How To Sell A Property Leased For 30 Years?

[palex]

I couldn't find an answer to this question on the internet - everybody talking about buying. What about the selling? Don't you want to get your money back?

Suppose I bought a house (5M baht) via a 30 years lease. Now, I want to sell the house in 5 years to get my 5M back, can I do this? Does a 30 years lease gives me rights to sell? I mean to sell the house not the remaining lease .

[Maestro]

How can you buy and lease a house at the same time? I thought it would be one or the other.

--

Maestro

[palex]

I see a new house for sale, I pay 5M baht to a developer/seller and ask him to register the purchase as a 30 years lease (other options are a fake company or thai wife/girlfriend, any other?). The leaser could be a thai company or a thai person (the last is not 100% legal). So, I end up having a lease that guarantees that I can live in this house for 30 years. My question is - can I sell this house for its market value before the lease ends to get my money back (lets say in 15 years)?

[teacup]

My common sense tells me that…..

If you’re leasing it, then legally it’s not your house, eventhough you had paid for the whole purchase amount of 5M. You builder is infact still the legal owner of the house because his/her name is on the house title paper, not yours. So if you want to sell it, well you can’t... because you’re not the true legal owner of the property, unless you can get your builder to agree on releasing you from the leasing agreement, and transferring your lease to the next person.

When you're leasing, you only have the legal right to use and enjoy for the duration of the lease period, but not the right to sell/transfer without the approval of the legal owner of the said property.

Edited September 11, 2007 by teacup

[johnnyk]

1) Its possible to own the house separately from the leased land, so as far as I know you could sell the structure but finding a buyer under those conditions might not be easy.

2) If land and house are leased together from the same owner then negotiate it into the lease agreement that you can lease to whomever you want.

[Khun Jean]

I would say after 15 years it would be worth 1 million max and that ONLY if the owner gives permission to sell the lease and transfer. And why should he do that? It is worth much more with you out, so he can leasi it or sell it at his own conditions.

Buying a condo seems the only thing worthwhile.

If you bought one for 5 million. It surely will be worth more 15 years later. And you don't have to ask permission from anyone because it is 100% yours.

Edited September 12, 2007 by Khun Jean

[trajan]

check the wording of your lease? do you have the right to transfer/assign the lease (with only notice to, but not consent of, the owner)? if so, it might be possible to "sell" the remaining term of your lease...the new leaseholder will most likely demand registration of the remaining period of the lease in his name (which will incur a new lease govt registration fee (1.1%)) but that will entail cooperation from the owner......

the problem with leaseholds (assuming you are abel to freely assign) is that the resale prices start dropping significantly as you get deeper into the lease term.....

[palex]

Thank you everybody for your replies. So, it looks to me that a lease is a worst option when buying a house. By 'buyng' I mean paying the market value of the house and land. On the other hand it is the best option when you want a house just for a long time residence. If so, then the 30 years lease has no difference from a rent except its long term, am I right? If so, then there is no legal way to buy a house in Thailand unless you have a Thai wife. Am I also right?

All this means that farangs shouldn't even look towards houses. How come then that there are much more houses on the market than condos? Who buys them? Farangs for their wifes or fake companies? This seems not wise, isn't it?

[Khun Jean]

I hate it when a long reply get lost when sending.

Here is the short version.

If so, then the 30 years lease has no difference from a rent except its long term, am I right?

Yes, With the problem that when you change your mind you are stuck with it. And of course it demands a large som upfront, when the alternative is paying month by month which in my opinion is a more financial wise decision.

If so, then there is no legal way to buy a house in Thailand unless you have a Thai wife. Am I also right?

Yes, and no.

You can buy the house but you can only lease the land ( or usefruct, but i believe that was meant for agricultural land).

Spirit of the law is actually the most important. The spirit is 'a foreigner can not own land'.

First companies were praised, i even considered it until i read the law about this myself. Then i confonted the lawyer with it and he did not have good answers. (6 years ago). I repeated that experience here and most peoples response was that a company was just fine. Read the post now and you will see that is not the case.

