Selling A Property On A 30 Year Lease

[JackBurton]

Hello

I am thinking of buying a house on 1 rai. The 30 year lease option is what I would probably use.

My question is if or when I want to sell the property how do I go about it as a lease suggest that I don't have the right to sell.

Many thanks in advance.

[taninthai]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

[falkan]

hehe good luck find a buyer for that =)

[Khun Jean]

The answer is easy Jack.

You supposed to live on that property for 30 years. You probably need to pay the whole 30 years lease upfront, should be a good indicator of what you get into.

If you move say in 10 years or so (use your past moving house history as an indicator) then say goodbye to that 20 years 'rent' you paid too much. However if it is very very cheap those 10 years or so could be worth it.

You might be able to sublease it, but i guess that 'clause' not 'real right' is not in the contract also. Landowners are not really happy with a clause like that.

Still when in that situation it is better then nothing.

Edited December 28, 2012 by Khun Jean

[PattayaPhom]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

[Sharp]

Don't comment if ya don't know the laws

Sent from my iPad using ThaiVisa app

[DrFloyd]

Just don't do it .

[taninthai]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

Yes off coarse they do my flat in London is leasehold the difference being it's a 999 year lease,you try selling a 30 year lease in the uk it aint gonna happen.

I wish they did sell 30 year lease in uk I would sell my flat tommorow at the age of 40 and get it back at 70 years old ready to sell again.

Edited December 28, 2012 by taninthai

[TommoPhysicist]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

Not when the lease is as short as 30 years, and you have used 10 of them, different if 99 or 999 year lease.

No Thai would ever buy it, so that's most of your potential sales market gone, foreigner would want new 30 year lease, so that's the rest gone.

[Khun Jean]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leasehold properties that are commercial or residential, yes its a lease and yes they are sold on.

Of course they are sold on and unless they are on prime locations they go cheaply. They must however in practice be renegotiated with the owner.

You can include a clause that the lease can be transferred but that is not a real right and very easy to circumvent for the owner.

When money is involved the urge to circumvent is pretty high.

You would be depended on the good will of the owner. A risk someone can take, i would not.

Now if you have a 30 year lease (the OPs question) and you pay monthly or yearly that would be a better position to be in to be able to transfer a lease as the owner would not like to be without income, but even then you are depended on the owner.

I would suggest that if you know from your own experience that living in one place is not your thing, don't buy just rent.

If you are someone that can shoot roots easily then have a usufruct because why settle for 30 years if it can be longer and a lot cheaper too as no taxes need to be paid.

Edited December 28, 2012 by Khun Jean

[bartender100]

To the OP also be very careful of which agent, lawyer and advisor you use, there are some extremely dodgy Farangs around in the property and legal profession.

They will tell you anything you want to hear to get a sale, and have no comeback

[davejones]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

Yes off coarse they do my flat in London is leasehold the difference being it's a 999 year lease,you try selling a 30 year lease in the uk it aint gonna happen.

I wish they did sell 30 year lease in uk I would sell my flat tommorow at the age of 40 and get it back at 70 years old ready to sell again.

Not true at all. I've seen quite a few condos for sale in London, with some leases as low as 20 years. And they sell for £500k+. That can still be a bargain compared to renting for 20 years. The condos will sell right up until the lease expires. Even with a year left it will have some value.

If you want to sell a 30 year lease there is nothing to stop you from doing it. If you're in a prime location then it will sell. Plenty of older people would love to get a cheaper 30 year lease property in a prime location.

Edited December 28, 2012 by davejones

[davejones]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

Not when the lease is as short as 30 years, and you have used 10 of them, different if 99 or 999 year lease.

No Thai would ever buy it, so that's most of your potential sales market gone, foreigner would want new 30 year lease, so that's the rest gone.

Not all foreigners would want a 30-year lease. If you were planning to stay somewhere for 10 years, then you'd want a 10-year lease. There's nothing magical about 30 years.

