Live on local's land for free - what could go wrong?!

[simon43]

Although this topic refers to Laos, the advice sought is common to both Laos and Thailand.

 

I live in Luang Prabang, north Laos.  Having moved between Thailand, Laos and Myanmar over the past 22 years or so, I always like to live in Luang Prabang.  The natural beauty, low cost of living, friendly people etc suits my lifestyle.

 

I rent a house, currently paying $400 each month.  Naturally, this rent will increase in the future, and I'm concerned that this unknown price increase might stretch my income in the future.  I am about 12 months away from receiving my UK State pension, which will be equivalent to about $1,000, quite adequate for a single guy to live comfortably on in north Laos, unless property rental prices increase... I have no private pension, but I am still earning about $2,500 per month from online teaching, and I don't have to stop that work when I retire.

 

The local bank manager in town is a good friend of mine. His family seem well off in terms of land assets.  One piece of land that they own is just on the other side of the Mekong river, with wonderful sunset views, raised land not prone to flooding etc etc.

 

No-one lives or looks after this piece of land, and that is a concern for my friend and his family.  They have no interest in developing the land for themselves to live.  He has proposed to me that I can build a small house on this land (at my own cost).  I can then live rent-free in this house for the rest of my years.  Upon my demise, since none of my family members in the UK and Thailand would ever think to live in this location, the ownership of the house would pass to my Lao friend.

 

The cost to build the house would be extremely low (I know this from building 4 small hotels in Phuket). I built my own house in the UK and I would undertake the build of the well, sewerage system, water pipes, electrical work etc.  I would only need to employ general labourers to lay down the concrete slab, construct the reinforced concrete pillars and install the roof. The style would be similar to the photo, with an open ground floor and then 2 bedrooms/bathrooms upstairs at either end of the house, with a living room and kitchenette in the middle, all opening out onto a balcony.  My friend has a lot of hardwood from a dismantled old house that could be used for the upper floor and walls etc.

 

This proposal interest me because it removes the unknown factor of rental rate increase, should I continue to rent a property in Luang Prabang. I would be able to build the house to my own tastes and layout.

 

So,... my question is:  What factors should I include in the legal contract between myself and my Lao friend?  I can think of terms such as ensuring unfettered access to my house/garden etc, but what else should be included in a contract like this to protect my interests?  What could go wrong?!

 

[Woof999]

Is this land just the other side of the Mekong in Thailand? Which province?

 

Get yourself a 30 year usufruct. I just did this in Nakhon Phanom province on the land I bought for my wife and it cost the princely sum on 75 baht. The downside is that the land owner (all those named on the chanote) will need to be with you.

 

Usufruct will expire after 30 years or when you die, whichever is first. It's about as safe as you can be on someone else's land.

[theblether]

You've lived a peripatetic lifestyle for decades, what makes you think this will be your forever house? You'll need to get a watertight lifetime lease on the land. As a Thai once told me when a similar deal was proposed "you can live here forever, but if I die, my brother might not have the same opinion." 

[Dolf]

Cost 700,000 baht to build a small house. That's 10 years rent.

[Enoon]

 

That house looks beautiful.......I hope you get the contract sorted OK.

[NorthernRyland]

30 minutes ago, Woof999 said:

Get yourself a 30 year usufruct. I just did this in Nakhon Phanom province on the land I bought for my wife and it cost the princely sum on 75 baht. The downside is that the land owner (all those named on the chanote) will need to be with you.

 

I don't understand this. Isn't the land a joint marital property? Part of being married is that you lose your right to hold sole title. I'm very skeptical these hold up in court with married couples. If you get divorced I believe you would be required to liquidate the property, I guess unless you can settle the divorce with other funds then you could hold the land.

[NorthernRyland]

Building is smart for security but if something goes wrong it would be a disaster to lose your money and now you're too old to re-earn. I would only do this if you can afford to lose the home. Who knows how the laws in Laos work and if any of that can be trusted anyways. I know Thailand has endless laws but do they ever actually enforce them? I'm very skeptical myself.

[swissie]

For a Farang, you are entering the "legal-djungle". REMEMBER how fast the rules can change when it came to your HAM Radio activities?

Near the Mekong? Buy or build a "Houseboat". As in Thailand and Laos, this can be registerd in your name. If things get "unpleasant" you can move your home.
- Buy 2 larger vessels, link them together (this is called a "catamaran"), build a 1 story small house on top.