The same is now with leases. As nobody can sell anything anymore to a foreigner they are coming up with new fantasy constructions. All AGAINST the spirit of the law.

I thin kit is better to work within the law. And that is rent or buy a condo. No worries with either choice.

It is 100% in your name and 100% decision right is yours. All other options leave you with 49% or just hope that the Thai you trust is indeed trustfull.

All this means that farangs shouldn't even look towards houses. How come then that there are much more houses on the market than condos? Who buys them? Farangs for their wifes or fake companies? This seems not wise, isn't it?

When you are married and have the feeling you will be together a long time, then why not buy a house. Just accept if things go wrong you loose most of the money. It can be worth it.

The houses were build before the clampdown on fake companies, well at least most started before that.

It is sometimes not wise indeed. Especially when no Thai spouse is involved, in that case you will have to trust a lawyer, hahaha.

btw. If you want some real advice go to www.samuiforsale.com. As far as i know it is the only one that is not making up stories. Best though is to inform yourself by reading the appropiate parts from the law. That site has links to those too.

Just don't read anything into it. Remember it is the spirit of the law, not the letter. Something very important in a country which courtrooms don't use jurispredence (sp?).

hmm. a long reply again.

edit: I have to add something.

You could make a 30 year lease and pay the landlord yearly. Maybe with an indexed price. A solution can always be found when you want to break the contract, or find someone who takeover the remainder which would be a lot easier to "sell".

Paying upfront is only interesting with a very large discount and a right to sublease.

Edited September 12, 2007 by Khun Jean

[palex]

Khun Jean, thank you.

The reason I've started this topic is to clarify whether it is possible to invest (i.e. to get your money back at some point in time) into a house in Thailand. You have confirmed what I suspected - it is not possible.

Still, I don't understand why so many houses are currently being constructed? I've been to Pattaya a month ago - constructions are everywhere, just like 2,3,4 years ago. There couldn't be that many farangs married to a thai .

[quiksilva]

I suspect there is some confusion here coming from the terms used. If you had paid 5m for a 30 year lease on a house, and that lease granted you right to assign it to whoever you chose with the lessors permission not to be unreasonably withheld then you could assign that leasehold interest no problem.

However, the tricky bit would be assigning it 5 years down the track for the same sum you paid, because the leasehold interest would be shorter by a span of 5 years.

You may fare well doing this in a booming market where values are rapidly rising, but I think we can safely say that this is not happening here.

[johnnyk]

I suspect there is some confusion here coming from the terms used. If you had paid 5m for a 30 year lease on a house, and that lease granted you right to assign it to whoever you chose with the lessors permission not to be unreasonably withheld then you could assign that leasehold interest no problem.

However, the tricky bit would be assigning it 5 years down the track for the same sum you paid, because the leasehold interest would be shorter by a span of 5 years.

You may fare well doing this in a booming market where values are rapidly rising, but I think we can safely say that this is not happening here.

Eggzackly. When you own a lease you own a piece of paper giving you right of occupancy for a set period.

Some developers will do a new lease before the 30 years are up so you could legally renew then have a brand-new 30 yr lease to sell, otherwise it is a diminishing asset.

[Khun Jean]

Some developers will do a new lease before the 30 years are up so you could legally renew then have a brand-new 30 yr lease to sell, otherwise it is a diminishing asset.

This is a very vague(sp) sentence and it is full with "wishes".

Some developers will do a new lease before th 30 years are up.....

Why would they do that? It is not smart business to do it. And who will be winning you think when you take it to court? Wait, i'll answer that. They win! Because long before the issue of renewing leases comes up the land will be sold to another company, and gone are those words on paper.

I will make a prediction, they will offer (The new company that owns the land) a new 30 year lease for a very high price. Up to you to accept it. Did you know that writing a fixed price in the contract for the renewal is illegal and will not stand up in court! It will be seen as a way around the 30 years maximum lease period.

If you not accept the high price, they will find someone else, or just sell it with a healthy profit.

Or another possibility, the already have someone interested in the land and will not even bother to make you an offer. They will send you a letter to be sure you leave the premises when the lease is finished, Maybe even add some costs to clear the land.

