• Buying Off-plan Property in Hua Hin: By Lee Philips

    Posted on 1 Comment

    lee-philips

    Hua Hin is located a couple of hours drive from Bangkok, making it an attractive destination for both local and foreign property buyers.

    The same as it goes in many other places, the most popular option for many Asian investors is to buy off-plan property in Hua Hin.

    But you need to beware of the benefits and risks when buying off-plan beforehand.

    In this interview, Lee Philips, who is the Managing Director of Property Solutions Hua Hin, explains the essentials you need to know when buying off-plan property in Hua Hin.

    The company is one of the city’s biggest real estate agencies that help both locals and foreigners.

    Lee, please tell us about yourself and how you started your business

    I’m from the UK originally and had been visiting Thailand and more specifically Hua Hin for about 6 years before we come to live here full time.

    My wife is from Bangkok, we were living and running a Financial brokerage at the time of the financial crash in 2007 – 2008, we specialised in secured loans and mortgages for clients that had had previous credit problems.

    When the crash happened most of the lenders pulled out of the market in effect leaving us without a business.

    I had friends and acquaintances here in Hua Hin at that time and we decided to make the move to Thailand and make a fresh start of life. We actually moved out here to Thailand when my son was only 8 weeks old.

    For the first 5 years, working as a real estate agent here in Hua Hin, I was working with one of the biggest international and most well known brands. I had a great 5 years working with them but at some point, it’s always time to move on and try and make a go of it yourself.

    Has off-plan always been a popular choice for foreigners, or is it mainly Asian investors that has driven up the demand the past years?

    Buying a property off-plan has always been a popular choice for foreigners, approximately 70% of our clients buy off-plan.

    The reasons for doing this include moving into a brand new home when construction is complete; who doesn’t love moving in to a brand new property?

    It also suits a lot of people because you can work with the developer and make small custom changes to the property so it suits you perfectly and also the pricing aspect of it.

    To some buyers, it’s not always clear how the process differs when buying off-plan, compared to buying an established property. How does the process differ when buying off-plan?

    If you were buying a resale property here you would pay the complete purchase price on the day of handover of the property at the land office, this is how it works buying off-plan:

    a. To reserve the plot it’s 200,000 Thai Baht

    b. Once the plot is reserved, you would hire a lawyer to prepare contracts (generally developments would have their own standard contracts)

    The lawyer would carry out due diligence and you would work with the developer with any changes you required. This whole process usually takes between 2 and 4 weeks.

    c. Upon contract signing there would be a down payment of between 20-30% of the total purchase price

    d. When construction starts you will be required to make payments at different milestones of construction progress

    Another benefit to buying off-plan is the payment plan so you don’t have to pay for the property all in one go and also some developers would be able to agree to a deferred build, meaning once contracts are signed you would delay the build for a few months.

    What should foreigners consider before buying off-plan in Thailand, and specifically, in Hua Hin? What should be included on the checklist?

    The biggest consideration is to make sure you buy with a reputable developer and obviously your agent would assist you in this and make sure you make the right decision.

    This is why it’s imperative to use an agent that has been here a long time and knows the market very well.

    Personally, ourselves as an agency will only sell on developments where they have already completed at least one project and I can take my clients to see the past work they have done.

    This is our way of instilling confidence into our clients. The only exception to this would be a new project that has just launched that I know personally are backed by a stock market limited company and also big well known national condo developers.

    Foreigners cannot own land in Thailand, this is a common practice in other Southeast Asian countries. If I’m not wrong, one way to resolve this is to open a local limited company, own 49% of the shares in the company and appoint the buyer as a director, giving him or her the majority voting rights. Can you explain more how this process works and how foreigners can assure that they will be able to control the land that their villa is built on?

    Personally, to be honest and it’s my responsibility to make sure my clients are making the right decisions and that responsibility sits on my shoulders heavily I wouldn’t recommend owning land in a company.

    This is an outdated way of ownership and at the end of the day is a very grey area. I think people that have done this in the past are fine but the government and the DBD department are really clamping down on this method of ownership now and putting lots of hurdles in place to prevent new companies being formed to do this.

    The best, most popular and 100% legal way to own a villa on landed property in Thailand is like this.

    a. You can own the structure in your name completely and this is 100% legal under Thai law

    b. Lease the land on a 30+30+30 year lease, perfectly legal and all registered at the land office under Thai law. In effect the lease is perpetual as every time the property is bought and sold the new owner gets a brand new lease

    Lawyers are preparing some great lease contracts these days that are full of clauses to give the buyer so much security, take a look here to see some of the points that are added.

    For condos, foreigners are allowed to own these freehold in a quota of no more than 49% of the units being foreign owned.

    Which areas and off-plan projects will be interesting in Hua Hin the coming years?

    The area to the South West of town in the Soi 112 area is becoming popular and a few developers are moving out that way, it’s a short 10-15 minute drive into town.

    Do you have any experience of clients that were not satisfied with the end result, or where an apartment building or villa was never finished? How do buyers usually proceed from a situation like that?

    Personally I haven’t had that experience with my clients, as like I said previously, I am selective in the developments I represent.

    There is more to life than making money at any cost and I like to sleep easy knowing I have helped my clients make the right decisions when buying.

    Crowdfunding will be more and more common in the future. Nowadays, people can even buy shares in properties through online crowdfunding services. Is it common to buy property through crowdfunding in Hua Hin? Can I pool money through crowdfunding and buy off-plan?

    I haven’t heard of this in Hua Hin or Thailand for that matter so no, it’s not possible here as far as I am aware.

    Is it possible to get local mortgages and buy off-plan as a foreigner?

    It’s not possible for foreigners to get mortgages to buy villas here in Thailand unfortunately.

    I have some clients that have borrowed against their properties in their home country to pay for a purchase here and I also know of 3 or 4 developers that would personally finance up to 50% of the purchase for up to 4 years with an interest rate similar to the Thai Banks.

    There is a couple of overseas banks that will part mortgage a condo purchase and I also know of a couple of private companies here in Thailand that will do the same.

    Thanks Lee. Finally, is there anything you want to tell our readers that are interested in buying off-plan in Hua Hin?

    Choose an agent you feel comfortable with, ask lots of questions and always insist to see previous completed projects by the developer.

  • Leave a Reply

    Your email address will not be published. Required fields are marked *

    * Checkbox GDPR is required

    *

    I agree

    [FREE EBOOK]
    [FREE EBOOK]
    [FREE EBOOK]
    [FREE EBOOK]
    [FREE EBOOK]
    [FREE EBOOK]