- Or put a so called "knock down" house on the property. Knock down= a house that can be easily dismanteled and moved by a low bed truck. "Knock-Downs" are available in Thailand. Google is your friend. 

[Upnotover]

2 hours ago, Woof999 said:

Is this land just the other side of the Mekong in Thailand? Which province?

No.

2 hours ago, simon43 said:

I live in Luang Prabang, north Laos

 

[sidjameson]

You've had three marriages where the woman you married turned into something completely different once the conditions of your relationship changed.

Men are just as capable of that type of change.

I wouldn't test your friendship if I were you.

[JeffersLos]

2 hours ago, NorthernRyland said:

I don't understand this. Isn't the land a joint marital property? Part of being married is that you lose your right to hold sole title. I'm very skeptical these hold up in court with married couples. If you get divorced I believe you would be required to liquidate the property, I guess unless you can settle the divorce with other funds then you could hold the land.

 

You're correct, you don't understand it. 

[HauptmannUK]

IMHO contracts related to land and housing (lease/usufruct etc) are barely worth the paper they are written on for Wrsterners in places like Thailand and Laos.  If there is a change of heart or death of a signatory etc then whoever owns the land will simply make your life a misery until you eventually leave - or even just kill you if you cause too much trouble.

[swissie]

38 minutes ago, HauptmannUK said:

IMHO contracts related to land and housing (lease/usufruct etc) are barely worth the paper they are written on for Wrsterners in places like Thailand and Laos.  If there is a change of heart or death of a signatory etc then whoever owns the land will simply make your life a misery until you eventually leave - or even just kill you if you cause too much trouble.

Thailand has gotten better over the years when it comes to "lagalities" concerning a Farang. Also a bit better in Cambodia. But Laos remains in some sort of Stone Age. The personal destiny (Farang and otherwise), still depends of the whim of local power-brokers, as the OP has experienced already.

 

To invest any mayor long term (immovable) funds in current Laos borders on lunacy.

[simon43]

10 hours ago, Dolf said:

Cost 700,000 baht to build a small house. That's 10 years rent.

10 years rent for me at $400/month is about 1,600,000 baht.

 

LoL, I get the general opinion that this is not a good idea! Certainly there is the unknown of what might happen to the owner of the land in the future.  If he has a change of heart then I could be forced off the land by whatever means and he has a nice weekend home for free....

 

Rental prices will certainly increase in the coming years, but if I'm renting then that just means that I will have to downgrade to a cheaper property.  Yonks ago someone on this forum made the joke about living in a hut by the side of the Mekong, and that might just happen!  (As long as it has a nice bed with a mozzie net, I wouldn't be too bothered).

 

Swissie's idea of a moveable/knockdown house is a good idea, but the usual idea of those is that one rents land to place it on.  Actually, renting a plot of land could be extremely cheap here in north Laos.

 

I'm still very happy in my current rented property (which is the same property on the outskirts of LP that I rented around 2020-2022).  I might keep an eye open for a plot of land to rent (at a fixed annual rent) for 30 years.

[Crossy]

I'm not a lawyer, nor do I play one on AN.

 

How about drawing up a proper long-term rental/lease (no idea what the maximum term is in Laos) but with a "peppercorn" rent?

 

That at least give you some legal standing if things sour or situations change.

 

I too would consider a movable / knock-down house.

[impulse]

Like Crossy, I don't pretend to be an attorney, licensed to practice in Laos.  My knowledge limits are a few years as a real estate agent in the USA.  (Which is a snakepit when it comes to ethics, but that's a whole different thread)

 

The biggest pitfall I see with the OP is the thought of taking the land rent free.  If you do decide to go that way, I'd suggest a nominal rent fee, just to make it legal.  I think the law guys call it "consideration", without which you may not have an enforceable contract.

 

Of course, that's subject to the vagaries of doing any business in SEA.  But that's balanced by a nice cost of living...

 

[lopburi3]

Although I loved the views in LP when worked there 3 months in early 70's would not advise tying yourself to anything in retirement years, especially in the countries you seem to be attracted to.  Your track record does not indicate much stability (how many years before wife #77).  🙂  Much more free if renting in our later years.  $400 per month seems excessive but have no knowledge of Laos prices - but if rents go up you could go elsewhere.  In Thailand you can get a good home in a city for less cost, as I am sure you know.  And prices do not seem to increase much.  But don't expect there is much choice in LP.