For the mentallity of landlords you can look what is happening to a lot of people that have 3 year or 10 year contracts. Most of them that are in good locations or where it is difficult for the person who leased to move to another place the increases in price will shock you. Some markets, and some businesses come to mind.... Keymoney is another 'dark cloud' hanging over a lot of people with rental contracts. Because you are never sure what it will be when it is renewal time.

....could legally renew....

I wonder why you worded it this way? Every renewal is legal is it not? You only don't have any way of securing it.

"Could", sure if they want it at their price and conditions.

...to sell...

IF it is allowed. It might be in the first 30 years contract, to entice you. But in the next? Who knows, it is up to them.

... otherwise it is a diminishing asset.

It is not "otherwise". It is a diminishing asset from the first day.

Sorry for picking on this post, it is just that these kind of texts make it very unclear, when it is such a clear and transparent subject. (just read the law)

I can sum it up in 1 sentence.

You are allowed to lease for a maximum period of 30 years and you have a tiny change (0.0001%) that you can get an extension with the same or other reasonable conditions.

Edited September 13, 2007 by Khun Jean

[palex]

I suspect there is some confusion here coming from the terms used. If you had paid 5m for a 30 year lease...

I probably did not explain well my point. Suppose you see a house (I always mean house and land) for sale for 5M. You want to buy it. If you were a thai, you would pay 5M to the seller, got the house, live in it for 15 years and then sell it for 10M. My question was - is the same possible for a non-thai? I mean spend 5M, use the house for 15 years, sell it and have your 5M back (most likely even with the 5M profit).

I thought that a 30 years lease allows you to do this. In other words I thought that the lease scheme somehow would act as if you owned the house with the restrictions that the house must be sold before 30 years expires. In other words 30 years lease = 30 years freehold. That was what I thought. Now I see that I was wrong because 30 years lease = 30 years rent = you pay your money to someone to live in his house = loosing money = making someone but you richer

[tjo o tjim]

It all depends on how you look at it.

For me, leasing land for 30 years has 50% more value than leasing land for 20 years. If you are in a 30 year lease, your percentage interest in the land is reduced by 3-1/3% per year. If the land appreciates by (say) 5% per year, your lease should maintain its value for the first half of the lease, then it tapers off.

If the local appreciation rate is 7% for land, then your lease actually gains value over the first half of the lease, although at a much slower rate than the underlying land (since your percentage interest in it is decreasing).

Comparing the buy vs. lease issue, it seems like the question is if you want to have the property in your own name with legal protections, then a lease is the best route.

The other alternative is the Option to Buy, where you transfer the property to a legal Thai entity before the sale, and then lease the property on to someone else in a new lease. Then you should be getting the market value for the property, less whatever your Thai partner takes out of it.

[quiksilva]

Actually in today's money, due to the diminishing value of money over time a 30 year lease isn't worth 50% more than a 20 year lease its actually quite a bit less than that. (I dont have the time to go into detail right now but the curious can learn more by researching Net Present Values, Parry's Valuation Tables and studying how and when equivalent yield valuation approaches should be applied to long leasehold interests.)

BTW did you produce that graph? The valuation of leasehold interests is not entirely a personal opinion, although that will form part of it, but it should be based on internationally accepted valuation practices such as those described in the RICS Red Book as practiced by Chartered Surveyors throughout the world.

So how did you come by those numbers? What discount rates did you apply? Have they reflected the greater insecurity of tenure of leasehold interests in land when compared with freehold assets? Please describe your valuation approach, and assumptions made.

I will concede that it is statistically possible for a lease to appreciate within a very limited window, and under a very specific set of circumstances, but it is not really helpful to describe a leasehold interest as an appreciating an asset when, most often, quite the opposite is true.

[Farma]

It is possible.

This is an example I encountered about 2 year ago. We were leasing the building at the time.

The 3 storey commercial building was in a provincial city’s CBD. It was owned by a Thai on land leased from a Royal trust. The owner died and his wife decided to sell the building which still had 13 years left on the lease for 6.5 Mil Baht.

