Condos Leases On Crown Property

[Jeff Jarvis]

While looking at various condo properties, some state they have 30 year leases from Crown Property.

What actually happens in 30 years?

Are the leases automatically renewed?

Can you lose your entire investment in 30 years?

Say you want to sell in 20 years, will the new buyer only have 10 years to stay there?

Edited March 8, 2005 by Jeff Jarvis

[trajan]

While looking at various condo properties, some state they have 30 year leases from Crown Property.

What actually happens in 30 years?

Are the leases automatically renewed?

Can you lose your entire investment in 30 years?

Say you want to sell in 20 years, will the new buyer only have 10 years to stay there?

<{POST_SNAPBACK}>

A real estate broker told me that when the lease expires, you would have to negotiate another lease with the Crown Property Bureau, but there is no guarantee that you will get the price you have in mind. If you cannot agree (and you wont have much negotiating leverage then) you must vacate the premises.

Also, please note that usually the lease term does not have 30 years left (because it has already begun). You are simply taking an assignment of an existing lease when you "purchase" the property...so you might only have 22 years left on the lease (for example)...

Leases are usually not automatically renewed, but you should examine a copy of the lease to determine lease renewal option rights, etc.

The broker told me that some people buy these leaseholds (in very prime central areas) with the intention to lease out the property during the lifetime of the lease (to hopefully maximize their return and recover their investment during the lease period).

Property on leasehold (versus freehold) should be significantly lower in price per square meter if located in the same vicinity (and are of similar construction).

I looked at several condos in the Rajadamri/Langsuan area and noticed the price differences in leasehold versus freehold properties, but finally settled on a freehold condo and am happy I did