Is The Pattaya Property Market Going Tits Up?

[Mobi]

At the end of the day, right now I'd rather be a buyer tha a seller.

If you're looking for a good deal, you will have to trawl through the estate agents brochures, websites, and get out and go look to see what can be had at what price in what area. After thoroughly familiarising yourself with the market, you will then be in a good position to know a good deal when you see one.

Also, as my esteemed fellow member Mr Expatgaz said, check out how long properties have been on the market and if you see something you like, make them a low offer and see what happens.

Try to deal direct and avoid agents if you can, and also 'sus' out the local expat community in the area you want to live, and see if you find out about anyone who is desperate to sell.

As the gentleman said, you just have to be in the right place at the right time. Easy

[Lazy Sod]

I've been looking at available properties on the website of fairproperties.com for over a year. The list of properties for sale is growing fast, for example in the "Houses for Sale" section there are now 7 pages with 50 second hand houses on each page (that's 350 houses for sale . The site is updated every few days with more and more properties for sale. They seem to maintain the site well, and regularly remove sold properties. The "Condo" section is even bigger, with 400 for sale.

The sellers do not seem to be lowering their asking prices. . .yet , I think it's teetering on the brink and could be going tits up soon. I'm in no hurry to buy and so I think I'll wait a while.

The site mentioned above has just had its weekly update, there are now 450 Condos for sale (50 added, an increase of 12.5% in only 2 weeks).

[nev]

I've been looking at available properties on the website of fairproperties.com for over a year. The list of properties for sale is growing fast, for example in the "Houses for Sale" section there are now 7 pages with 50 second hand houses on each page (that's 350 houses for sale . The site is updated every few days with more and more properties for sale. They seem to maintain the site well, and regularly remove sold properties. The "Condo" section is even bigger, with 400 for sale.

The sellers do not seem to be lowering their asking prices. . .yet , I think it's teetering on the brink and could be going tits up soon. I'm in no hurry to buy and so I think I'll wait a while.

The site mentioned above has just had its weekly update, there are now 450 Condos for sale (50 added, an increase of 12.5% in only 2 weeks).

and they are one of many agents in pattaya.

it is very easy to buy,but once you are in the market very hard to sell and get out,unless you plan on holding on to the place you buy, better off renting, IMHO.

[Pakboong]

It appears to me that the greatest failure will be from the builders packing up and leaving half or less finished villages. They can't continue to operate a sales office with no income. One village that I pass often has been under construction for over 2 years and for the first time, yesterday, I see someone move in to one of the 100 houses. There is absolutely no chance that this village will survive. The quality of the work will not matter. There are simply not that many Farangs walking the streets with 4+ million Baht in thier pockets ready to buy a house. I suspect that there will be attempts at builder financing. But, nothing is going to save this mess.

[monty]

Prices will go tits up, now that the interim government has decided that the laws concerning limited companies holding land will be followed to the letter!

As of last friday, Land and House department simply refuses to transfer any land title deed in or out a limited company with a Foreign shareholder, whatever percentage he may hold...

I do know that a lot of the land "owned" by Farangs is through a lease contract with their Thai partner, but for a lot of people this is not an option. One might be quit young, and not agree with the 30 year limit, one might simply not have a Thai partner (foreign couples spring to mind) etc...

Where I live, a lot of the Thai landowners, who have their land up for sale at pretty rediculous high prices, are suddenly sitting on low-priced agricultural land again. Very little of this land gets actually bought by a person just planning to build his own house on it, but the majority gets bought by either small or big scale developers, who most of the time want to go the company way...No more!

A poll done some time ago on Thaivisa showed over 23% of the house owners having gone the company way... And probably a lot of the others bought from a developers' company to then transfer the house to their partner...

We are talking a pretty big share here!

[Mobi]

Prices will go tits up, now that the interim government has decided that the laws concerning limited companies holding land will be followed to the letter!