As the building was on leased land the banks wouldn’t lend money for the purchase. A Thai family negotiated the price and purchased the building for 6.2 Mil Baht.

There are other cases I can mention regarding commercial properties including one building my wife recently purchased. 2 buildings nearby also have recently changed ownership at higher than the original purchase prices.

The building transfers involve paperwork being lodged with land owner. In my wife’s case, it was the railway department.

Many inner city areas have leasehold land with shop houses etc built on them. In some cases the land has been leased by families for generations.

Edited September 14, 2007 by Farma

[palex]

The other alternative is the Option to Buy, where you transfer the property to a legal Thai entity...

I don't understand it. If you transfer the property to a Thai before the lease (before the purchase in this case) this property gets that Thai's property. If you are talking about transfering the property to a Thai after the lease then you can not do it because the property already is not yours - you are leasing it from another Thai. In other words with the lease all depends on a Thai - if it allows, you'll sell, if it doesn't then you stuck

[palex]

Many inner city areas have leasehold land with shop houses etc built on them. In some cases the land has been leased by families for generations.

I don't understand this as well. Why would one want to build a house on a leased land? Once the lease ended, the owner of the land might ask any unrealistic price for the next lease because the owner of the house has no choice but either to accept the price or loose the house (or sell the house at a bargain price). By the way, interesting (to me) point - you have your house on a leased land and the lease is over. What is going to happen with the house if you don't want to sell it? Can you still live in the house? I think no. Can the owner of the land sell the land? I think can. But what about the house??

[Farma]

It depends what you want the house for. If it was purely as a residence I personally would opt for building on freehold land.

In our case it was business motivated, we needed a commercial property that doubled as a place to live. As mentioned most of the prime business district in our city is leasehold.

We needed a prime location so our only option was to purchase a building on leased land from a trust or government department. The difference being our lease is a perpetual lease renewed 3 yearly. The building was a project built with the approval of the railways who own the land.

I was concerned the land owner could increase fees or cancel the lease at anytime but that was a chance we had to take. It was also reassuring that retails franchises were buying in the same project. It was a new building and within the first year the sale price increased 35% from when the wife purchased.

We looked at other options like buying and building on the closest freehold land away from the main area, crunched the figures, compared both options and the leasehold option was more profitable to us.

We think of the building as a combined shop/apartment but added the purchase cost and land rental into our business plan as an operating expense. Any money we make from the building sale when we relocate in the future will be an added bonus.

The other building I mentioned with 13 years remaining on the lease was a different matter. At that time other buildings on the same trust land were coming up for renewal of their 30 year leases. The trust had tripled the amount to renew the 30 year land lease. One business sold their building and relocated. I believe a well known Optical company bought that building and renewed the lease. A popular Mini-mart franchise, Gold shop and Electrical store in that building renewed their leases.

[johnnyk]

Khun Jean,

I personally know people who have signed, sealed leaseholds with the agreed right to draw up a brand new 30-yr lease at any time within the original 30 yr term.

Its a legal agreement as good as any other Thai legal agreement.

Why would the developer do that?

Because he has finished with the project, has his profit and wants to move on. The land isn't terrifically sellable if it has a lot of 30-yr or 25-yr leaseholds on it so I don't think there is too much danger there. In any case a new buyer is legally obligated to see out the 30-yr term of the lease which buyer and seller understand going in.

Edited September 15, 2007 by johnnyk

[Khun Jean]

Khun Jean,

I personally know people who have signed, sealed leaseholds with the agreed right to draw up a brand new 30-yr lease at any time within the original 30 yr term.

Its a legal agreement as good as any other Thai legal agreement.

Why would the developer do that?

Because he has finished with the project, has his profit and wants to move on. The land isn't terrifically sellable if it has a lot of 30-yr or 25-yr leaseholds on it so I don't think there is too much danger there. In any case a new buyer is legally obligated to see out the 30-yr term of the lease which buyer and seller understand going in.

I know one person who has a lease for 90 years. Still it does not make it valid.

The part in bold is what is the problem. It will NOT stand up in court. Any agreed price mentioned in the first lease for the new lease is NOT valid.

