Banks Are Freaking Out!

[johnnyk]

" Then another expert obviously 'in the know' adds in nonsense about condos and 30-year LHs obviously having no clue that falangs can own condos outrright in their own name, nothing whatsoever to do with LHs as land is not involved "

johnnyk your comments above disturb me because they confirm that there must be a number of

foreigners and maybe Thais's for that matter who don't understand the nature of buying a leasehold

condominium. Yes a foreigner can own the condo outright but if the building is sitting on leasehold land as Nawtilus correctly said " at the end of 30 years, anything can happen " and don't forget TIT

midas,

thanks for that. i like to think i can learn something every day and i just did.

it never occurred to me that some condos could be on leased land.

[bkkandrew]

I have not read so much rubbish in a long time!!

The first premise of "I know someone - nudge nudge, wink wink - is so laughable it is not worthy of comment.

Posts of derision that follow, stating that exodus of funds for various reasons do not matter to an economy, are devoid of economic sense and knowledge.

Fundamentals:

1. Scaremongering without facts, examples or quotes is just that - scaremongering.

2. Economies are complex beasts. Small decisions do matter. It does not take a large percentage of one currency to be converted to another to create a self-perpetuating collapse. For this example study GBP withdrawel from EMS in 1992, Russian currency crisis and debt default in 1998, Argentina's debacle soon after... ad infinitem...

[johnnyk]

I have not read so much rubbish in a long time!!

The first premise of "I know someone - nudge nudge, wink wink - is so laughable it is not worthy of comment.

Posts of derision that follow, stating that exodus of funds for various reasons do not matter to an economy, are devoid of economic sense and knowledge.

Fundamentals:

1. Scaremongering without facts, examples or quotes is just that - scaremongering.

2. Economies are complex beasts. Small decisions do matter. It does not take a large percentage of one currency to be converted to another to create a self-perpetuating collapse. For this example study GBP withdrawel from EMS in 1992, Russian currency crisis and debt default in 1998, Argentina's debacle soon after... ad infinitem...

Well first, how many falangs resident in Thailand who aren't on WPs sponsored by western companies?

Let's be generous and say 50,000.

Second, how much money is in those falang bank accounts?

Let's be generous again and say US$50K each.

That's US$2,500,000,000 (2.5 billion) tops.

Thai GNP as of 2001 (CIA factbook) was US$525,000,000,000 and would be more today.

So that's under .00476% of Thai GNP, much less than half of one per cent. Taking it away isn't going to hurt much because its spread around and won't all disappear in one day.

Small decisions?

Well, the UK going out of the EMS was a government decision to uncouple an entire major economy from a currency agreement. The money was not converted into anything and it didn't go anywhere. Economy didn't collapse either, it got stronger (compare it over tghe past decade with France, Germany & Italy).

The Russian currency crisis was because a large and strategically important country DEFAULTED on huge bond debts. Samesame Argentina.

None of these are the same as a relatively small number of individuals closing down their chequing accounts and going home.

[thaigene2]

First off, I must say sorry for the shrill OP.

It was a frustrating day with the banks following negotiations on a condo (not a leasehold by the way)....coupled with a few too many whiskies

So a better explanation is due.

This particular branch has extensive experience in lending to foreigners for property purchases, and had for around 2 years been approving loans to foreigners for land/house purchse thru Thai wives (including those not working - with the foreigner guaranteeing thru inbcome alone- no collatoral). They had also been lending (as indicated in the original inebriated post) for condo purchases directly in the foreigner's name. (e.g. The issue of the Thor Thor 3 was a separate issue..you just make sure you've got enough to cover the purchase price for your trip to the Land Office - then send your money back home).

I'm also aware that other TV members have managed to get loans thru wife's name or even for their own condo purchases in the foreign name.

But that has all changed - or at least is being strictly enforced now, and the BOT directive to the banks (according to this bank manager - in whom I have every faith) is that no more loans to foreigners for any reason. And no loans via the Thai wife either - unless she's a professional and earning big coin in her own right.

So there are the details as requested.

As for the issue some raised about Leasehold condos - I've only seen a couple. And I agree with the above posters. I think they are a bad investment and I have already seen some speculators trying to off load them (Is the building called Urbana?) with the adverts saying "29 years remaining" - does that mean a 15 million baht condo depreciates at 500,000 baht per year? Maybe this accelerates as the years pass?

Why anyone would pay almost the same amount for a 30 year leasehold as they would for a Freehold (condo or house) is beyong logic to me - sober or otherwise.

