More Protection For Buyers Of Condos

[george]

More protection for buyers of condos

BANGKOK: -- Condominium buyers are to get better legal protection thanks to the amended Condominium Act, under which developers who do not deliver facilities as advertised will be penalised.

The amendment will become effective on July 4. Surasith Sahasthamrangsi of the real estate business promotion bureau of the Land Department said at a seminar yesterday that the new Act would punish de velopers who used misleading advertising to boost sales.

"If they can't deliver what they advertise, the Land Department is empowered to charge them with giving false information," Surasith said.

The amendment followed complaints by buyers whose purchases did not include what was advertised. Most of the angry buyers were people who bought units before they were completed. From July 4, developers will have to submit advertising plans with their construction proposals. On completion, the Land Department will check if all is as advertised.

Property Perfect's chief operations officer, Teerachon Manomaiphibul, said this law would hurt only developers who are inclined to cheat buyers.

Meanwhile, experts said the amended law might hurt the resale market, as the provisional clause that allows foreigners or foreign entities to hold more than 49 per cent of condominium units in Bangkok, municipal areas and other specified areas will be scrapped.

The limit will now be 49 per cent, without exception.

-- The Nation 2008-05-17

[thaigene2]

More protection for buyers of condos

Meanwhile, experts said the amended law might hurt the resale market, as the provisional clause that allows foreigners or foreign entities to hold more than 49 per cent of condominium units in Bangkok, municipal areas and other specified areas will be scrapped.

The limit will now be 49 per cent, without exception.

Why would that hurt the resale market?

[Khun Bob]

Can we see the amendments to the law - or is this yet another case of presenting face for a current problem resulting in no change really ?

How will the Thai Gov penalise organisations/people who break this alleged amendment ?

Please provide the complete amended condominiums act or a link to it...

[manutoo]

"If they can't deliver what they advertise, the Land Department is empowered to charge them with giving false information"

woh, that sounds very severe !

I guess we'll have to wait to see how far will go this kind of charge... But I doubt it'd end with any substantial financial compensation or anything like that...

[Kaojai]

The limit will now be 49 per cent, without exception.

Why would that hurt the resale market?

You won't be able to sell your condo to a farang if your building already has 49% (or more) foreign owners. So you'll have a smaller set of buyers to deal with and they will be well aware of the bind you're in, so it'll be even more of a buyers' market.

On the other hand, if your building has fewer than 49% farang owners, you might find greater demand for your condo if it's in a location with farang-appeal.

Edited May 17, 2008 by Kaojai

[OldenAtwoody]

More protection for buyers of condos

Meanwhile, experts said the amended law might hurt the resale market, as the provisional clause that allows foreigners or foreign entities to hold more than 49 per cent of condominium units in Bangkok, municipal areas and other specified areas will be scrapped.

The limit will now be 49 per cent, without exception.

Why would that hurt the resale market?

At these prices (& in - generally - "farang" areas) , who's buying? This (the advertising clause) is a protection for Thais, not foreigners.

Reducing the ownership percentage is a step backward, so the total impact is negative for foreigners.

[marshbags]

More protection for buyers of condos

BANGKOK: -- Condominium buyers are to get better legal protection thanks to the amended Condominium Act, under which developers who do not deliver facilities as advertised will be penalised.

The amendment will become effective on July 4. Surasith Sahasthamrangsi of the real estate business promotion bureau of the Land Department said at a seminar yesterday that the new Act would punish de velopers who used misleading advertising to boost sales.

"If they can't deliver what they advertise, the Land Department is empowered to charge them with giving false information," Surasith said.

The amendment followed complaints by buyers whose purchases did not include what was advertised. Most of the angry buyers were people who bought units before they were completed. From July 4, developers will have to submit advertising plans with their construction proposals. On completion, the Land Department will check if all is as advertised.

Property Perfect's chief operations officer, Teerachon Manomaiphibul, said this law would hurt only developers who are inclined to cheat buyers.