Illegal is a big word, you can write in a contract whatever you want. The one who is doing an illegal act is the one who is selling it with false information, but without forcing a buyer to sign it is difficicult to prove, Maybe when a guarantee is written down before the actual sale. But the buyer bears responsibility too. As it is very easy to obtain a copy of the right passages from the law, it is up to the buyer what he signs.

Everything is rosy when at the end or before the end both parties agree to make a new lease with conditions and prices both parties can live with.

The problem is when it is not rosy, the buyer thinks he has a case, he might even go to court. A judge will rule in 1 minute that the buyer was trying to go around the maximum lease period and the buyer looses.

Remember a lot can change in 30 years. It can change into a dump, a little paradise or stay the same.

The seller might die, sell his land, transfer it to his children, the bank took his land, etc... All situations that have nothing to do with the buyer, only in this case the buyer is the one who loses. The buyer can not even control his fate, he can only hope for the best.

As most leases (for private house and land) are for the full price of owning freehold it is just plain silly to do it. I can imagine someone taking the risk when there are no houses for rent, but you practically have a house for rent every 500 meter, and for cheap prices too.

If there is a Thai spouse then at least someone you know and love will be the owner.

At the end it is just "Up to you".

Edited September 15, 2007 by Khun Jean

[tjo o tjim]

Actually in today's money, due to the diminishing value of money over time a 30 year lease isn't worth 50% more than a 20 year lease its actually quite a bit less than that. (I dont have the time to go into detail right now but the curious can learn more by researching Net Present Values, Parry's Valuation Tables and studying how and when equivalent yield valuation approaches should be applied to long leasehold interests.)

BTW did you produce that graph? The valuation of leasehold interests is not entirely a personal opinion, although that will form part of it, but it should be based on internationally accepted valuation practices such as those described in the RICS Red Book as practiced by Chartered Surveyors throughout the world.

So how did you come by those numbers? What discount rates did you apply? Have they reflected the greater insecurity of tenure of leasehold interests in land when compared with freehold assets? Please describe your valuation approach, and assumptions made.

I will concede that it is statistically possible for a lease to appreciate within a very limited window, and under a very specific set of circumstances, but it is not really helpful to describe a leasehold interest as an appreciating an asset when, most often, quite the opposite is true.

From an accounting standpoint, you are right; this is just a gross simplification, an excerpt from a business case for leasing land here for a project. The graph of the total project value is much different when accounting for inflation, revenue, taxes, cost of capital, MARR, and discount rates. But, as a simplification, it helps to understand what is going on-- at least for me. I had trouble grasping why the heck someone would lease land prior to crunching the numbers.

As for the risks between leasehold and freehold, as a non-thai, a lease appears to minimize risk over the duration of the term relative to freehold, since you are within a legal boundary. It would clearly be in your best business interests to convert to a freehold arrangement if legally viable or practical/beneficial from a business perspective within the first four or five years of taking on the land.

To the OP's issue, if you are just leasing land for a residence, it will lose value fast. If you are renting it out at a "guaranteed 6% return", you are clearly losing money. If the house you build on the land is of poor construction, you will lose value fast. If the land just sits unimproved... it loses value fast. This is why there aren't a whole lot of land leases sold-- people look at it as a residence and not a business, but the valuation is not tied in those same terms.

[staccyy]

Farma:

Can a farang lease land from the Royal trust or similar agencies? (i.e. railway or a sen ya chow)

can you explain this perpetual lease renewed 3 yearly. is that with the government as well?

thanks allot.

[harleyclarkey]

I have just bought with a 30 x 3 year lease. I have full power of attorney, noted and stamped in the land registry office, for the options to renew. So I have no need to approach the seller in the future. I can also buy the freehold should it become available for a nominal cost of 500 Baht. worth considering??

[harleyclarkey]

I have just bought with a 30 x 3 year lease. I have full power of attorney, noted and stamped in the land registry office, for the options to renew. So I have no need to approach the seller in the future. I can also buy the freehold should it become available for a nominal cost of 500 Baht. worth considering??

