Purchasing Apartment In Phuket

[petercallen]

I was in Jungceylon recently and checked out the apartments for sale.

There was a stall selling apartments starting at 4.5 million Baht, after asking a lot of questions about fees i was

told there was a sinking fund payment of 150000 baht which must be for maintenance of the building.

After asking more questions i found that they also wanted another 8000 baht a month in management fees.

Sounds to me they want to sell the apartments and then want to make a good income from them for ever.

Are all apartments sold with similar conditions, if so i can understand why they have a problem selling them.

[logbags]

I have a plumber here at my house in Australia and we are talking about the exact same thing. I was told this "maintanence fee" thing was first around in Scandanavia and developers from there bought it over to Thailand but my nephew just informed me you have to pay it in Bangkok as well. In a way we have similar things here like the Body corporate etc but some places in Phuket charge up to 20,000 a month just for garden, rubbish and perhaps pool cleaning.

I don't think you can say you'll do it yourself and must pay up monthly. I was just explaining to my mate here a lot of people have this idea of buying 2 condos and renting one and using the rent to cover the cost of your own etc. This can get you into trouble if you can't rent it as you are then paying for 2 maintainece charges etc. This doesn't include, water, power, phone etc as well.

Water is the big issue at the moment, everyone knows there is HUGE problems about this and then land fill for rubbish is another problem that is going to get worse unless a big investment is made into modern furnaces like in Japan. Phuket is only now realising too much development has been allowed to go on without any infrastructure to maintain it. It's not as if people don't know but the ongoing political problems have Thailand going backwards fast.

[BillR]

yes and most likely they will charge you an obscene (+50%) electric rate and water rate among other things.

[zulugutt]

All condo-projects in Thailand that I have seen the prospect of have sinking fund. The interesting thing is how much is it pr. square meter. The same with the monthly costs. Some projects, especially here in Phuket, will charge you a lot. But as lot as you have the information before buying, at least you can compare and make up your mind. But they will probably not tell you how much they intend to charge when it comes to water and electricity... I'm happy I have my own house, so I know the costs.

[Old Croc]

If the monthly charges are going to cost as much as a rental, what's the point of buying?

[ScubaBuddha]

If the monthly charges are going to cost as much as a rental, what's the point of buying?

There isn't one.

[petercallen]

Is it possible to buy an apartment where the apartment owners form a corporate body and manage the apartments them selves which would get rid of the management fees and have your own electricity and water meters and pay the providers directly yourself.

I do remember reading a article last year where the owners where doing this and one owner was taking legal action because he was not happy with the management committee.

[sarahsbloke]

property developer in Pattaya say

1) build block of 100 condos

2) sell 10 to break even, but usually sell 30 for good profit

3) Divide maintenance bills for 100 condos among the 30 you sold

4) Abandon project when condo owners complain, let condo fall down

5) back to step 1)

property developer also say ferrang very easy .........

Edited March 29, 2010 by sarahsbloke

[jdinasia]

yes and most likely they will charge you an obscene (+50%) electric rate and water rate among other things.

If you own then electric and water will be in your own name. No mark-up.

[Atmos]

There is an article in the current issue of PG detailing the numbers of apartments/condos/units currently for sale in Phuket, and of the new developments underway.

Thousands.

Sorry don't have the paper now, article was under a pic of a decaying/mouldy apartment dev't that has been abandoned. I came here with the idea of buying - pleased I got talked out of it. Not saying this is 'right' for everyone, but personally I'm happy to rent meantime.

[LivinLOS]

yes and most likely they will charge you an obscene (+50%) electric rate and water rate among other things.

If you own then electric and water will be in your own name. No mark-up.

Not the case for many condos I know of.. At the mercy of the management co for pricing with a centralized system.

[maxjay]

Not the case for many condos I know of.. At the mercy of the management co for pricing with a centralized system.

I owned a condo in Jomtien for six years.

The chanolt (deed) was in my name.

The electric bill from the government company was in my name.

The water bill from the government company was in my name.

The TOT bill was in my name.

I know many, many, other condo owners, and their experience is the same as mine.

I think the issue being discussed is unique to Phuket?

[LivinLOS]

Just depends on the condo.. Many are set up for a management company and have non gov meters and centralized water charges.

[logbags]

Just depends on the condo.. Many are set up for a management company and have non gov meters and centralized water charges.

Meters are supposed to be set and charged the same for all. I've heard of what the Thais call "Chinese meters" where they are suspected of being set to run faster or are illegally run off the main supply. I've only seen this once when I was renting an apartment where a lot of students stayed. A girl told me the landlord ripped everyone off on the power every month and my bill seemed a bit high.

With the farang market it is usually you buy a place with a 30 year "freehold" lease with monthly "management fees" for things like security, gardening, pool cleaning etc and I get the impression most of these developers are really trying to run a resort or hotel by stealth. They set up villas, sell them for millions and then rent them out for the owners and run the place exactly like a resort.