Meanwhile, experts said the amended law might hurt the resale market, as the provisional clause that allows foreigners or foreign entities to hold more than 49 per cent of condominium units in Bangkok, municipal areas and other specified areas will be scrapped.

The limit will now be 49 per cent, without exception.

-- The Nation 2008-05-17

NO slight on George but in reality this is a load of old dogs.

I can just visualise them enforcing the new proposals as per amendments Thai style.

Meanwhile ex number of years later and appeal after appeal after appeal ect. ect.

Forget it unless they show it is enforced in practice as and when it is needed and the owners get their justice.

marshbags

[bayrider]

Thai Condo real estate is not a good investment since other regions such as Vietnam and China has appreciated 300-600%.

[guava]

Teerachon Manomaiphibul, said this law would hurt only developers who are inclined to cheat buyers

There is another kind?

I's like to see much stiffer penalties (public caning and remedial English classes perhaps) for the clowns who come up with names like "The Trendy" and nonsense Thinglish gibberish fluff to describe how super hip chic happy fun life mega convenience sanuk maak their over-priced poorly-finished poky little shoe boxes with 1 square meter balconies will be.

Yes there are substantial "savings" in buying off the plan compared to the price when finished, but the risks just aren't worth it, even when going into it fully expecting the developers to deliver less than advertised. Much better value buying a 10+ year old condo IMO.

[NHJ]

it looks like thai love that famous 49% rule all for everything...

when will they understand that buying land by a foreigner does not remove the land from the country.

they should have a look how spain did rise after franco, they had their arms open for foreign investments and see where they are now

[george]

Condo Act to protect consumers

Aims to weed out shady developers

BANGKOK: -- The amended Condominium Act will improve the overall condo market and screen out non-professional developers that take advantage of buyers, says Opas Sripayak, managing director of the condo developer L.P.N. Development Plc.

''The amendments will benefit condominium buyers as most of them will focus on consumer protection. Condominium developers should pay more attention to what the sellers promise,'' he said yesterday.

He said a regulation in the amendment requiring developers to pay common area expenses for unsold units after unit transfers would put a greater burden on irresponsible developers who earlier tried to avoid this payment.

''L.P.N. will have no impact from the amendments as what we've done already will comply with them,'' said Mr Opas. ''This is the same for many listed and professional developers in the industry.''The Land Department will hold a public hearing about the amended Condominium Act next Friday before it becomes effective on July 4.

''After we talked with some developers about the amendments, what most of them were concerned about were odds and ends, not big issues,'' said Surasith Sahasthamrangsee, director of the department's Real Estate Promotion Office.

The department was waiting for consideration from the Consumer Protection Board on condominium pre-purchase and purchase and sales contracts before submitting details to the Interior Ministry next week. The department hopes the board will help tighten loopholes in the agreements as it earlier received thousands of complaints related to unfair agreements.

''It [the contract] will be a standard for all condominium projects to use,'' said Mr Surasith.

The amended Condo Act would require developers to keep all copies and versions of sale brochures or pictures advertised or sales letters publicised in any way at the juristic person office of the condominium for future reference, he added. ''Advertisements are part of a purchasing and selling contract. If there are many versions, all must be kept,'' he said.

This requirement aims to focus on the common area that developers promise to customers, not on selling prices or promotions. In the past, some developers changed the common area for other uses, taking advantage of unit owners.

''The amendments, responding to many problems, aim to protect consumers. Formerly, the act had no provisions for punishment as it left the private sector to manage and solve the problems by itself.''

Mr Opas said L.P.N. planned to launch three low-priced CondoTown projects in the Rama II, Rangsit and Pak Nam in Samrong areas with at least 2,000 units each. Spending for these three plots would be around 200-300 million baht each.

''CondoTown will focus on a large community where a discount store is situated,'' he said. The location has more than 100 apartment buildings where tenants pay rent of 3,000 to 4,000 baht a month.