I may be wrong on this but I have been told by an independent source that on selling the owner of the leased land cannot ignore your entitlement to the value of the propery on the land. This as far as I know has not been tessted in the courts to any degree. It may be a mess but I am guessing that the 2 have to be valued seperately. also what about seling to a Thai?? Surely they do not face any such problems but I can see them offering less than market value.

Most are hoping that the pressure been brought on the Thai Gov to relax their paranoia on foreigners owning land will make them ease their ridiculous laws. At a recent London property exhibition, by Thais, they were told in no uncertain terms that if they want to sell..then give foreigners legal guarantees and freehold.

[Khun Jean]

I have just bought with a 30 x 3 year lease. I have full power of attorney, noted and stamped in the land registry office, for the options to renew. So I have no need to approach the seller in the future. I can also buy the freehold should it become available for a nominal cost of 500 Baht. worth considering??

You just bought a 3 year lease. And a hope (with a lot of wishful thinking) that after 3 years it will be renewed for an acceptable price. It might work for a few times (up to 10 times = 30 years), and when you are comfortable with it, something bad might happen. At that moment you have no rights whatsoever.

In my opinion freehold will never be available (for land). And mentioning a 500 baht price is too low. The current marketprice minus the value of the paid lease on that moment is a more realistic price.

I would go back and demand my money back, because 30 x 3 years does not exist and it will be considered a 30 years lease..

If the landowner sells his land tomorrow you will have nothing to demand, just a lease with maximum 3 years left.

You will have power of attorney over something that is not there anymore.

[Farma]

Farma:

Can a farang lease land from the Royal trust or similar agencies? (i.e. railway or a sen ya chow)

can you explain this perpetual lease renewed 3 yearly. is that with the government as well?

thanks allot.

Maybe someone else can answer your question on Farang leasing land. The land in both cases was to be leased in her name only. Although married we keep our business dealings in separate names for various reasons.

Had we bought the building with 13 years remaining on the 30 year lease, the lease would have been transferred into her name and the land lease agreement amended and registered. At the end of the remaining 13 years she had the option of renewing the lease or selling the building and lease option on to any prospective buyer.

The building she eventually purchased was part of a commercial complex built by a developer on railway land with the approval of the railways. Tax was paid on transfer of building ownership. The land lease change of name was also registered. I'm unsure of where the registration took place, I was away at the time but do know a representative of the railways was involved when registration took place.

In the past few years the railways have been actively encouraging developments on its spare land in that area. Off the top of my head I know of 7 other new commercial developments on railway land in that area.

Prior to purchase she made a few discrete enquiries with some senior contacts in a number of government departments dealing with this project and was satisfied this was a long term leasing opportunity.

I haven’t seen a full translation of the lease but had a simplified explanation in good English that every 3 years the land lease can be renewed with the railway department. The railway department has the option to review rent on lease renewal. The down side is the railways also have the option of reclaiming the land IF required for rail expansion. It was also explained there will be compensation for the building if that is the case.

[johnnyk]

Khun Jean,

I personally know people who have signed, sealed leaseholds with the agreed right to draw up a brand new 30-yr lease at any time within the original 30 yr term.

Its a legal agreement as good as any other Thai legal agreement.

Why would the developer do that?

Because he has finished with the project, has his profit and wants to move on. The land isn't terrifically sellable if it has a lot of 30-yr or 25-yr leaseholds on it so I don't think there is too much danger there. In any case a new buyer is legally obligated to see out the 30-yr term of the lease which buyer and seller understand going in.

I know one person who has a lease for 90 years. Still it does not make it valid.

The part in bold is what is the problem. It will NOT stand up in court. Any agreed price mentioned in the first lease for the new lease is NOT valid.

Illegal is a big word, you can write in a contract whatever you want. The one who is doing an illegal act is the one who is selling it with false information, but without forcing a buyer to sign it is difficicult to prove, Maybe when a guarantee is written down before the actual sale. But the buyer bears responsibility too. As it is very easy to obtain a copy of the right passages from the law, it is up to the buyer what he signs.

Everything is rosy when at the end or before the end both parties agree to make a new lease with conditions and prices both parties can live with.