As of last friday, Land and House department simply refuses to transfer any land title deed in or out a limited company with a Foreign shareholder, whatever percentage he may hold...

I do know that a lot of the land "owned" by Farangs is through a lease contract with their Thai partner, but for a lot of people this is not an option. One might be quit young, and not agree with the 30 year limit, one might simply not have a Thai partner (foreign couples spring to mind) etc...

Where I live, a lot of the Thai landowners, who have their land up for sale at pretty rediculous high prices, are suddenly sitting on low-priced agricultural land again. Very little of this land gets actually bought by a person just planning to build his own house on it, but the majority gets bought by either small or big scale developers, who most of the time want to go the company way...No more!

A poll done some time ago on Thaivisa showed over 23% of the house owners having gone the company way... And probably a lot of the others bought from a developers' company to then transfer the house to their partner...

We are talking a pretty big share here!

Monty,

When you say in, or out. I assume you mean land owned by a company with a foreign shareholder cannot be transferred, .i.e. sold. What happens if the company gets rid of its foreign shareholder? Can it then then get the land transferred?

This is the first I have heard about this. Is this new rule just being applied by the Pattaya land transfer office, or is it all over the country?

[Digger]

What remains to be seen is how this affects (if at all) existing companies, that followed the law at the time they were set up and acquired land. But going forward, I'd say a lot of farang orientated developers are going to be very nervous at this development as it will basically mean that most higher end houses are unsalable. i.e its one thing for a farang to let a 1 or 2 million baht property go into a Thai name, but I doubt this is going to fly on a property with a sales value say of 5,000,000 baht +. Sounds like Phuket is really go to get hurt with the plethora of million dollar properties being sold to foreigners.

[monty]

A newly formed company with a foreign shareholder can't buy land (i.e. the company cannot be recorded on the back of a land title deed)

An existing company with a foreign shareholder owning land cannot sell it...

I guess you can transfer the foreign shares to a Thai national to get the transaction done...

Not a new rule, just existing rules being suddenly enforced.

Basically, if a company with a foreign shareholder owns land, the Thai shareholders have to be able to prove that they invested the necessary funds to acquire the land into the company as per the share holding structure.

They also have to prove where their funds originated from (salaries, a mortgage or loan,...)

If they are not able to prove this, it is deemed that they are just nominees, used by the foreigner to circomvent the law preventing aliens to hold land...

Not Pattaya, nationwide...

See also : http://www.thaivisa.com/forum/index.php?showtopic=70665

[monty]

What remains to be seen is how this affects (if at all) existing companies, that followed the law at the time they were set up and acquired land

None of those companies ever followed the law. The law hasn't changed, it's just being enforced at the moment.

The fact that the Thai shareholders never brought in any funds as per the shareholding structure of the company to acquire land has always been the weak point of going the company way.

It has always been assumed, if one actually trades with the company and pays taxes, one would escape scrutiny from the authorities! With the memo of the ministry of interior, sent to the land and house offices nationwide, they actually stopped any new transactions taking place.

Only in a very few circumstances where the Thai shareholders bring in the needed cash (and they acquired that cash legally), the land and house deoartment can go forward with the transaction...

Edited May 29, 2006 by monty

[suiging]

I have been informed that the current play is party politics and protection of " national assets " in the lull between genuine government. Not sure, but certainly has a wiff of truth. The perceived protection in the company purchase was " If they are going to do Joe Bloggs..then they will have to do the Chairman of Shell, Swedish royalty etc etc ", and to a degree that still holds.

There are a considerable number of extremely powerful leaders of industry ( and powerful politicians ) who hold their holiday homes this way. They are the same folk who decide on the level of overseas investment they or their country will spend in the land of smiles and I would guess they and their legal representatives, would cause considerable embarrassement to the powers that be for some time to come, if screwed over in the long term. At the end of the day, property markets have collapsed triggering full scale economic collapse for less cause than this. Not saying the present set of you know what's in BK are not capable of shooting themselves and the entire economy in the foot, but I doubt when they wake up and see the potential consequences of their actions, they will like what they see.

