What Is To Become Of Leasehold Residential Properties?

[trogers]

The first wave of leasehold residential properties in Bangkok are now passed their halfway lease lives.

 

What is the trend line of their property values for the next decade compared to rising asking prices of freehold condos?

 

Would they face similar problems like the leasehold properties in the UK?

 

UK Mulls Banning Leasehold Properties

 

 

Edited July 26, 2017 by trogers

[KittenKong]

5 hours ago, trogers said:

The first wave of leasehold residential properties in Bangkok are now passed their halfway lease lives.

 

Halfway. Is that 15 years out of 30?

 

I've never seen any attraction in leasehold property, especially here where leases are so short, but many condos are apparently sold leasehold in Phuket. I suppose I might consider a 999 year lease if the place was really special.

[Senechal]

There was just recently some movement on the possibility of 99 year leases.  (Although it's still just in the proposal stage).

 

http://www.nationmultimedia.com/news/national/30313134

 

This would opens the door for meaningful leasehold investment (30 years was kind of a joke) in non-juristic properties.

 

For some 99 years wouldn't be enough. For me it's more than fine. And it's easily resellable after a few years. Plus, how many buildings in Thailand will even last 99 years?

 

It all depends on the contract though. In the UK, land owners can raise the rents ex post facto which is basically a scam.

Edited July 26, 2017 by Senechal

[KittenKong]

1 hour ago, Senechal said:

For some 99 years wouldn't be enough. For me it's more than fine. And it's easily resellable after a few years. Plus, how many buildings in Thailand will even last 99 years?

 

The land will last more than 99 years (unless you live on the edge of an eroding cliff, or in some sinking area).

 

[dotpoom]

9 hours ago, KittenKong said:

 

Halfway. Is that 15 years out of 30?

 

I've never seen any attraction in leasehold property, especially here where leases are so short, but many condos are apparently sold leasehold in Phuket. I suppose I might consider a 999 year lease if the place was really special.

I suppose if you're in your 60's you would have a house for life?

[KittenKong]

29 minutes ago, dotpoom said:

I suppose if you're in your 60's you would have a house for life?

 

Yes, but I would also have a house for life if I bought freehold. And when I died I could leave the freehold to my family or friends or anyone I choose. And if I decided in my 80s that I wanted to go elsewhere I could sell the freehold and use the money to buy something else or pay my rent with it (or even pay my care home fees). I would not be able to do any of that with a lease with just a few years left on it.

 

Buying short leases (ie less than several hundred years) just seems like a bad choice to me, unless they are priced accordingly. Here 30 year leases seem to cost as much as a freehold, which is insane.

[trogers]

From the view point of investment in Thailand, a 30-year leasehold property loses out to a freehold condo in two aspects:

 

1.  Leasehold relies on annual increase in rental value which does not occur here

 

2.  Freehold enjoys increase in land value even when rents don't increase.

 

The divergence in property values between the two forms of ownership may be estimated at 4 times after 15 years.

 

Leasehold having only half the value, while freehold doubles in value.

[little mary sunshine]

20 years before end of lease....almost worthless!!

[3421abc]

Just look at the leaseholds  people are trying to sell around ratchadamri. Some towers in this area were built in mid 90s so there is little value left of the leasehold. Nobody buys.

20 million condo selling for 9 million, I think about 7 yrs left on the leasehold

[IAMHERE]

13 hours ago, KittenKong said:

 

The land will last more than 99 years (unless you live on the edge of an eroding cliff, or in some sinking area).I've read where Bangkok is sinking.

 

 

[Senechal]

12 hours ago, trogers said:

From the view point of investment in Thailand, a 30-year leasehold property loses out to a freehold condo in two aspects:

 

1.  Leasehold relies on annual increase in rental value which does not occur here

 

2.  Freehold enjoys increase in land value even when rents don't increase.

 

The divergence in property values between the two forms of ownership may be estimated at 4 times after 15 years.

