If The Government Extended Leases From 30 To 90 Yrs How Will It Benefit Thai's

[Tony121]

The reason I am asking this question is because it might be what the new government will be discussing in the near future .

[BEENTHEREDONETHAT]

It will make a big difference on the desirability of them, you won't have to worry about being booted out when you are old and need them most and the resale value will be there even when you are old and gray.

[Tony121]

Sorry I mean how will it benefit thai people e.g create jobs

[chownah]

Sorry I mean how will it benefit thai people e.g create jobs

Allowing 90 year leases would probably reduce jobs. As it is now Thai houses aren't meant to last much beyone 30 years so every 30 years or so the house will be torn down and rebuilt. If 90 year leases come into effect then there is an incentive for the renter to maintain the building and make it last for 90 years....thus eliminating the jobs that would be created for two replacement buildings.

I want to be clear that in replying in this topic I am not in any way trying to say that I think there is a snowball's chance in hel_l that the maximum legal lenght for a lease will be extended at all....I view my post as a theoretic answer to a theoretic topic.

Chownah

Edited January 28, 2008 by chownah

[Irene]

To a Thai, with allowance of 90-year lease, his land will be more marketable with more demand and resulting in higher value. There will be a big boom in Phuket and Samui where the demand has been suppressed by the 15-month threat of Foreign Business Law.

[Tony121]

Ok Chownah who is going to maintain the house for 90 years are falangs going to do all the work or thai's ?

[Khun Jean]

What if scenarios are pretty useless in Thailand. Better to concentrate waht is available now.

Status quo is what is desired by most governments. And be happy for it, otherwise the prices would only skyrocket, especially in the tourist places.

[Tony121]

Yes it is a scenario, but Business leader's in the real estate business have been asking the government to extend leases and for condo limit's to be increased,

The Company way of owning a Property or land was the in thing till the Coup

then You Have the Usufruct which was designed for farming, mining, orchad's what's to say another coup 10 years down the line will say this illegal as it has been used as a loophole.

So your left with the 30 year lease

So who's not to say they won't extend leases ? maybe not 90yrs but maybe 70yrs in line with Vietnam.

They extend leases of 30 yr's to 50 yr's for foreign industry.

so why not for real estate ?

[chownah]

Ok Chownah who is going to maintain the house for 90 years are falangs going to do all the work or thai's ?

There is less work involved in maintaining a house compared to building a new one....also.....what does a farang have to do with it? If the gov't changes the legal maximum duration for a lease agreement then this will impact alot more Thai people than farangs as the law does not differentiate between Thais and farangs for lease duration.....most leases in THailand do not involve farangs at all.

Chownah

[Tony121]

I think I asked the question how does this affect thai's, because if the government did decide to change it this is what they would discuss. Do you think vietnam a communist country is giving out 70yr leases because they love foreigner's or to boost their economy ?

or maybe there houses last 70 yr's ?

Edited January 28, 2008 by Tony121

[quiksilva]

No I doubt that all their buildings last 70 years, some will but not all. Anyway lets not confuse the matter. Buildings throughout the world are usually only afforded a 30 year lifetime, for accounting / appraisal purposes.

A building's useful life may well extend beyond 30 years but it will be dependent upon construction quality.

The main point from my perspective is the affect of the value of money over time, a 90 year lease is worth almost exactly the same as a freehold property, perhaps 2-5% less [it depends].

A 90 year lease will enable everyone Thai and Farang alike to enjoy almost freehold security on land that is held by other parties, including the State and the Crown. Furthermore, the greater security of tenure will put Bank's at ease which may make mortgages on leasehold property feasible.

This will almost certainly cause an injection of capital into the economy, which I think we can all agree would be welcomed by everyone, well okay except all those bitter people who have gone short on Thailand.

The key point though is will it happen? For a long time I have been on record here as saying no, never, not in a million years. However, I have been hearing some interesting stories of late, that have given me cause to think that 'never' may be a little too strong.

I cant quite repeat exactly what I have heard, its all hearsay, but I can say that it comes from the City.

[Tony121]

Hello Quicksilva Thanks for your positive comments, I believe something will have to change and at the moment extended the contract of leases will be the only real way falangs can own property long term, freehold will never happen in my opinion,

The rule on foreigner's owning condo's only came into effect after the 97 crisis when there was a huge oversupply in the Bangkok market.