[Rimmer]

But an existing company can still change it's Farang shareholders am I right?

[xbusman]

From the Bangkok Post Website today

Housing market growth shrinking fast

Growth in the property market this year is likely to shrink to just 5%, half of the 10% forecast when the year began. Experts blame the impacts of surging oil prices and higher interest rates, said an industry executive.

Manop Pongsathat, President of the International Property Association, said the number of new houses on the local property market is forecast to increase by 65,000, compared with 68,000 units last year.

He suggested people wanting to buy houses now should estimate their debt repayment prospects properly.

They must realise how interest rates would move in three years ahead; otherwise, they would experience difficulties in the debt repayment.

Mr Manop also called for the government to come up with measures to curb excessive lending by commercial banks. The situation, if allowed to go unabated, would lead to an uncontrollable economic bubble, he said.

My experience is that when they mention that there are reactor problems the core has already melted. What gets my attention in this is this line:

Mr Manop also called for the government to come up with measures to curb excessive lending by commercial banks.

Any idea how critical things must be when the President of the International Property Association makes a public plea to the government to reduce the availibility of credit? Just gives me a dark feeling of ominous foreboding.

[Phil Conners]

I think unless they do a quick backtrack on that company-owning-houses thing you can change that forecast to 0%. There is already a glut of houses on the expectation that they will be sold to farangs.

[icecubes]

I think unless they do a quick backtrack on that company-owning-houses thing you can change that forecast to 0%. There is already a glut of houses on the expectation that they will be sold to farangs.

All i can say is i hope house prices and condo prices come down as fast as Knickers do in Pattaya

Then i can have a bigger place for half the cost.

come on down, the price is right.

Have a nice day

[TominBangkok]

The interim government has already cast econonic doubt with foreign investors. The length of time Thailand has operated without a government concerns many foreign companies with substantial investment here.

Now that are going to make it much harder for foreigners to purchase a house creating further doubt for individual investors. What poor timing. Are they looking to create another crash? We'll see.

[poppa]

Prices will go tits up, now that the interim government has decided that the laws concerning limited companies holding land will be followed to the letter!

As of last friday, Land and House department simply refuses to transfer any land title deed in or out a limited company with a Foreign shareholder, whatever percentage he may hold...

I do know that a lot of the land "owned" by Farangs is through a lease contract with their Thai partner, but for a lot of people this is not an option. One might be quit young, and not agree with the 30 year limit, one might simply not have a Thai partner (foreign couples spring to mind) etc...

Where I live, a lot of the Thai landowners, who have their land up for sale at pretty rediculous high prices, are suddenly sitting on low-priced agricultural land again. Very little of this land gets actually bought by a person just planning to build his own house on it, but the majority gets bought by either small or big scale developers, who most of the time want to go the company way...No more!

A poll done some time ago on Thaivisa showed over 23% of the house owners having gone the company way... And probably a lot of the others bought from a developers' company to then transfer the house to their partner...

i have been reading this site for 3 years and i have never before come across a idiot off the scale as this Monty , lets try this , as from last Friday Thailand has stop all investment coming into this country , Monty if Thailand took such action it would be on its arse with in 7 days , but i think a cleaver guy like you ,could take it on your self to inform the rest of the world whats going on ,

[Gary A]

Anyone who bought a house by forming a bogus company has no right to complain. When you had the company formed you SHOULD have known the it was against the existing law and that it could come crashing down at any time. I too would have rather had a home than a condo. After thoroughly checking it out I decided that I like to sleep well at night and if I had a bogus company that would have been impossible.

The Thai government is going to make HUGE sums of money if they carry through enforcing the law. The taxes for transferring property are pretty high and all those farang formed Thai companies will have to transfer the property.

