If you are going to be in a country for any length of time then the question will inevitably come up as to whether it is better to rent a property or to buy one, and whether to get a house or a condominium.
There are pros and cons to both of course and over the years, we have seen more than a few couples, perhaps just retired or soon to be so, who came on holiday and fell head over heels in love with the place and the idea of buying into the dream.
Bounding into the Bangkok office all shiny happy and smiley to declare they have finally found nirvana and are now determined to buy that house on the hill that they happened upon on by chance on a drive round the island or saw in an estate agents window and ask if we can we help them with the formalities to get it done as soon as possible.
Comparing the price of the property in question to something much less substantial in their home town where it is freezing cold with horizontal driving rain and dark at four o’clock in the afternoon and still is at eight in the morning, only adds fuel to the fire to buy it now before someone else grabs it. This must be a one off opportunity after all and there surely can’t be many others like it at that price.
Why wouldn’t you buy it?
Explanations follow that as a foreign buyer (*without a Thai family) you cannot actually own a landed property outright. Yes you can own the house structure but not the land that it is on or that which surrounds it. Would it not perhaps be better to rent for a year cooling off period first? And anyway why on earth would anyone buy something they can’t legally own? Bizarre.
“But wait, the firm next to the agents offices said we could use their staff to be our shareholders in a company that can buy it for us. We can only own 40% of the shares in it but they say we control it, which seems fair doesn’t it?” and so it goes on.
So, fast forward two years perhaps three, and the same house is back on the market at a heavily discounted sale price often significantly less than it was bought for. The quasi ‘owners‘ have had enough and just want to go home to the familiar comfort of old friends, wet summers, dark winters and free health care.
To add to that disappointment and frustration comes all the hassle and costs associated with now trying to sell the house and the land, exit the ‘company’ and transfer the sale proceeds back home. The dream turned into a nightmare. Some just leave it and go home anyway. They are the houses you can often see around holiday resort areas that look more than a tad dilapidated with overgrown gardens and pigeons roosting in the window ledges.
It doesn’t have to be that way if you take time to get a feel for the area, or indeed to just rent a house on a longer term basis. This is a wonderful country to spend some time in, to retire to, as a second holiday home destination or to live in permanently, but it is not for everyone. Why would you tie up hundreds of thousands of dollars / pounds / krone on something you cannot legally own in a country you do not really know or understand?
Why not take some time to get to know the place first and if you still like it and prefer to buy then consider buying a condominium which you can own 100% freehold title as a foreigner in your own name. Doing so can be an excellent long term investment too but there are still risks involved of course – more on that in future articles.
By Jerry Dingley
Jerry Dingley has been advising expatriates & international investors in the Asia Pacific region for 25 years. Specialist areas include expatriate retirement schemes, family trusts, inheritance planning, wealth protection vehicles, private client portfolios & QROPS UK Pension transfers.