[taninthai]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

Yes off coarse they do my flat in London is leasehold the difference being it's a 999 year lease,you try selling a 30 year lease in the uk it aint gonna happen.

I wish they did sell 30 year lease in uk I would sell my flat tommorow at the age of 40 and get it back at 70 years old ready to sell again.

Not true at all. I've seen quite a few condos for sale in London, with some leases as low as 20 years. And they sell for £500k+. That can still be a bargain compared to renting for 20 years. The condos will sell right up until the lease expires. Even with a year left it will have some value.

If you want to sell a 30 year lease there is nothing to stop you from doing it. If you're in a prime location then it will sell. Plenty of older people would love to get a cheaper 30 year lease property in a prime location.

Yep true enough there are few places with short leases to buy in the uk the difference being in the uk they go for a fraction of the cost and tey still dont really find buyers for them ,thailand they seem to want you to pay full value for what is really 30 years rent in advance.....crazy in my opinion but I'm a youngish guy for the older guys the 30 year lease is not so bad as most of them will be dead before the lease expires anyway.

[Khun Jean]

Bit difficult to sell something you don't actually own ,but quite possible only in Thailand of coarse.

Many countries have leashold properties that are commercial or residential, yes its a lease and yes they are sold on.

Not when the lease is as short as 30 years, and you have used 10 of them, different if 99 or 999 year lease.

No Thai would ever buy it, so that's most of your potential sales market gone, foreigner would want new 30 year lease, so that's the rest gone.

Not all foreigners would want a 30-year lease. If you were planning to stay somewhere for 10 years, then you'd want a 10-year lease. There's nothing magical about 30 years.

The 'problem' in Thailand is that normally the house and land is for sale, so the owner want to get the amount that he would normally get when it is sold. Now if a foreigner wants to buy it you have a 'problem', one solution is to pay the same amount for the maximum period that is allowed by law, the famous 30 years. Some owners do that as the amount of money is the same, most of the time with the added cost for taxes to be paid by the buyer.

This will give the foreigner his real right, a lease for 30 years. Any clause added to a contract like that the lease can be transferred or renewed (for an additional amount probably much hgher then for the first 30 years) is only valid against the current owner. If the owner changes all clauses are void. Only the real right (the lease) remains.

If the situation is that after say 10 years you want to sell and the clause is in the contract and the owner is still the same the price would be maybe 50% of what was paid first. Maybe more because of inflation or upgrade of the location. At that moment the owner can get difficult, he already got the full amount once, and with very easy measure he can get the full amount again. If he just transfers his land to a child then the child is the new owner and again the clauses are void. You would then be unable to transfer (sell) the lease.

So in practice when doing this is to count on the lack of knowledge with the owner and his close ones. If one of them finds out how to get out under those clauses you would have nothing to sell and have a choice between remaining, abandoning.

If you have a clause that allows a sublease (again only valid with the same owner) then you could recoup your money over a longer period of time.

Recouping your money at once remains difficult and not predictable as it is absolutely not the same as freehold where you are the one and only real owner.

Edited December 28, 2012 by Khun Jean

[JackBurton]

Thank you for your advice. Especially Khun Jean. You seem to know all the loopholes.

I've been told that when the contracts are signed I can also get the seller to sign a contract for a future sale.This would entitle me to sell the property at a future date. The only problem is when the future sale takes place the land office may want to see the owner in person and then I run into problems. Which is a gamble.

Have you heard of this happening?

The other option I've been contemplating is having the property transferred into a Thai person I trust and have that person sign it over to me on a 30 year lease. That way I have some protection and when it comes time to sell I can have some confidence that I can get a contract of sale signed.

I know the big issue is "a Thai person I can trust". That is something I'll have to weigh up but just concerned with the legalities etc.

Any thoughts?

[Khun Jean]

Thank you for your advice. Especially Khun Jean. You seem to know all the loopholes.