I would bet that there will be new companies formed to handle those transactions. They will basically be holding companies that lease the houses back to the farangs. Maybe not a really bad deal for the farangs involved with the phony companies.

[Pakboong]

Seems a natural reaction to over-buying by foreigners to me. I was sitting here in 1974 thinking the Thais would never run the Americnas out of the country and lose billions. Boy, was I wrong. The financial crises of the late 90's apparently caused some shortcuts to foreign investement. Now that problem is under control. Thais do not want Thailand to be foreign owned and they have got to do something to make housing affordable for Thais.

[Noel]

Prices will go tits up, now that the interim government has decided that the laws concerning limited companies holding land will be followed to the letter!

As of last friday, Land and House department simply refuses to transfer any land title deed in or out a limited company with a Foreign shareholder, whatever percentage he may hold...

Sunbelt Asia appear to disagree:

A number of Land offices are allowing foreigners who are holding shares of a Thai company to buy land today and yesterday as one officer stated " it was quite clear that the purpose of this new rule is to curtail the property developer who are foreigners who set up company first with the objective to buy land for office or for home then apply for objective changes to be real estate development."

Case in point, a Thai company bought land today. Even though these Thai shareholders would ready to show their proof of income, the officer waved the proof off, while he stated " no need as this is for buying a office and land for a import export company NOT real estate development' This was a Thai company with 49% foreigners and a Foreign Director. We are hearing other reports of the same.

Looking at the literal translation the new rule did clearly state that the investigation of the Thai shareholders' financials is for the company which has the business objective to do any real estate business.

However, as I said many times the rule is written in black and white but it is up to

The officer who you dealt with how he wants to interpret the law.

Here is another different translation of the ruling.

Referring to the guidelines of land ownership set up jointly by the Land Bureau and the Ministry of Interior for legal entity which has foreign ownership:

There upon, the Ministry of Interior was reported that there have been foreigners working with Thais or had commissioned the Thais to set up corporation to do property trading by initially buying land and house for the purpose of making it a home or office and subsequently apply to change the usage to for sale or sub-divide and sale to foreigners which constitutes a breach of law.

For the purpose of preempting any actions which may circumvent the laws or as to prevent the purchase of land which may benefit foreigners under the Land Act 74, second paragraph, the Ministry foresees that an additional practice should be applied in the event that a company limited, limited partnership or partnership which has already been set up and apply to own land for the objective of doing business in real estate (except public company limited or other legal entities which were permitted to own land under other applicable laws such section 27 of Board of Investment Act B.E 2527 or property fund, commercial bank, banks set up under special law, finance company, security firms, life and non-life insurance companies).

If it is appears that the company is having foreigner as shareholder or Director or if there is a reason to believe that it is nominating the Thais to hold shares for the foreigners, the officer is to investigate income of every Thai shareholders in the legal entity by looking into their work history of what kind of work they have done and what monthly salary they earned, all of these proved by evidence. If the purchased is funded by loan, then loan evidence must be provided. If after the investigation, it is led to believe that the application for land ownership is circumventing the law or any individual is purchasing land to the benefit of foreigners under the Land Act 74, paragraph 2, the officer is to investigate the case in detail and report to the Land Bureau to be waiting for further advise from the Minister.

www.lawyer.th.com

Would you care to quote the source of your contradictory claims, monty?

The name of the bar would do...

[Rimmer]

Anyone who bought a house by forming a bogus company has no right to complain. When you had the company formed you SHOULD have known the it was against the existing law and that it could come crashing down at any time. I too would have rather had a home than a condo. After thoroughly checking it out I decided that I like to sleep well at night and if I had a bogus company that would have been impossible.

SNIP

What's with the "bogus" company Gary? Many people submit tax returns on time as well as paying tax on them, methinks you are getting confused between 'shell' companies that submit no tax returns but still go out and buy land.

You are wrong to state that to own land in a company is against the law it is not. It is simply not within the spirit of the law.

