscated as assets of bankrupt company owing others tons of money.

 

Well, you could say then... at least you could live in it while paying rent...

This is interesting, yes.
Do you have any experience of acting as guarantor for a Thai? I didn't know that would be possible. I'm not paying 7.5% interest on a mortgage if I can help it.

 

 

I've just been drilling into this "rent-to-buy" contract, and it does seem predatory.
They were selling it to me as all paid installments contributing to the final purchase price.
In the contract, they don't. Only the amount over the fair rental price would count. So I'd be paying rent, and a little bit towards buying the house.

I believe they operate like this:

Get a large (10-20%) deposit.
Collect the monthly rent for 3 years, assuring tenant they will help them get credit after that period.
Very close to the end of the contract, they say they can not provide credit.
Tenant has limited time to find credit, fails.
Company evicts tenant, who loses everythign they've paid so dar (deposit+rent+extra)

or

They collect monthly payments.
They don't pay bank.
Bank evicts tenant.

or

They just siphon off deposits, declare bankruptcy. Fold and banks reclaim properties

 

or

 

There are other possibilities.

 

I won't be proceeding.
 

Edited September 28, 2022 by carbuyer

[tomazbodner]

I think you should not proceed, as all the risk is with you, and they own the place and can change the rules whenever they please.

 

Best would be for your wife to check around the offers of the banks for housing loans (most are on the website, then you contact the bank and get their offers), where usually you talk to the person in charge of loans and can discuss details. Don't go with first bank that accepts it. Check some more and compare their offerings.

 

As a foreigner taking loan, our options are very limited, expensive and only a handful of banks would even bother taking time to talk to us. But when it comes to Thais, the situation is quite different. If loan is in Thai name, that is. So you should at least go banking websites surfing with wife, find on forums comparison tables of current offers, then reach out to those that look most promising.

 

Commercial banks might be easier to talk to than GHB/GSB (orange/pink) banks, they are usually more flexible and try to find a way. So try UOB, SCB, Krungsri, Kasikorn, maybe Bangkok Bank. Their websites would look like this: https://www.bangkokbank.com/en/Personal/My-Home

 

Note - beyond opening pages, most information is in Thai. But banks are more flexible than what's written on websites.

 

Good luck.

[AlQaholic]

This is bogus. There must be a clear contract and payment plan set out from the beginning. How many payments in total and what amount to be paid. The payment plan should be clear and fixed amount for every payment until the total amount is paid, where after the property will be in your company's possession. Of course that would be illegal in Thailand as foreigners are not allowed to own property through proxy companies, that is why this contract could never exist.

Edited September 29, 2022 by AlQaholic

[JBChiangRai]

As a developer, I have done this but 5% interest over a specified longer period.

 

All the documents are in escrow with the buyers lawyers.

 

There are lots of things that could go wrong if the seller is dishonourable.  It’s highly risky for the buyer, I think it depends how honourable the seller is and also that the seller is financially sound.  If the seller goes bust then you will lose your house.

 

If the seller is super honourable and wealthy, you’re ok (I’m both), if the seller is a corporation then don’t do it, they inherently don’t have a conscience.

[carbuyer]

-

 

Edited September 29, 2022 by carbuyer

[khunPer]

19 hours ago, carbuyer said:

The payment plan is 15-20 years of payments, but the contract only covers the first three years. They say (verbally) they would be happy to repeat the contract after those 3 years. My concern is that we run into problems after the initial 3 years is up. They say the interest for the remainder would be 5%, but that's not in writing. What if we can't find financing for the remaining sum? There could be other potential problems I'm missing.

Anyone have any advice?

You have no rights after three years. You cannot have legal written agreement on consecutively 3-year rental agreements.

 

Any rental/lease agreement running more than three years and up to 30 years shall be registered at a Land Office and a smaller tax need to be paid for the whole registered period, the registration will be written on the land title deed as a servitude.

 

In my opinion, if a long term rent/lease is not registered as servitude: Don't.

 

You can find the rental/lease Law in English translation HERE...????