 

Leasehold having only half the value, while freehold doubles in value.

 

Agreed. Although that math would change pretty radically on a 99 year lease.

 

After 15 years you can easily still sell a 99 year leasehold at a large increase in value. 

 

If this comes to pass (which is a big 'if') it's going to open up a whole lot of opportunities for foreign investors. IMHO, with the current level of household debt, they won't have a choice. They need to remove some of the debt burden for new growth, and an enormous amount of that household debt is tied to properties which farangs can't invest in. 99 year leases are one good solution -- and they don't screw up the country over the long term.

[trogers]

24 minutes ago, Senechal said:

 

Agreed. Although that math would change pretty radically on a 99 year lease.

 

After 15 years you can easily still sell a 99 year leasehold at a large increase in value. 

 

If this comes to pass (which is a big 'if') it's going to open up a whole lot of opportunities for foreign investors. IMHO, with the current level of household debt, they won't have a choice. They need to remove some of the debt burden for new growth, and an enormous amount of that household debt is tied to properties which farangs can't invest in. 99 year leases are one good solution -- and they don't screw up the country over the long term.

Doubt that 99-year lease would ever be allowed, like the List 3 in the Foreign Business Act that has existed for more than half a century.

 

Thai professionals in real estate know the impossibility of 99 years, and are now proposing 50 years.

[William C F Pierce]

22 hours ago, Senechal said:

There was just recently some movement on the possibility of 99 year leases.  (Although it's still just in the proposal stage).

 

http://www.nationmultimedia.com/news/national/30313134

 

This would opens the door for meaningful leasehold investment (30 years was kind of a joke) in non-juristic properties.

 

For some 99 years wouldn't be enough. For me it's more than fine. And it's easily resellable after a few years. Plus, how many buildings in Thailand will even last 99 years?

 

It all depends on the contract though. In the UK, land owners can raise the rents ex post facto which is basically a scam.

In the UK I have a lease for 999 years and the land rent is fixed at £8.40 for the whole of this period. Known as a peppercorn rent. So not all land owners can raise the rents. It depends on the original contract set up when it was first built. 

[scubascuba3]

31 minutes ago, William C F Pierce said:

In the UK I have a lease for 999 years and the land rent is fixed at £8.40 for the whole of this period. Known as a peppercorn rent. So not all land owners can raise the rents. It depends on the original contract set up when it was first built. 

My flat in Scotland is freehold, the Scots realised a long time ago that leasehold flats and houses was just a scam

[William C F Pierce]

9 minutes ago, scubascuba3 said:

My flat in Scotland is freehold, the Scots realised a long time ago that leasehold flats and houses was just a scam

How do you think £8.40 a year is a scam. A lease property is much cheaper than freehold. the increase in property value over time more than covers the £8.40 cost(I have had it since 1982). A SCAM is an illegal action where you the lose money on a scheme and don't see much chance of getting it back.

[scubascuba3]

19 minutes ago, William C F Pierce said:

How do you think £8.40 a year is a scam. A lease property is much cheaper than freehold. the increase in property value over time more than covers the £8.40 cost(I have had it since 1982). A SCAM is an illegal action where you the lose money on a scheme and don't see much chance of getting it back.

Maybe you aren't aware of the current issue in England where houses are being sold leasehold with ground rent expected to go up from circ £1k a year to £10k a year within a number of years

[William C F Pierce]

5 minutes ago, scubascuba3 said:

Maybe you aren't aware of the current issue in England where houses are being sold leasehold with ground rent expected to go up from circ £1k a year to £10k a year within a number of years

The terms and conditions are written at the time of its initial completion. Some do allow for rising rents. Commercial property companies operate this way in buying properties, much in line with the same sort of contrcts as business properties they own. Some propertioes have fixed rents like mine for the life of the lease (999 years).