During the first four months of this year, L.P.N. had pre-sales of 2.8 billion baht and it aims to achieve 11 billion baht by the end of the year. In the first quarter, it realised 1.2 billion baht and missed a target of two billion baht as government tax incentives took effect in late March and many buyers delayed purchases. However, the firm would realise tax benefits representing 4% of total revenue. It expected to realise 7.8 billion baht of revenue in 2008, said Mr Opas.

Next month the company will launch the first phase of Lumpini Place Ratchada-Rama IX on a 15-rai site near the MCOT Junction with unit prices of 1.3 million baht. It will have a total of 2,000 units.

''A rise in steel prices caused higher unit prices of 2-5% so [prices of] units in the existing projects will be revised up,'' Mr Opas said.

LPN shares closed yesterday on the Stock Exchange of Thailand at 7.30 baht, up 10 satang, in trade worth 209.9 million baht.

-- Bangkok Post 2008-05-17

[tilac2]

The limit will now be 49 per cent, without exception.

Why would that hurt the resale market?

You won't be able to sell your condo to a farang if your building already has 49% (or more) foreign owners. So you'll have a smaller set of buyers to deal with and they will be well aware of the bind you're in, so it'll be even more of a buyers' market.

On the other hand, if your building has fewer than 49% farang owners, you might find greater demand for your condo if it's in a location with farang-appeal.

Excuse me, but I think the above from Kaojai might not be true, or not always be true anyway (I don't know, I'm just suggesting, mind!) Here's how I would argue:

1. If the level of foreign ownership is less than 49%, any of the owners can sell to anybody (a sale to a foreigner in this case is only barred if that would push foreign ownership above the 49% level).

2. But if the level of foreign ownership has already reached 49%, then only a foreigner can sell to a foreigner. Effect on price? As far as foreign buyers are concerned, the number of available units has fallen by half, therefore the price that they will have to pay if they want to move into the building should increase. Generally, less supply = higher prices.

This is just my interpretation, based on a limited understanding of economic theory. Has anybody (Kaojai?) any actual experience of what happens to prices of units in a condo building (which is quite popular with farangs) after the 49% quota has been reached?

[thaigene2]

Oh come ooonnn you guys.

The point is if you're in some place like Phuket or Pattaya or Samui where "foreigners" tend to be pushing the 49% envelope this is the same issue it's always been. You can sell to ANYONE, but a non-farang owner would NOT be able to sell to a foreigner cause it's already at the max.

In Bangkok - much less of an issue as most places are only around 10-30% foreign owners - high end is higher though.

[Teddy3943]

it looks like thai love that famous 49% rule all for everything...

when will they understand that buying land by a foreigner does not remove the land from the country.

they should have a look how spain did rise after franco, they had their arms open for foreign investments and see where they are now

Probably they want also an economic growth of 49% from which is possible due to the economic developments in Asia.

[taxexile]

I's like to see much stiffer penalties (public caning and remedial English classes perhaps) for the clowns who come up with names like "The Trendy" and nonsense Thinglish gibberish fluff to describe how super hip chic happy fun life mega convenience sanuk maak their over-priced poorly-finished poky little shoe boxes with 1 square meter balconies will be.

how about this for an "up yours" name for a housing development , in bang kradii , off rama 2.

[Ted]

I's like to see much stiffer penalties (public caning and remedial English classes perhaps) for the clowns who come up with names like "The Trendy" and nonsense Thinglish gibberish fluff to describe how super hip chic happy fun life mega convenience sanuk maak their over-priced poorly-finished poky little shoe boxes with 1 square meter balconies will be.

how about this for an "up yours" name for a housing development , in bang kradii , off rama 2.

Thank you for that taxexile, that has made my Sunday morning! genius

[zorro1]

Thai Condo real estate is not a good investment since other regions such as Vietnam and China has appreciated 300-600%.

