The New Norm for Foreign Property Buyers in Thailand. Part 2 Selling During the Lease Period
Last month we began our series of interviews with Gavin Perfect and if you missed this you can still read it on our website: The New Norm Since our interview Gavin has held a meeting at the Marriott Courtyard to discuss the matter with industry professionals. It was very well attended, many property agents were keen to find out how to keep their clients from being alarmed by recent news especially when mis reported on social media.One of the most popular topics for discussion was how to advise a Foreign property owner wishing to sell during the period of the lease. So please now read part 2 of our series where we delve further into what this entails:
Selling During the Lease
One of the biggest concerns for buyers must be what will happen if they decide to sell their property, with your proposed lease structure, how will that work?
Gavin: That’s one of the strongest features of this structure. If you as a foreign leasee decide to sell during the lease term, your 30 years registered lease is a ‘sellable’ asset. So you can transfer the right of the lease during the term of the registered lease agreement at any time. For example you purchase a house in 2026 for 10 million baht. Under the terms of your SPA the land value is registered at 2.5 million and the house 7.5 million. In 2036 you decide to sell your lease rights for a value of 15 million baht. The process here is that you present your new SPA to the leasing company showing you have an agreement in place to sell. Both you as the leassee and the lessor agree a date to be at the land office with your new buyer. The current lease agreement with a remaining 15 years is cancelled by agreement of the current leassee and the lessor or the leasing company. The buyer pays you your 15 million and the land office their relevant fees to register the lease.The new buyer then has a new 30 years registered lease agreement with the leasing company.
Are there any fees from the leasing company when doing this?
Gavin: Yes.When the sale takes place the leasing company charges 1% of the sale value of the house (not the lease value), and there is a 50,000 baht administration fee.The existing lease is cancelled, a new lease is prepared in the buyer’s name, and it’s registered at the Land Office for a new 30-year term.
Transferring During the Lease
How about transferring? What is the difference between selling and transferring?
Gavin: Selling refers to transferring the lease from one foreign buyer to another. Transferring is different. Let’s say the purchaser is a Thai national who can legally own the land. In that situation, the leased land and the house can be transferred out of the leasing company, allowing the Thai buyer to own the property directly. You being the leasee can terminate the lease agreement and request to transfer the land from the leasing companies rights to the Thai national wanting to purchase.
Should the government change the rights for Foreigners to own land during the term of the 30 years lease, this clause also allows the leasee being a foreigner the rights to transfer the land to themselves. Any and all transfer taxes at the land office would be paid by the buyer/seller parties as per their SPA.
Are there any fees involved from the leasing company for that process?
Gavin: Yes.The leasing company charges:1% of the registered sales value, and a 50,000 baht administration fee.The lease is terminated and ownership is transferred through the Land Office.
Next month we will continue this series by discussing the issue of Inheritance, but in the meantime, if anyone would like to learn more about the structure or discuss how it may apply to their own property purchase contact WWW.ESS DEVELOPMENTS.COM