[tryasimight]

18 hours ago, William C F Pierce said:

The terms and conditions are written at the time of its initial completion. Some do allow for rising rents. Commercial property companies operate this way in buying properties, much in line with the same sort of contrcts as business properties they own. Some propertioes have fixed rents like mine for the life of the lease (999 years).

999 years?

Interesting to see how that pans out. Let me see what has happened in the UK in the last thousand years...........?

[Senechal]

13 hours ago, tryasimight said:

999 years?

Interesting to see how that pans out. Let me see what has happened in the UK in the last thousand years...........?

English, actually.

[William C F Pierce]

On 28/07/2017 at 11:38 AM, tryasimight said:

999 years?

Interesting to see how that pans out. Let me see what has happened in the UK in the last thousand years...........?

999 years? Yes you are reading it right. The rent of the land at £8.40 is virtually rent free. The laws governing leases did not exist 1000 years ago. They came into being with the industrial revolution 200 to 300 years ago. My lease is dated from 1958, so I am not worried what happens in 900+ years into the future, because I can sell for a profit at anytime I choose. A 999 year lease is as secure as a freehold, but at a cheaper price to buy.

[tryasimight]

16 hours ago, William C F Pierce said:

999 years? Yes you are reading it right. The rent of the land at £8.40 is virtually rent free. The laws governing leases did not exist 1000 years ago. They came into being with the industrial revolution 200 to 300 years ago. My lease is dated from 1958, so I am not worried what happens in 900+ years into the future, because I can sell for a profit at anytime I choose. A 999 year lease is as secure as a freehold, but at a cheaper price to buy.

Nice work

[Destiny1990]

28 minutes ago, tryasimight said:

Nice work

Well here u will get 30 years the difference is 969 years only.

[trogers]

2 minutes ago, Destiny1990 said:

Well here u will get 30 years the difference is 969 years only.

Perhaps a study to compare the difference among 30, 50 and 99 years would be useful.

 

A third of the public housing in Singapore is approaching half of the 99 years. Anyone has info on this?

[tryasimight]

What's nine centuries between friends?

Assuming the Muslims win...then the Christians win again it's all good ...unless  aliens land .....or we all die from global warming....or...or...or somebody simply says no and the lease is terminated.

Compulsory acquisition.

900 years is quite a long time.

Even for a TVF member.

[tryasimight]

1 minute ago, trogers said:

Perhaps a study to compare the difference among 30, 50 and 99 years would be useful.

 

A third of the public housing in Singapore is approaching half of the 99 years. Anyone has info on this?

I guess 33.333% percent of Singaporeans do. The majority of posters here? Nah.....nuffink.

[scubascuba3]

Are condos leasehold in Thailand? How many years usually? I've not seen it discussed on other threads

[inThailand]

Take a clue from the Chinese, they are not buying something they cannot own. Ever hear of a Japanese or Singaporean buying here?

Nada!!!

 

[KittenKong]

28 minutes ago, scubascuba3 said:

Are condos leasehold in Thailand? How many years usually? I've not seen it discussed on other threads

 

Thai residential leases are for 30 years and have to be renewed after that time.

 

In some areas (Phuket mostly, and Bangkok) leasehold seems to be quite common. In other areas like Pattaya they are very rare.

 

Personally I see no merit in a 30-year lease, especially as prices for them often seem to be around the price one might pay for a similar freehold condo.

Edited August 2, 2017 by KittenKong

[trogers]

2 hours ago, scubascuba3 said:

Are condos leasehold in Thailand? How many years usually? I've not seen it discussed on other threads

Leaseholds are called apartments.

 

All condos are freehold with title deeds.

[trogers]

7 hours ago, tryasimight said:

I guess 33.333% percent of Singaporeans do. The majority of posters here? Nah.....nuffink.

 

7 hours ago, trogers said:

Perhaps a study to compare the difference among 30, 50 and 99 years would be useful.

 

A third of the public housing in Singapore is approaching half of the 99 years. Anyone has info on this?

 

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