Living the Dream in Thailand

Despite all the uncertainty about the body politic in Thailand, much of it connected to two men – Thaksin and his Royal Highness – foreigners still continue to flock to Thailand looking to live out their dreams. Thailand is a place where the sun nearly always shines, where there are superb beaches, great dining options and the local culture encourages people to take it easy.

While those looking to escape the rat race may be enticed by the laid back attitude prevalent among Thais they should look a bit deeper into Thai culture. For every success story of a foreigner setting up a bar, resort, villa or shop in Thailand there are a hundred sad stories. The temptation for people in the UK and elsewhere in the developed world is to cash out – to sell the house or business, take out the pension and move to Thailand to spend the rest of their life in the sunshine.

When you look at prices for renting a business in Thailand or buying land it all seems very doable. There are plenty of middle men in Thailand prepared to act as go-betweens to sort out the legal requirements and the visa. There are thousands of potential customers in the form of holiday makers, ex-pats and wealthy Thais from whom a self-sustaining lifestyle can be made. What can go wrong?

 Plenty.

Firstly, the situation with visas is a moveable feast in Thailand. Every change in government or regime in Thailand comes with its own brand of nonsense to publish on the matter. The latest bunch has cracked down hard (supposedly) on English teachers and dive instructors working in the Kingdom on tourist visas. Other administrations have made noises about stopping the loophole of Thai registered businesses with foreign shareholders buying land in Thailand.

 Foreigners have to continually jump through hoops to extend their resident visas for Thailand. Only those working for big corporations don’t have these headaches. Typically you have to leave the country regularly to renew a visa; have to show evidence of funds in Thailand and have to deal with Thai bureaucrats and immigration officers as well as bank staff who all seem to have their own interpretations of the rules. Some of them seem to just hate foreigners.

Further scratching beneath the surface reveals a Thai attitude that can be best summarised as ‘wait and let them leave’. Many Thais will sign a lease for however many years with the expectation that sooner or later the foreigner will run out of money or enthusiasm and they will be left with land or business unit they can lease out again. If on the rare chance the foreigner does succeed there is always the possibility of not renewing a lease and taking over a ready-made successful enterprise.

For example the bars on Haad Rin’s Full Moon Party beach change management every few years as foreigners realise they are not living the dream. The monthly windfall is taken away by the Thai landlord. Moreover the bucket shacks between the bars seem to pick up a good percentage of the punter’s booze cash.

Another example out of millions is the Phanganer clothes shop in Thongsala (see above picture). It is up for rent. The brand is established, the location looks good; the shop is smart and new. However, if you check out the www.waybackmachine.org you will discover the place has been up for lease since August 2013. What looks like a steal has not generated much interest.

Thai Forum is littered with villas for sale for bargain prices. The second hand market for villas is bad. Real estate agents make more money selling new builds and off-plan builds. They skewer the market in their favour.

All of this is not to say that the dream of living and working in Thailand is a lie. Plenty of foreigners marry Thais and carve out their little niche. Some do very well running budget Bangkok hotels and ex-pat bars. Some seem happy in the boondocks farming rubber.

What is certain is that you should never rush in. Do due diligence and then do it again. Don’t forget you could just get a cheap villa rental for a year and not commit the bulk of your savings into a lifestyle project that could go horribly wrong.

Registering Right of Access for Land

Many villas and houses in Thailand are on plots surrounded by other plots owned by somebody else. Guaranteeing access to a plot of land is essential to your chances of selling or leasing that plot of land. Much of the time roads between commercial plots become adopted by the government, and by this means the property owners in the area don’t need to worry about access rights or maintenance payments for such things as road repair.

However, in many cases ‘estate’ roads go through other people’s lands. This can lead to legal entanglement especially if neighbours become antagonistic.

Thai property law calls this situation servitude. Owners have a right not only to access their land but also to have facilities such as water pipes. The law stipulates:

Section 1387. An immovable property may be subjected to a servitude by virtue of which the owner of such property is bound, for the benefit of another immovable property, to suffer certain act affecting his property or to refrain from exercising certain rights inherent in his ownership.

In other words, your neighbour cannot close down your access road even if it does go through his or her property.

The time limit for exercising this right is 10 years. If you don’t claim your right of access via a land title within 10 years it may be forfeited.

For more information: www.samuiforsale.com/real-rights/servitudes-easements.html

Thai Property Market Shows Growth for 2014

Business analysts such as CBRE and The Real Estate Information Center (REIC) claim the Thai property market is showing growth at the moment.  The REIC predict the property sector will grow 5% to 10% in 2014 (http://www.thailand-property.com/news/view/thai_property_market_to_see_up_to_10_growth_in_2014). Although analysts point to increased demand and a general upswing in the USA and UK economies, it is worth noting that the healthy property market portrayed is somewhat misleading.

The news of the 2 trillion Baht government investment plan for infrastructure in Thailand is central to the confidence displayed in the Thai property market. It looks like a lot of this money will go into the expansion of the BTR or Skytrain. As a consequence there is a high demand for property near the new proposed BTR stops. Buying to let in Bangkok has been a solid performer bringing in returns of 10%. For those with excess cash and an eye for an investment Bangkok remains an attractive proposition. Thai condominium laws mean that foreigners can buy a freehold. There are, of course, others legal structures to gain ownership of a property as a foreigner.

As with the UK housing market, figures for the industry are skewed by the capital effect. Because property prices rise in the capital the increases (in London over £1,000 a month) bring up the averages for the country as a whole. However, if you are selling a property in Udon Thani or Hull then you might not find you can make a good return on your initial investment.

The problem of reporting is systemic. The people who tend to comment on the building and property markets are those who live by these commercial sectors. It is in their interests to exaggerate and pick facts to create more confidence and more increases. Real estate traders get bigger commissions as they are on percentage payments. Moreover, high confidence means more building works and more employment. The property sector is important in Bangkok as it is in London for many reasons.

In Thailand the underlying problems in the Thai property market remain, although perhaps there is some light at the end of the tunnel.

These problems are:

1)The restrictive ownership laws and the obtuse and restrictive visa laws for non-Thais
2) The massive financial crash of 2008 and its continuing repercussions of spiralling out of control national debts
3)The on-going political violence and uncertainty in Thailand which has a strong impact on foreign investment and tourism

Just these 3 issues should make sellers and buyers of Thai property realise that value is key and that it is not the place to make a quick buck, unless that is unless you want to buy to let a flat near a Skytrain stop.