It's very clever as you sell each unit then "manage" it making an earn every month. If you are lucky enough to get renters I would guess they take a healthy sling out of the daily rate as well. The one guy I do know who has a place in an upmarket villa/resort says he struggles to get any maintainance done and forever has his hand in his pocket for some charge or another.

Also, how do you know if it is being rented or not if you have nobody local to check for you? How do you know exactly how much it is being rented for? My friends place was brand new but the weather had already rotted the roof in places. I wonder if any owners of these type of places actually make a profit on their properties over a year. My friend showed me a print out he got showing how often it had been rented etc but it would be easy to clip you if you are not there to check.

I see places advertised in Nai Ton starting at 80 million baht. Sai Tarn starts at 26 million on their adverts so we are talking about places 1 million USD upwards. Some of these places say they give a locked in 6% or more return so somebody must pay them big rents or that must be built into the price. I would be interested to hear from somebody who owns a place.

The people I hear of who own places like this are usually so cashed up they don't care.

[katabeachbum]

Just depends on the condo.. Many are set up for a management company and have non gov meters and centralized water charges.

some condos have electric meter directly from PEA at approx 4 baht/kwh, some are supplied from huge condo meter and charged whatever condo decides, usually 5-12 baht/kwh.

most condos do not have public water, and none I believe have one public meter for each unit. condo usually charges 30-150 baht/m3 for water depending on purchase price

commonfees are usually based on sqm/unit, and the higher fees the more likely condos will look nice and be maintained. new condos often have fees set far to low.

utilities and maintance is often less expensive living in a townhouse

Edited March 31, 2010 by katabeachbum

[LivinLOS]

Just depends on the condo.. Many are set up for a management company and have non gov meters and centralized water charges.

Meters are supposed to be set and charged the same for all.

They are, just not at 'normal' rates..

Each condo still has a meter, but often condo blocks own the transformer or other issues unlike household supplies.

[thewhites1212]

I have worked for an established well respected developer and i believe the facts are these for most well run completed developments

The Maintenance charge for a well run 40 apartments, can vary 9,500 baht for 3 bed up to 18,500 for penthouse, this includes usually the below:

*Daily garbage removal.

*Gardening and irrigation of all communal areas.

*Security – Physical security, 24 hours a day, 7 days each week.

*Manager and office staff, office utilities, equipment and supplies.

*Insurance for all common areas and public liability within the apartment development.

*Communal area electricity and water supplies.

*Pool and equipment cleaning.

*Accounting fees.

*All applicable government & leasehold annual taxes.

*Additional sinking funds to cover maintaining the common areas, equipment and facilities in pristine condition including landscaping, roads, garden and pool furniture and building exteriors including regular re-painting as necessary. One off charge

Question: would you want your home to not be maintained correctly, you will find these world wide, communal charges in flats/shared dwellings etc. Usually this is also eventually run my owners committee, once the development is handed over/completed. the charges are in the owners hands

Electricity and Water charges:

These are normally charged at government rates, however sometime the developer will add one baht per unit, too cover extra admin/late payments etc…

Rentals:

Most rentals are controlled by owners, their designated estate agents, developers, most developers will cater for rentals for their clients and of course they will charge, it’s called a service, just like estate agents will charge. No such thing as a free lunch!

Some developer have guaranteed rental schemes for new properties bought, hence the new owner will still have small usage of the property , but the owner is usally guaranteed a three-five year income which can relate up too 6.5%, on the sales value when your not using your home.

Title deeds:

A 5% deposit is a reservation form to secure your built home, different stages of percnetage probably if its off plan, this allows the developer to start legal proceedings for the full contract and in many cases , start adding furniture too the homes with the latest design of style drapes/curtains etc..The full contract usually takes about 5 weeks. It’s usually a standard straight forward contract used by all developments and supplied by Asia’s top lawyers and is a proven contract, obviously extra c auses can be addded if needed.

Leasehold is the most common title deed in Phuket and the developer I worked for used this on all his developments and was very successful as freehold you need 51% of Thai owners and the developer believed that Thais don’t buy luxury property in Phuket , mainly Bangkok and Hua Hin.

Phuket market:

Seen equity increase year on year on quality build/good location homes and rental can be in excess of $300 US a day for say a 16 Million baht home.The market can always slow down though when political unrest as Bangkok airport closure two year a go in high season.

So in my opinion if you buy correctly, make the right quality choice,mainly buy completed NO RISK developments and in the right location, you will and should get good returns on your homes in equity and rental for many years.

Hope this helps with your conversations.If anyone requires more info, please ask and I will try too help.

Regards

Tony

[logbags]

Leasehold is the most common title deed in Phuket

Freehold means legal ownership and control of a building or piece of land for an unlimited time/life. Leasehold is the more correct term but you see places advertised as freehold lease which is a paradox in terms as you might have freehold use of a property but you certainly don't own it in the traditional term we know as freehold.

In Australia you own something lock, stock and barrel and you only have to pay rates, water, power and any other utilities you might have like internet. Many of these Phuket developments don't allow full freehold even if you are a Thai buyer and that to me implies the developer wants to keep control of the project.