You want to live there? Nooo Thank you very much

[jumnien]

When prices have gone up 300% to 600%, I'd hardly call it time to buy!

[calmichael]

The limit will now be 49 per cent, without exception.

Why would that hurt the resale market?

You won't be able to sell your condo to a farang if your building already has 49% (or more) foreign owners. So you'll have a smaller set of buyers to deal with and they will be well aware of the bind you're in, so it'll be even more of a buyers' market.

On the other hand, if your building has fewer than 49% farang owners, you might find greater demand for your condo if it's in a location with farang-appeal.

My guess is.. and this is only a wild-ass-guess, is that a lot of buildings do not comply with the 49% rule anyway. I have heard this from a Real state Agent, but do not know if it is accurate.

[backflip]

"...a lot of buildings do not comply with the 49% rule anyway. I have heard this from a Real state Agent, but do not know if it is accurate...."

Which specific buildings do not comply with the 49% rule? Most assuredly, the agent's claim is not accurate.

[Arkady]

Once the provisional law allowing more than 49% ownership is scrapped what happens to foreign owners in projects where foreigners own more than 49%? Do some of them get their title deeds revoked and, if so, how do they decide which ones? Or are they grandfathered but no one can sell a unit to another foreigner until sufficient units have been sold to Thais to bring the ratio down to less than 49%. I don't know if many people bought under this provisional law but developers would have been irresponsible to sell over 49% to foreigners under a law that could be rescinded at any time. The resale value to all foreign owners is reduced. I remember thinking that the provisonal law was suspicious at the time it was introduced, knowing that everything has been getting tougher for foreigners in Thailand since Thaksin came to power the first time to be followed by the even more xenophobic Sarayudh govt.

Anyway it is good that they are going through the motions of protecting condo buyers better, even though it is about 15 years late. Many Thais were scammed out of their savings by developers in the early and mid 90s. Bangkok Land and Thanayong are but two that spring to mind and, as always, the revolting Thai Chinese scamsters held on to their assets, while the little people went bust.

[bKkRk]

"...a lot of buildings do not comply with the 49% rule anyway. I have heard this from a Real state Agent, but do not know if it is accurate...."

Which specific buildings do not comply with the 49% rule? Most assuredly, the agent's claim is not accurate.

This has also be suggested to me in not so explicit terms by more than one agent of one of the more well known international firms in BKK, but I do not have any data to prove either side. I would not be suprised however to find that this rule, like so many others in LOS, has legal ways around it.

[chrislarsson]

it looks like thai love that famous 49% rule all for everything...

when will they understand that buying land by a foreigner does not remove the land from the country.

Most people here are arguing that it is in the interest of Thailand to allow foreigners to own land.

I doubt that is true. Letting foreigners buy land will increase the price of land. This will hurt locals unless it's accompanied with higher incomes. This is unlikely to happen, at least not because of more foreigners coming here. Tourism tends to create little high-paying jobs. It could also hurt tourism as it would make tourist spots like Pattaya, Phuket and Samui more expensive (the areas where its' likely that foreigners will buy land).

The world is already heavily tilted in favor of the rich, developed world at the expense of the developing world. I would support foreign ownership of land and businesses in Thailand, if America and the EU would open up its job market to people in Thailand. Then there would at least be some benefit for Thailand as well.

[chrislarsson]

Excuse me, but I think the above from Kaojai might not be true, or not always be true anyway (I don't know, I'm just suggesting, mind!) Here's how I would argue:

1. If the level of foreign ownership is less than 49%, any of the owners can sell to anybody (a sale to a foreigner in this case is only barred if that would push foreign ownership above the 49% level).

2. But if the level of foreign ownership has already reached 49%, then only a foreigner can sell to a foreigner. Effect on price? As far as foreign buyers are concerned, the number of available units has fallen by half, therefore the price that they will have to pay if they want to move into the building should increase. Generally, less supply = higher prices.