There are not so many loopholes, Almost everything a lawyer suggest is just plain wrong.

Especially the ones that have connections with the developer/agent, the urge to make money is too big.

I've been told that when the contracts are signed I can also get the seller to sign a contract for a future sale.This would entitle me to sell the property at a future date. The only problem is when the future sale takes place the land office may want to see the owner in person and then I run into problems. Which is a gamble.

Have you heard of this happening?

It is not 'may want', the chance of the owner being there will be high and the landoffice will want to see him. Someone can go in the place of the owner but if that paper is older then a few months it looses its credibility and you can be sure a new document signed recently is requested.

Signed undated documents are illegal to start with so going that road is full of troubles and it is easy to spot, old paper different ink, handwriting etc.

The other option I've been contemplating is having the property transferred into a Thai person I trust and have that person sign it over to me on a 30 year lease. That way I have some protection and when it comes time to sell I can have some confidence that I can get a contract of sale signed.

I know the big issue is "a Thai person I can trust". That is something I'll have to weigh up but just concerned with the legalities etc.

"Trust" is the most difficult especially when the amounts are high. Maybe you trust him/her now but that can change in the future.

Any thoughts?

You don't want to have 'Big trouble in little Thailand'

It comes down to accepting what is available. I would not consider a 30 year lease when a usufruct is available for less costs and offers a potential longer period of control over the land.

If a sale in the future is one of your requirements then you need to assess the risks. The worst and a probable outcome would be that you can not sell and are unable to recoup (a part of) your money, still the possibility remains to recoup a small portion of it slowly by renting out. If the owner is a professional like a developer, agent, broker, builder etc you will be more vulnerable then when dealing with a 'normal' owner. It is there profession to extract as much money as possible and they will their best to find ways to do that.

So just be aware that you can not do much without the full cooperation of the owner.

Other options that are available is buying a condo or rent. Both are very straightforward and you get exactly what you pay for. At the moment condos are a little pricey and rents are cheap. Don't be surprised that real estate objects that are for sale for 4-5 million are available for rent around 20000 baht and cheaper.

[dksharron]

You can buy the property and have it put into a Thai name which you know, and then for a 1% land office mortgage registration fee, open a mortgage for the value of the property + 10%.

Then, in 3 years, close the mortgage and do it again, adding 15% to the mortgage, taking into account the increasing value of the land. This will cost you only 1% of the additional increase in the mortgage amount, not 1% of the entire mortgage amount. Continue to do this until you are ready to move, and then let the land title deed holder know you are selling the property, and you will give them a cut for coming into the land office and signing.

If they refuse, then you would sue them for breaking the mortgage contract, the court would take your side, and the property would proceed to auction, and you would receive about 80% of retail value.

If you asked me, I would put it in a company.

[Khun Jean]

If you asked me i would ignore dksharron's post completely.

[comserve]

I looked into this when I first came to Thailand. (4 years ago)

At that time I understood that you could only get a 10 year lease with the guarantee of two extensions. You need to also have a clause to say that you had the right to sell the property at any time during that lease period (assuming you have paid the value of the property up front). In that case the original owner could not refuse to transfer the property when you had sold it.

One restriction however, the local land office director can refuse to register the lease if the owner was related to you.

(I did consider that my wife would "buy" the property & then lease it to me which the local land office director would not allow).

That may have been an action which was a personal one on his behalf. He considered it as a farang buying land!!

I got that info from a web site, the name of which I cannot remember, written by a farang journalist who lived in BKK and kept a blog - c alled something like STICKMAN.COM

[hgma]

Selling property as lessee is only possible if lessor agrees!

For ordinairy Thai prospects not interesting,(can't borrow money on the property)

For a Business person however it could be the perfect match.

As his business can go bust and property with it, a lessee property keeps lessee property bankrupt free.

i sold mine to a business person.