The problem is when it is not rosy, the buyer thinks he has a case, he might even go to court. A judge will rule in 1 minute that the buyer was trying to go around the maximum lease period and the buyer looses.

Remember a lot can change in 30 years. It can change into a dump, a little paradise or stay the same.

The seller might die, sell his land, transfer it to his children, the bank took his land, etc... All situations that have nothing to do with the buyer, only in this case the buyer is the one who loses. The buyer can not even control his fate, he can only hope for the best.

As most leases (for private house and land) are for the full price of owning freehold it is just plain silly to do it. I can imagine someone taking the risk when there are no houses for rent, but you practically have a house for rent every 500 meter, and for cheap prices too.

If there is a Thai spouse then at least someone you know and love will be the owner.

At the end it is just "Up to you".

Agreed.

I bought my house via the company route with full knowledge of the potential pitfalls. I examined the leasehold option and concluded I was less comfortable with it than the company route.

My conclusion at this point is that not much will happen either way as the company loophole still gives the Thais what they want. They know full well that I can't take my land and put it on a boat and go home with it. This way they get their cake and eat it too while creating enough uncertainty to keep falangs off balance

and they can say that Thailand is not for sale. It all has political roots: no politician wll ever come out in favour of outright freehold land sales to falangs, he woud be crucified. With leaseholds and the company set-up (Thai majority shareholders) they preserve the idea that no one has sold land to falangs while getting the same financial benefits as selling outright. Its a Thai solution that works for them and in the end its all about benefit to them, and why not its their country? We may not like it but we don't vote, do we? For me the best of all worlds would be a 99-yr lease but I'm not holding my breath. I'm also hoping that the xenophobe nationalists don't take power in the next election. Ah well, never a dull moment in Thailand!

As you say, everyone has to make their own decision about what they feel works best for them.

Thanks for good comments KJ.

Edited September 16, 2007 by johnnyk

[johnnyk]

Khun Jean,

I personally know people who have signed, sealed leaseholds with the agreed right to draw up a brand new 30-yr lease at any time within the original 30 yr term.

Its a legal agreement as good as any other Thai legal agreement.

Why would the developer do that?

Because he has finished with the project, has his profit and wants to move on. The land isn't terrifically sellable if it has a lot of 30-yr or 25-yr leaseholds on it so I don't think there is too much danger there. In any case a new buyer is legally obligated to see out the 30-yr term of the lease which buyer and seller understand going in.

I know one person who has a lease for 90 years. Still it does not make it valid.

The part in bold is what is the problem. It will NOT stand up in court. Any agreed price mentioned in the first lease for the new lease is NOT valid.

Illegal is a big word, you can write in a contract whatever you want. The one who is doing an illegal act is the one who is selling it with false information, but without forcing a buyer to sign it is difficicult to prove, Maybe when a guarantee is written down before the actual sale. But the buyer bears responsibility too. As it is very easy to obtain a copy of the right passages from the law, it is up to the buyer what he signs.

Everything is rosy when at the end or before the end both parties agree to make a new lease with conditions and prices both parties can live with.

The problem is when it is not rosy, the buyer thinks he has a case, he might even go to court. A judge will rule in 1 minute that the buyer was trying to go around the maximum lease period and the buyer looses.

Remember a lot can change in 30 years. It can change into a dump, a little paradise or stay the same.

The seller might die, sell his land, transfer it to his children, the bank took his land, etc... All situations that have nothing to do with the buyer, only in this case the buyer is the one who loses. The buyer can not even control his fate, he can only hope for the best.

As most leases (for private house and land) are for the full price of owning freehold it is just plain silly to do it. I can imagine someone taking the risk when there are no houses for rent, but you practically have a house for rent every 500 meter, and for cheap prices too.

If there is a Thai spouse then at least someone you know and love will be the owner.

At the end it is just "Up to you".

Agreed.

I bought my house via the company route with full knowledge of the potential pitfalls. I examined the leasehold option and concluded I was less comfortable with it than the company route.

My conclusion at this point is that not much will happen either way as the company loophole still gives the Thais what they want. The