[Dolf]

1 hour ago, simon43 said:

10 years rent for me at $400/month is about 1,600,000 baht.

 

LoL, I get the general opinion that this is not a good idea! Certainly there is the unknown of what might happen to the owner of the land in the future.  If he has a change of heart then I could be forced off the land by whatever means and he has a nice weekend home for free....

 

Rental prices will certainly increase in the coming years, but if I'm renting then that just means that I will have to downgrade to a cheaper property.  Yonks ago someone on this forum made the joke about living in a hut by the side of the Mekong, and that might just happen!  (As long as it has a nice bed with a mozzie net, I wouldn't be too bothered).

 

Swissie's idea of a moveable/knockdown house is a good idea, but the usual idea of those is that one rents land to place it on.  Actually, renting a plot of land could be extremely cheap here in north Laos.

 

I'm still very happy in my current rented property (which is the same property on the outskirts of LP that I rented around 2020-2022).  I might keep an eye open for a plot of land to rent (at a fixed annual rent) for 30 years.

Nong Khai has cheaper rents

[Toby1947]

16 hours ago, Woof999 said:

Is this land just the other side of the Mekong in Thailand? Which province?

 

Get yourself a 30 year usufruct. I just did this in Nakhon Phanom province on the land I bought for my wife and it cost the princely sum on 75 baht. The downside is that the land owner (all those named on the chanote) will need to be with you.

 

Usufruct will expire after 30 years or when you die, whichever is first. It's about as safe as you can be on someone else's land.

The land is near the Mekong in Luang Prabang. Nowhere near Thailand, suggest you brush up on your Geography 

[KhaoNiaw]

Is it overlooking the river? 'Not prone to flooding' - but is this going to be affected by the construction of the Luang Prabang dam, which is going to have some serious impact on water flow, water levels etc. Is it in an area that is likely to be attractive to Chinese investors? Or for a Lao government project - in which case it wouldn't matter what's in a contract between you and your friend? 
But if you're sure everything checks out, why not give it a go? I'm sure you'll be prepared for the situation to change at some point and not regard it as a completely 100% safe option. 

[simon43]

4 hours ago, Dolf said:

Nong Khai has cheaper rents

I previously lived in Nong Khai - the city has grown a lot since I lived there.  I have no urge to move back to Thailand, I'm very happy living in Laos.  The chance of a new wife #4 is probably zero because I realise that any nice woman would only show interest in me for my money (not much of that!!), and certainly would not be out of love fror me.

 

My rent in LP is quite expensive because I'm renting a traditional Lao teak house.  I could rent cheaper if it were necessary.

[Dolf]

6 minutes ago, simon43 said:

I previously lived in Nong Khai - the city has grown a lot since I lived there.  I have no urge to move back to Thailand, I'm very happy living in Laos.  The chance of a new wife #4 is probably zero because I realise that any nice woman would only show interest in me for my money (not much of that!!), and certainly would not be out of love fror me.

 

My rent in LP is quite expensive because I'm renting a traditional Lao teak house.  I could rent cheaper if it were necessary.

Maybe rent cheaper then. Save money for future.

[Jimjim1]

14 hours ago, sidjameson said:

wouldn't test your friendship if I were you.

Neither would I.

At the moment his friend has a piece of albut useless land that no one including him takes care of and then along comes the poster believing everything his “friend” tells him and builds a house on it, and when it is completed and BEFORE he moves in his good “friend “ decides not to be so friendly anymore because he now has a very useful piece of land with a house on it for FREE and now worth at least a couple of million.

Like a lamb to the slaughter comes to mind.

[ChrisP24]

Maybe there is a compromise.  If you propose to the owner that he build the house at his expense (but under your supervision), and you will sign a two-year lease at the local equivalent of $400 monthly, with option to renew each year for a certain number of years, perhaps that is a good deal for you both.  You get rent stability and a house built to your liking, but with the ability to not renew if your life plans change after two years.  He gets an improved property financed by his tenant.   

 

Not sure if he can use your signed lease as a basis to get a construction loan, but even if not, the deal could still make sense if he has the capital.  You could also pre-pay a chunk of rent to help him with construction costs, but of course not too much, and paid progressively as construction is underway.   