[Khun Jean]

I got that info from a web site, the name of which I cannot remember, written by a farang journalist who lived in BKK and kept a blog - c alled something like STICKMAN.COM

Only use stickman for when you want to get drunk or get laid. Both task are rather effortless in Thailand if you see who is able to pull that off.

All information you got 4 years ago is false.

Edited December 30, 2012 by Khun Jean

[khunPer]

I looked into this when I first came to Thailand. (4 years ago)

At that time I understood that you could only get a 10 year lease with the guarantee of two extensions. You need to also have a clause to say that you had the right to sell the property at any time during that lease period (assuming you have paid the value of the property up front). In that case the original owner could not refuse to transfer the property when you had sold it.

One restriction however, the local land office director can refuse to register the lease if the owner was related to you.

(I did consider that my wife would "buy" the property & then lease it to me which the local land office director would not allow).

That may have been an action which was a personal one on his behalf. He considered it as a farang buying land!!

I got that info from a web site, the name of which I cannot remember, written by a farang journalist who lived in BKK and kept a blog - c alled something like STICKMAN.COM

To my knowledge and as quoted in all known books, you can lease up to three years on a simple contract. Anything beyond three years and up to 30 years have to be registered at the Land Department and tax, stamp etc. paid (about 1½%). Contracts over three years are void, if not registered and tax paid.

I often see property ‘for sale’ with a remaining lease of fx. 20 years. Price will be adjusted thereafter and of course based on location and demand – buyers or sellers market. You may be able to have a transferable lease agreement or a sub-lease agreement. You shall be able to have an option for one only 30 years renewal of the lease (Section 540 of the Civil and Commercial Code), which shall include the agreed terms, but the extension cannot be registered at the Land Department. However depending of your relationship with the landowner, but Thai Courts has found lease extensions to be a legally binding contract.

I will advise you to have a lawyer to write the Lease Agreement.

[Chris Lawrence]

Try Jones Lang Lasalle. They appear to advise on these matters. I was a real estate valuer and something like this I would be seeking out the people that handle this type of transactions. It will be more expensive than advice from this forum but down the track may save a lot of heart ache. They might even be able to advise on sliding scale of the value of the lease over the 30 years, together with the type of clauses that will protect your interest.

I have only suggested JLL as they are a worldwide organisation and generally professional people. There might be similar agencies in Bangkok? that may steer you in the right direction.

Regarding a law firm, I would go to professional real estate agent first and then a lawyer.

Good luck

[taninthai]

^

professional real eststate agent in Thailand

Sorry don't think they exist here

Don't really think this question can be answered here to many factors depending on how clued up the landlord is , how friendly you are with the landlord and what kind of contract the landlord is willing to sign.

[dksharron]

If you asked me i would ignore dksharron's post completely.

If he asked Thaivisa, which is what he did, then the mortgage or the company are the strongest ways to proceed.

[Khun Jean]

If you asked me i would ignore dksharron's post completely.

If he asked Thaivisa, which is what he did, then the mortgage or the company are the strongest ways to proceed.

ok. Let's hear it then.

Why?

[dksharron]

Because in a company, he can sell it when he wants to. he pays a paltry 11,000 / year to his accountant.

Mortgage gives him a lien against a property, and if the person whose name is on the property does not want to release it when he wants to sell it, he sues, goes to court, is awarded interest and principle. The property goes to auction at mortgage value. Over time, if he chooses , the starting bid can be at 80% of land office value, and then 50% of land office value, and then the bidder s would raise it from there.

If he did the mortgage using a company, then his company (without him as the director) could bid on the property at the auction using the court papers, and pick it up for a 5% fee payable to the land office.

[Khun Jean]

Company is illegal so that is ruled out.

Mortgages can be paid of, the land can be gifted to family member releasing the not real rights.

Meaning the owner of the land not someone else has control.

At least with a lease or usufruct you have the right to use the property for a fixed period, a mortgage does not offer that.