Ho Brokenheart,
I found this on Thai Visa .... Hope this helps
Domi
Better rent than buy condominium in Thailand
In recent weeks I have received several enquiries with regard to
buying real estate property. These have inevitably been from a
middle-aged (or older) expatriate who has decided to settle in
Thailand with the girl of his dreams that he met last month or the
month before, who loves him so much that sheıs leaving her place of
work in Soi 8 or Pattayaland Soi 2 to settle down in the nice little
house sheıs found for them somewhere along Jomtien Beach.
Usually, the enquirer wants to find out why the property cannot be
held in his own name, and if itıs okay to put it in his girlfriendıs
name.
Some of these enquirers are so naïve that they even ask how they can
obtain a mortgage on the property. ³Oh dear,² I think when I hear
these tales, ³Not another one²
For their own protection
At the height of the currency crisis in 1997, Thailand had agreed
with the IMF to liberalise its laws with regard to foreigners owning
real estate in Thailand.
The matter was debated in parliament and the press at great length,
and the usual jingoistic (some would say xenophobic) statements were
aired that if the protectionist laws were amended, we greedy farangs
would sweep in and buy up all the land in Thailand and exploit the
poor innocent Thais in our typical colonialist fashion.
(I wonder why the fact that Thais or anyone else with money can buy
any amount of landed property in the U.K. or U.S.A. is never aired as
a counter-argument, and neither the British nor Americans seem
terribly worried that their country is going to be taken over by
colonising Asians * but that perhaps is another topic for another
day.)
So the debate went on and on, and announcements were eventually made
that the law was going to be amended to allow foreigners to lease up
to 1 rai of land for up to 30 years, on which to build a residential
property * provided this was preceded by a remittance equivalent to 10
million baht of hard currency from overseas deposited in a bank in
Thailand.
However, like several other politically unpopular bills, this one also
is still pending, as far as Iım aware.
Nonetheless, some local real estate firms trumpet in their
advertisements that foreigners can now own their own property. But
this is just a clever ploy to get you through their doors. The
mechanism which has been used for years to get around this
protectionist law has not in fact changed.
The facts
An expatriate can own a condominium in his own name provided not more
than 40% of the apartments in the condominium complex are owned by
foreigners. That has been the case for a long time already.
But if you want to buy a house or land, an expatriate can only do so
through a legally registered company, of which a single expatriate
cannot own more than 39% of the shares (recently amended from 33%),
and collectively not more than 49%.
You also need at least six Thai partners to hold the remaining shares
(although you can go a long way to protect your interests by being the
sole authorised signatory and ensuring these local partners sign their
undated resignations and share transfer deeds at the time of setting
up the company.)
Of course, you could avoid the costs & hassle of setting up a company
by putting the house in your wife/girlfriendıs name. This will
undoubtedly make her very happy * even happier than the visits you
made to her favourite gold shop and motorcycle shop (which are the
usual precursors to visiting the real estate agency.)
However, what happens a year or two down the road when you have a
major disagreement about something, or her Thai husbandı shows up
(they all seem to have them squirreled away somewhere)? You, like so
many before you, may find yourself standing on Jomtien Beach with only
your passport in one hand and a bag of clothes in the otherand your
life savings gone.
Getting a mortgage
In U.K., U.S.A. or Europe, getting a mortgage on a property is almost
taken for granted. Few people are in a position to buy a property for
cash on the table.
The relatively low price of property in Thailand means that many
expatriates who decide to settle here are tempted to buy a residential
property, or a shophouse for their girl-friend to run a travel agency,
beauty salon, snooker hall or beer bar on the ground floor, while they
love * I mean live * upstairs.
Some of the more naïve ones imagine that they can just march into a
local bank and get a mortgage on the strength of the property and
their personalı guarantee on behalf of their girlfriend.
Sorry, but that isnıt going to happen.
Unlike in the West, where the title to the property guarantees the
bank in the event of default, and an endowment or insurance policy its
money in the event of the borrowerıs dying, laws in Thailand to help
banks recoup bad debts were only implemented last year, and the
efficiency of the court system is such that it could take up to 10
years to recoup defaultersı bad debts.
Banks are not interested in holding real estate on their books, since
this is a non-performing deadı asset; they want to recover the money
they lent, to lend it to someone else and earn interest on the loan.
Understandable, since theyıre in the money business, not the real
estate business.
Look at the numbers of non-performing loans (still around 43% of total
loans issued by local banks), and the high percentage of mortgage
defaulters, and that might give you some inkling why banks here have
virtually stopped offering new mortgages on real estate.
In Europe, banks can seize collateral property and sell it on fairly
quickly. Here, in a depressed property market, even auctions have
proven less than totally successful in moving those real estate
properties which banks have been able to repossess against defaulting
loans. More often than not the few meagre bids have not reached the
bankıs reserve price, and the bank simply withdraws the property from
the auction.
Obtaining a mortgage anywhere will depend largely on the ability of
the borrower to repay the loan. This will be evaluated by the lending
institution on the basis of stability of employment income and past
credit record.
Nowadays, even local business people with good credit records are
having great difficulty obtaining mortgages. Typically, they have to
show they have at least the value of the mortgage on deposit in the
bank already, and are prepared to keep it there as collateral.
So if youıre prepared to deposit the value of the property in the bank
* in her name, of course * she might be able to get a mortgage if she
has a good employment record and her regular salary is sufficient to
repay the loan. And of course the property then has to be in her
rather than your name.
But to imagine that an expatriate boyfriend (who could leave the
country any time) will be accepted by any bank as guarantor of a
mortgage being applied for by a local lass whose employment record
comprises working in a go-go bar for a year or two, and whose average
bank balance has been perhaps 400 baht a month, is naïve in the
extreme.