Industrial leases were extended to 50 years again i believe this only started in the last ten year's

I think a extended lease will benefit thai's and foreigner's alike

let's be honest your average thai can't afford land in bangkok or Phuket or Koh samui even before the property boom.

If the lease law's aren't changed were back to the thirty year lease and this has brought the property market pretty much to a stand still.

[chownah]

I think that the 30 year lease law has been in effect for a long time but I'm not sure. It seems that in the past there were building booms inspite of the 30 year lease limitations so it seems incorrect to say that the 30 year lease has "brought the property market pretty much to a stand still." The 30 year lease has pretty much been constant for along time so it is not causing the property market booms or busts.

As to why Thailand is more restrictive on land ownership than for instance Vietnam....I think its cultural difference. In Thailand there is a cultural value in owning land which is quite above and beyone the legal or economic ramifications. My view is that this cultural value extends all the way from the rural poor who either have or strive to have a small plot of land to use and to give to their children all the way up to highest authority of the land.....don't forget that Thailand is a kingdom...a kingdom for Thai people.....Vietnam is not a kingdom.

Chownah

Edited January 29, 2008 by chownah

[quiksilva]

I agree Chownah.

Before the mainstream cottoned on to the company route there was very little activity in the housing market by ex-pats, because the only valid option was a 30 year lease.

As the company structure became better known this route to 'ownership' caused a boom, despite the fact that it was technically illegal.

50 year leases are for commercial property and require an Environmental Impact Analysis.

Qualified industrial users can own freehold property in an IEAT estate, and BOI promoted firms may own freehold land for commercial, residential or industrial use, subject to permission. This has been known to given to foreign development firms building hotels, resort and villa developments.

*NB a foreign individual would still not be able to own the land, but they could probably own shares in a promoted firm...

Edited January 29, 2008 by quiksilva

[think_too_mut]

I believe something will have to change and at the moment extended the contract of leases will be the only real way falangs can own property long term, freehold will never happen in my opinion,

The rule on foreigner's owning condo's only came into effect after the 97 crisis when there was a huge oversupply in the Bangkok market.

Industrial leases were extended to 50 years again i believe this only started in the last ten year's

I think a extended lease will benefit thai's and foreigner's alike

let's be honest your average thai can't afford land in bangkok or Phuket or Koh samui even before the property boom.

If the lease law's aren't changed were back to the thirty year lease and this has brought the property market pretty much to a stand still.

Why would Thais go out of their way to make farangs get more of a stranglehold on their land?

They could have done it long ago if it has ever crossed their mind.

Land for factories and commercial estates, yes, but land for retiring baby boomers who would just drive prices up and up, why?

[Tony121]

So do you think they will extended leases as they can then tell thai people they still own the land.?crisis of 97' was also due to a huge oversupply of property's that developer's had built.

and when was the property boom before that ? The money these new project's generate is huge. Most tourist destination home's won't sell on a 30 year lease go ask any estate agent. unless it's your home and you live in it or run a business from there, it's a worthless investment, it's about the same return as putting your money in a bank but you get nothing at the end.

[think_too_mut]

So do you think they will extended leases as they can then tell thai people they still own the land.?crisis of 97' was also due to a huge oversupply of property's that developer's had built.

and when was the property boom before that ? The money these new project's generate is huge. Most tourist destination home's won't sell on a 30 year lease go ask any estate agent. unless it's your home and you live in it or run a business from there, it's a worthless investment, it's about the same return as putting your money in a bank but you get nothing at the end.

Looks like Thais (Government) see peanuts money in that kind of properties, could do more damage than good. At least not worth a thought.

Condo ownership for foreigners was introduced to clear the logjam that speculators made - before Thai clientele as whole economy went belly up.

Those expensive villas in Phuket were built mainly by speculators (some foreigners among them) for foreigners, no way Thai authorities would pass a legislature that will make the 2 sides (speculators and foreign buyers) meet.

[jumnien]

90 year leases would be horrible for Thais, but who cares, it's there country and they can do what they want with it; I'm a happy guest for the last decade and probably the next three.

90 year leases would be horrible for farang; now this matters to me. If 90 year leases were legal, an endless stream of farang would arrive building up the villas and tapas bars along every kilometer of coastline. The last thing we farang want is more farang here clogging up our streets and ruining our lives. We moved here for two reasons - to enjoy Thai culture and get away from gobs of farangs in our home countries.