|
Not really a scam - just a way to squeeze significant extra profit due to the value-add of the freehold title. This is similar to charging a premium for identical units on higher floors, or with seaviews. Same floorplan, fittings and finish, but additional real (or perceived) value due to position in a building or other intangibles. In fact, the freehold title can provide more real value than a seaview unit (for the premium price paid), because a unit that's seaview today may not have a seaview a year from today. Just look around Patong and it's easy to see how new construction projects are eliminating the sea views that existing units formerly had.
I think that charging a premium for the freehold units is relatively new (within the past couple of years). I know of several projects for which there was initially no difference in price for freehold versus leasehold. The trend started when a small number of developers began to charge premiums for their freehold units, and soon after, others followed suit.
For the 51% of the units in foreigner-oriented projects that cannot be sold freehold to foreigners, most of these are held by the developer's company and sold as leaseholds. I believe that in some cases, the remaining units are sold freehold to Thais or legitimate Thai companies, who in turn may sell leaseholds to foreigners.
One thing to consider is that while most developers talk about a 30+30+30 (total 90 year) lease for a leasehold, there's been a lot of discussion as to whether Thai law will recognize the commitment for the additional two 30 year extensions. Only a single 30 year (maximum) lease period can be registered with the land department. In my mind - assuming that the extensions will actually be granted is somewhat of a gamble. The developer's company could go bankrupt, or be sold to someone with a different business agenda. It seems foolish to assume that the same developer, company and attitude toward extending leases will be in place after the initial 30 year lease period ends, knowing that the courts may not uphold your right to extensions if later, the owner of the freehold title refuses to honor the extensions. Developers and their legal assistants tend to write a lot of things into contracts that probably cannot be upheld under Thai law.
One final thing to consider is re-sale. I don't have any personal experience with this, but I would imagine that it would be fairly difficult to sell a leasehold unit for which the clock has been ticking for more than a few years in the initial 30 year lease.
For these reasons, a freehold unit is simply more valuable than an identical leasehold unit. Unfortunately, the developers have discovered this, and adjusted their pricing accordingly. For them, its like "found money" - more profit at zero cost.
|