[Firefan]

Thaigene; thanks for clarifying - and appreciate the honesty. It does indeed seem like rules affecting foreigners here keep changing (to the worse) almost on a daily basis....

Wonder whether that also apply to the loan via Bangkok Bank Singapore arrangement for WP/big salary holders that got started just 1-2 years ago?

Cheers!

[thaigene2]

Thaigene; thanks for clarifying - and appreciate the honesty. It does indeed seem like rules affecting foreigners here keep changing (to the worse) almost on a daily basis....

Wonder whether that also apply to the loan via Bangkok Bank Singapore arrangement for WP/big salary holders that got started just 1-2 years ago?

Cheers!

Firefan

A friend of mine was telling me about the Bangkok Bank Singapore issues - and I checked myself. They have raised the bar to 12 million now. Still ten year repayment..I figured it out and it seemed that monthly payments would be in excess of 100,000 baht. In other words, only people that are earning huge money - or already have it stashed overseas (e.g. don't want to expose that much of their money in the Thai egg basket) but could afford to pay the big monthly repayments were being considered. How many people are prepared to drop 200-300,000 cash on the table to buy a place here? Many I guess..but?

The Officer at the bank there had said that the 'situation was very unstable' and added that the whole thing may get pulled down. That was a week or so before the recent political events here. I am unclear on what was meant by 'unstable' - whether that referred to things in general or the Bank of Thailand's view of foreigners buying property/condos in Thailand.

You're right the whole thing is getting out of hand and it's very unsettling for foreigners - it seems to be an ever-changing and increasingly hostile policy. More to the point, if you're not of retirement age, tighter visa rules also mean you have no way of knowing whether you would even be able to live in your property a year or two from now (except as a tourist - 180 days a year max). Maybe that's what the Banker was referring to? I don't know. But you can see why a bank would be reluctant to lend to foreigners if they happend to know (in advance) that an anti-foreigner sentiment was building. Why not just play all their cards and then we can get on with moving on up - or out and be done with it.

[Cyberstar]

First off, I must say sorry for the shrill OP.

It was a frustrating day with the banks following negotiations on a condo ....

So - one can conclude the banks aren't more stupid than the rest of us ... Why would a bank grant even a 20% loan on some property that in a few years might not be much but some concrete construction in an area resembling a ghost town, not even the bums would dare to stay in after dark ? ...

[Richard W]

2. Economies are complex beasts. Small decisions do matter. It does not take a large percentage of one currency to be converted to another to create a self-perpetuating collapse. For this example study GBP withdrawel from EMS in 1992, Russian currency crisis and debt default in 1998, Argentina's debacle soon after... ad infinitem...

Small decisions?

Well, the UK going out of the EMS was a government decision to uncouple an entire major economy from a currency agreement. The money was not converted into anything and it didn't go anywhere. Economy didn't collapse either, it got stronger (compare it over tghe past decade with France, Germany & Italy).

The UK withdrawal from the EMS was only a government decision in that it was either that or see massive business and personal bankruptcies as a result of the necessary interest rate increases. (10% to 15% was not enough.) The UK government viewed withdrawal as a defeat.

[backflip]

"does that mean a 15 million baht condo depreciates at 500,000 baht per year?"

That's exactly right, and it's the reason that I didn't consider a leasehold property. At the end of lease term, the property owner can either extend the lease or not. If the lease is not extended, the building must be vacated. If the lease is extended, you'll need a bucket of cash (or a mortgage), to pay for the new lease. I inspected the Sky Villa leasehold condos closely, and it reminded me of a stage set. The condos were impressive but, looking at the fitout quality, if was obvious that the developer had cut many corners - making it as cheap as possible - assuming that the lease would not be renewed. Now, if the lease is renewed, these condos will need substantial repair and updating to make it through the new lease period.

[subzone]

Just a thought!!!

Lease hold may be of interest to those retiring ie not investing. They could live out thier days in the place without caring what happens to it after.

I am sure that Thai's never said we could come and own land and set up small falang controlled business - These have always been achieved by exploring loop holes in Thai law.

Since the Thai census / Survey system and results are unreliable to non existant. The true impact that foreign (Western) savings, small biz and property investment have on the economy in Thailand is pure guess work and so pointless to debate due to lack of facts available.

For the record I don't agree with poorly thought out, reactive and yes xenophobic methods such as those employed by Thailands officialdom, however Many foreigners do over estimate thier importance and impact on Thailand. The measures will produce a positive result from a Thai point of view. It's just a shame that some who do contribute positively will be caught in the cross fire.

"If the bow doesn't bend - it will break"