This is very different from developments here where most builders just sell their places and move on. I understand most Farang developers are only trying to do their best under the laws they have to work with but the original poster is obviously trying to weigh up the options of buying a place so the more information he has the better.

The thing that worries me about a leasehold in Phuket is what happens when the lease finishes. many buyers may not care but if you have children this is very very important. The person or company whom you made the original 30 year deal with probably won't be around so you or your children may have to deal with people who have no inclination to honor any previous promises made 30 years ago.

Secondly if you buy and own a place for a while then want to move on, you can only sell the remaining portion of the lease in theory so 20 years of freehold use is certainly not worth as much as 30. Then I would ask are the management fees locked in for a certain amount of time? Do they rise according to CPI or what? Once you have parted with your money and signed a 30 year lease you have no say if the company is sold and it might be sold to someone with a different agenda than the original developer.

[logbags]

Todays Bangkok Post has a story of exactly what I am talking about. Some Brit charged over a resort that seemingly never got built. From Surin Beach right up to Nai Yang you can see projects half finished that have obviously gone bust or stalled for some reason.

[thewhites1212]

Hi Gents

I may not have explained the leasehold position clearly enough in my comments above.

Q. As a non-Thai national can I own the land upon which the apartment is built?

A. There are ways for this to be achieved however because certain developers are offering 90 years leases (3 x 30 years) and giving the owners the control of the land owning company upon completion it isn't deemed necessary. They effectively become landlord of their own property and if the law changes, freehold will be transferered in most cases F.O.C

Reference the unfinished developments yes , they are unfinished developments , due mainly to the fact the developers have financial problems for not selling more properties. This is understandable in business as its not only Phuket.Look at Dubai , half of Dubai under construction and their having to be bailed out bigstyle.

This is also a time when con merchants will take advantage and spend the money and then go bankrupt, but its the way of the world now, morals and standards are sliiping as most people go about their own business and dont want to get involved in todays tough society, thierfore they stick their head in the sand.

Its also down too common sense and due dilligence in most cases, wouldnt you check things out first, buy a from a developer that as finished his construction/development and then their RISK FREE.

Heres one website agency that deals in RISK FREE developments and quality rather then quantity (link removed)

Hope that helps gents

[KarenBravo]

No such thing as a 30+30+30 year lease. Maximum is 30 years.

Loads of threads on TV that confirm this.

[steelepulse]

No such thing as a 30+30+30 year lease. Maximum is 30 years.

Loads of threads on TV that confirm this.

Of course there is if you're in sales .

[katabeachbum]

No such thing as a 30+30+30 year lease. Maximum is 30 years.

Loads of threads on TV that confirm this.

Of course there is if you're in sales .

loads of Chanote in land office dont agree with sales

[thaiwanderer]

No such thing as a 30+30+30 year lease. Maximum is 30 years.

Loads of threads on TV that confirm this.

Whilst that is a useful shorthand it's actually incorrect.

A (residential) lease cannot be registered for more than 30 years.

30+30+30 can be perfectly legal if drafted correctly.

As to practical enforceability there are issues to be aware of (hence usefulness of the shorthand) and as you rightly say there are many threads in the real estate forum that discuss this but I for one have never considered something confirmed by appearance on TV.

[steelepulse]

loads of Chanote in land office dont agree with sales

Chanote, lease? Never heard of a chanote 30 year lease before, please advise :D :D

[logbags]

There are ways for this to be achieved however because certain developers are offering 90 years leases (3 x 30 years) and giving the owners the control of the land owning company upon completion it isn't deemed necessary. They effectively become landlord of their own property and if the law changes, freehold will be transferered in most cases F.O.C

## They can offer the stars and Moon as well but a 30 year lease is it legally. Why wouldn't the owner give up the land owning company if they have sold all the units? Surely it would be better to hand over the company to the people who have bought the properties and let them set up the company where they all have a fair share and voice.

This promise of handing over the land if the law changes, well excuse me if I'm a bit skeptical of that ever happening.

[petercallen]

logbags posts 14/18/26 is comparing Australian rules of buying a apartment where you own it freehold and the owners choose to have a management

company or form a body corporate and manage the apartments them selves, when i was involved we ran it ourselves and saved a lot of money.

maxjay post 12 seems to have a similar arrangement as in Australia, this does not seem to be available in Phuket if it was i think they would

sell a lot more apartments.

thewhites1212 posts 17/20 quotes fees of 9500/18500 baht a month, the main cost of maintaining a apartment block is employing people to

do the work cleaning/ gardening/maintaining the the pool etc, the minimum wage in phuket is approx 6000 baht a month and i dont think the

people employed to do this work would be payed more than that.

The developers who i have asked about the price of water and electricity always quote a price much higher than the government charge.

Comparing apartments to houses in my opinion a house wins easily, you just make sure you buy in a area where people can afford to look

after there property's and look after your own which costs nothing like the fees charged by people who manage apartments in phuket.