[Gary A]

Rimmer, I have spent a considerable amount of time researching a way to own a house. I'm sorry now that I deleted all the information. It is still available if you spend some time looking for it. To sum it up the law specifically states that forming a company for the purpose of a farang owning a house is NOT legal. There is one legal way but it limits you to no more than one rai and it involved a very large investment. I too have bought land here in the Kingdom and would have liked to have been protected BUT I was forced to forget it and it is in my wife's name. I figured if worse comes to worse it would be gone anyways so why pay for a bogus company, pay an accountant and file tax returns. My condo and car are in my name and were both bought before we married.

[xbusman]

THere is a second legal way as well. Become a Thai citizen.

[monty]

Poppa, where in my post did I state that Thailand blocked all incoming investment in Thailand???

The reports at the time I wrote that post were that Land and house department stopped registering land transfers involving companies with Foreign shareholders...Now it seems that the land offices refused, basically because they themselves had no clue how to interpret the letter from the Ministry of Interior...

I only stated that according to a poll on this website 23% of the homeowners went the company way...

In very specific area's where the main selling target are foreigners (Pattaya, Phuket, Samui,...) this is a big enough percentage to influence prices....

Main reason not only the legality of these purchases, but the sentiment of the prospective buyers, especially after for example the Bangkok post published an article in their business section, with the header clearly printed on their front page...

Never did I say that Thailand did something that would collapse the property sector, but in these specific Farang orientated areas it will have a profound impact...

I'm still convinced that this will result in a micro bubble burst... Even if it all proved to be a storm in a glass of water, it will take some time for the market to regain some momentum.

This probably is not too bad either, depending on who you ask...

Noel,

Source of my info was a lawyer in the employment of the government department called Land and House (Com Tie Din).

Wen they just received that letter they were close to shitting their pants, since it was them who approved all these previous transfers for those bogus companies/Farang land developers...

Now the sentiment has changed a bit to limiting all future transfers by from now on checking the Thai shareholders on their financial contributions in the company.

Still, even though Sunbelt Asia reported transactions without the need for these Thai shareholders to prove anything, there are also other land offices simply refusing transfers for any Co.Ltd, until they have a bit more guidance to what and how they have to check...

[Mobi]

Poppa, where in my post did I state that Thailand blocked all incoming investment in Thailand???

The reports at the time I wrote that post were that Land and house department stopped registering land transfers involving companies with Foreign shareholders...Now it seems that the land offices refused, basically because they themselves had no clue how to interpret the letter from the Ministry of Interior...

I only stated that according to a poll on this website 23% of the homeowners went the company way...

In very specific area's where the main selling target are foreigners (Pattaya, Phuket, Samui,...) this is a big enough percentage to influence prices....

Main reason not only the legality of these purchases, but the sentiment of the prospective buyers, especially after for example the Bangkok post published an article in their business section, with the header clearly printed on their front page...

Never did I say that Thailand did something that would collapse the property sector, but in these specific Farang orientated areas it will have a profound impact...

I'm still convinced that this will result in a micro bubble burst... Even if it all proved to be a storm in a glass of water, it will take some time for the market to regain some momentum.

This probably is not too bad either, depending on who you ask...

Noel,

Source of my info was a lawyer in the employment of the government department called Land and House (Com Tie Din).

Wen they just received that letter they were close to shitting their pants, since it was them who approved all these previous transfers for those bogus companies/Farang land developers...

Now the sentiment has changed a bit to limiting all future transfers by from now on checking the Thai shareholders on their financial contributions in the company.

Still, even though Sunbelt Asia reported transactions without the need for these Thai shareholders to prove anything, there are also other land offices simply refusing transfers for any Co.Ltd, until they have a bit more guidance to what and how they have to check...

Hi Monty,

I must admit I was scratching my head trying to track down this statement you allegedly made about "Thailand stopping all investment coming into the country". I thought: here's me, away for a couple of days and poor old Monty has cracked up!