 

Unrelated (or maybe not so unrelated), can I ask what the cost of the house would be, and where your capital for this is currently invested?   A different way to look at your situation is the degree to which your ongoing return on this capital will serve to offset potential rent increases, so you might be better off leaving it invested instead of using it to build a house.  If the reply with the 700,000 baht estimate is close, even a 5% annual return on that is over 2,900 baht per month or approx. $82 per month to cover a potential rent increase.  And that is accumulating to widen your cushion every month that your rent stays at $400. 

 

Either way it seems better to me to stay liquid and flexible, unless you just really want to own something, which of course might have value to you beyond just the math. 

[simon43]

3 hours ago, Jimjim1 said:

Neither would I.

At the moment his friend has a piece of albut useless land that no one including him takes care of and then along comes the poster believing everything his “friend” tells him and builds a house on it, and when it is completed and BEFORE he moves in his good “friend “ decides not to be so friendly anymore because he now has a very useful piece of land with a house on it for FREE and now worth at least a couple of million.

Like a lamb to the slaughter comes to mind.

 

You have misunderstood a few facts.  I have known this Lao man for 12 years.  He is the manager of the bank and his rich family own various houses and land in and around this town and they have absolutely no need of a 'shack' built on a piece of land outside the town. A few million baht is nothing to them.....

 

Having built before in Thailand, I know how much it will cost to build this house - no more than $10,000, because the local labour only needs to lay down the base concrete slab, build a few concrete support columns and put on the roof work. I can do the rest of the work (as I did in Thailand).

 

But of course people can change and while I trust my friend, I do not know his family members well enough to trust them.  The loss of $10,000 wouldn't make any problems for me since I will have a monthly retirement income. 

 

As to renting a cheaper house right now, reducing my monthly outgoings by say $100 (eg - renting a house for $300 and not $400) really doesn't make any difference to my finances.

 

Of course, the best solution would be to buy a small piece of land and build on it, but that would require similar 'fiddles' that foreigners use in Thailand to buy land....

[theblether]

46 minutes ago, simon43 said:

 

You have misunderstood a few facts.  I have known this Lao man for 12 years.  He is the manager of the bank and his rich family own various houses and land in and around this town and they have absolutely no need of a 'shack' built on a piece of land outside the town. A few million baht is nothing to them.....

 

Having built before in Thailand, I know how much it will cost to build this house - no more than $10,000, because the local labour only needs to lay down the base concrete slab, build a few concrete support columns and put on the roof work. I can do the rest of the work (as I did in Thailand).

 

But of course people can change and while I trust my friend, I do not know his family members well enough to trust them.  The loss of $10,000 wouldn't make any problems for me since I will have a monthly retirement income. 

 

As to renting a cheaper house right now, reducing my monthly outgoings by say $100 (eg - renting a house for $300 and not $400) really doesn't make any difference to my finances.

 

Of course, the best solution would be to buy a small piece of land and build on it, but that would require similar 'fiddles' that foreigners use in Thailand to buy land....

 

The problem you have with many forum members is that they can't comprehend why someone would risk $10,000. That's because they are living hand-to-mouth. If you are content to risk the money - as you appear to be - then go for it. 

 

All the better if you can obtain some sort of legal guarantee but it's clear the loss of $10,000 wouldn't be a fatal blow - plus, there's always the idea of having a new purpose to your life, a new project. All the best. 

[Celsius]

7 minutes ago, theblether said:

 

The problem you have with many forum members is that they can't comprehend why someone would risk $10,000. That's because they are living hand-to-mouth. If you are content to risk the money - as you appear to be - then go for it. 

 

hilarious totally wrong observation. 

 

My observation is that Simon is looking for validation since everything he invested in SE Asia money wise he f$#&Ed up.

 

 

 

 

[theblether]

5 minutes ago, Celsius said:

 

hilarious totally wrong observation. 

 

My observation is that Simon is looking for validation since everything he invested in SE Asia money wise he f$#&Ed up.

 

 

 

 

 

Which part is hilarious - the fact that many forum members live hand to mouth? 

 

Or the fact that if he is content to risk the money he should go for it? 

 

By the way, luxuriating is Schadenfreude is a low-class way to spend your life. 

[Celsius]

35 minutes ago, theblether said:

 

 

 

By the way, luxuriating is Schadenfreude is a low-class way to spend your life. 

 

pls try make sense

[theblether]

34 minutes ago, Celsius said:

 

pls try make sense

 

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