Kaojai is right, but I'm not sure if you are.

A foreigner can always sell to whomever he want, but a Thai may only be allowed to sell to Thai. This will create two markets. Prices will go up for foreigners (because of limited supply), but will be cheaper for Thais (because of the greater supply).

So in general, the 49% rule is a disadvantage for foreigners that are buying and for Thais that are selling. For foreigners selling and Thais buying it's an advantage.

[pkrv]

it looks like thai love that famous 49% rule all for everything...

when will they understand that buying land by a foreigner does not remove the land from the country.

Most people here are arguing that it is in the interest of Thailand to allow foreigners to own land.

I doubt that is true. Letting foreigners buy land will increase the price of land. This will hurt locals unless it's accompanied with higher incomes. This is unlikely to happen, at least not because of more foreigners coming here. Tourism tends to create little high-paying jobs. It could also hurt tourism as it would make tourist spots like Pattaya, Phuket and Samui more expensive (the areas where its' likely that foreigners will buy land).

The world is already heavily tilted in favor of the rich, developed world at the expense of the developing world. I would support foreign ownership of land and businesses in Thailand, if America and the EU would open up its job market to people in Thailand. Then there would at least be some benefit for Thailand as well.

I tend to agree with you on this one - But I am NOT now in favour of retaining the 49% rule - It is, and will create social problems between Thais and Foreigners. A Thai owns it 'cheap' a ferang owns it's expensive – Ferang’s can only sell to Ferangs. Thais can never lift themselves up economically via this route, I am afraid the 49% rule simply serves ‘to keep Thais down’ economically - effect on Ferangs ZERO.

[thaigene2]

"...a lot of buildings do not comply with the 49% rule anyway. I have heard this from a Real state Agent, but do not know if it is accurate...."

Which specific buildings do not comply with the 49% rule? Most assuredly, the agent's claim is not accurate.

This has also be suggested to me in not so explicit terms by more than one agent of one of the more well known international firms in BKK, but I do not have any data to prove either side. I would not be suprised however to find that this rule, like so many others in LOS, has legal ways around it.

I seriously doubt that many - if any- buildings in BKK are over-quota. When I was looking to buy in BKK, the ratio seemed to be around 15% or less. I guess if you look at the high end though the ratio might climb - low to mid-Sukhumvit Sois. I think the real issue for the 49% rule is Samui, Phuket, Pattaya.

[KK-Mike]

The limit will now be 49 per cent, without exception.

Why would that hurt the resale market?

You won't be able to sell your condo to a farang if your building already has 49% (or more) foreign owners. So you'll have a smaller set of buyers to deal with and they will be well aware of the bind you're in, so it'll be even more of a buyers' market.

On the other hand, if your building has fewer than 49% farang owners, you might find greater demand for your condo if it's in a location with farang-appeal.

This post must be for Thai condo owners.

If a farang has a condo they should be part of that 49% so how can a farang have a unit outside that 49%. Maybe a Thai being part of the 51% would have a problem selling to a farang if the 49% was full, but should not bother farangs

[Goodwitch]

Is there a rule about Thais selling condos to farang? I can understand how farangs would sell to each other but I'm guessing the 49% rule is being broken by the Thais.

[BEENTHEREDONETHAT]

The land department knows the ownership status of the building and can determine if the 49% quota is full. If it isn't full you get a chanote for the condo if it is full they will tell you. You should check with the land department before handing over any money.

[thaigene2]

The land department knows the ownership status of the building and can determine if the 49% quota is full. If it isn't full you get a chanote for the condo if it is full they will tell you. You should check with the land department before handing over any money.

I was told the Jurstic Person (management) of the Condo in question needed to guarantee the ownership quota in writing. You're saying a trip to the local Land Dept. will provide an official up-to-date account of foreign ownership in any building? Is this something one just walks in, pays a small fee, and is given a copy of?