Maybe its poppa having a 'senior'moment, like Mobi has from time to time.

I think its far too early to see exactly how this enforcement of the law will end up in practice.

Please correct me if I'm wrong, but I'm almost positive that when they changed the law forbidding Thai wives of foreigners from owning land, didn't they also have a similar rule whereby the wife was required to prove that the money had not come directly from her husband? in other words, it has to be money that she has earned in her own right? If I'm correct, it is similar to the Thai shareholder rule. Now, has anyone heard about wives being examined to check the source of their money before getting the land registered?

It would be interesting to know what the agents, developers and lawyers are saying about this, across the highways and bi ways of Pukhet, Koh Samui, Pattaya and other places. Maybe members could let us know what the "word is on the street".

Personally, I am very interested in two aspects of this crack down.

1. Will the authorities come after farangs/farang 49% companies who have "illegally" acquired land? If so, what will happen? Will they confiscate the land? Will they order it sold by public auction? Or what? It seems to me very unlikely that any of this may happen, but who knows?

2. Can existing companies that already own land, transfer the farang held shares to Thais? What sort of cost would this involve - I am thinking here of tax.

It would be nice to hear what the "experts"out there are saying, and how they think the whole thing will pan out in the long run.

BTW - if the farangs do lose their houses, there's a lot of potential law suits out there against all the local "Somchais the lawyer" and maybe even some bigger fish?

I will repeat the above on the other thread that is running on this subject.

Edited May 31, 2006 by Mobi D'Ark

[Lazy Sod]

When I started this thread it was because I was considering buying a 2nd property in Pattaya (I already "own" a house in another part of Thailand, using the Company method). I guess it's no surprise to anyone that in light of the recent news I have abandoned the idea. How many others are like me I wonder, and what's it gonna do to the already precarious property market. I can only hope that this is one of the Thailand "clampdowns" which normally fizzle out in a few weeks or months.

[RAZZELL]

I bet 20 baht that nothing happens...

[george]

This topic continues here:

http://www.thaivisa.com/forum/index.php?showtopic=70987

[gharknes]

greedy just became nightmare..............

want to buy a property to live in.....fine

want to buy land and build lots of properties for extreme profits.....think again, foreign realestate just took a 180

i hope they investigate existing owners and apply the rules retrospect

http://www.thaivisa.com/forum/index.php?sh...36entry768136

[sattahip]

Don't you all think this is thread has gone awry.

First the real driver of Pattaya is the phenomenal growth of industry here, both manufacturing and tourist. Please also note that the tourists that count aren't European at all but Asian and you wont see them in Soi 8 or the like or at Jomtien beach. They are out shopping up a storm and the local economy with it.

Pattaya is now a city of over 1million and growing fast in my estimation. I guess 5000 a year more or less of European residents hardly effects anything but the very top end, which is, in the scale of things, minute.

The long term prospects for the Eastern Seaboard are very, very good.

As for the company ownership brouhaha, we all know it will pass and besides there are ways around it if you choose such as a lease, a company with all Thai shareholders where the alien holds blank signed share transfers and so on.

Calm down and realise that the market has levelled off a bit, that there is a lot of ill-built crap on the market which will never move, good times or bad, but otherwise this is a very attractive market for a long term buyer of good property.

[Pakboong]

Rimmer, I have spent a considerable amount of time researching a way to own a house. I'm sorry now that I deleted all the information. It is still available if you spend some time looking for it. To sum it up the law specifically states that forming a company for the purpose of a farang owning a house is NOT legal. There is one legal way but it limits you to no more than one rai and it involved a very large investment. I too have bought land here in the Kingdom and would have liked to have been protected BUT I was forced to forget it and it is in my wife's name. I figured if worse comes to worse it would be gone anyways so why pay for a bogus company, pay an accountant and file tax returns. My condo and car are in my name and were both bought before we married.

What is to resarch if Farangs cannot own houses in Thailand