Global Mortgage Finance
(Thailand Property and Land Finance Specialists)
Published 1st December 2016 - Seasons Baht Finance Greetings
As 2016 begins to draw a close and whilst 2017 is soon to begin, it’s an opportune moment to reflect upon property finance deals, which have been concluded or, met their demise throughout the year. From successful sales of good cases and why they were concluded vs. rejected rationales, it is useful to reflect before we move forward unto the New Year and strive for new targets and goals. I am also sure, Mr. Trump & the Brexiteers, will also be setting new goals, along with the new Royal appointment to be, in Thailand.
First and foremost, property & finance methods have definitely changed throughout 2016, it has become pretty conservative and at the same time, an increased amount of due diligence is required before we even begin to talk finance, particularly for land. Not a month has passed, without “encroachment” issues in the mainstream media, where land and buildings have been reclaimed by the NCPO & Junta, with pretty much no specific area of Thailand left untouched. What could in the past have been deemed as Forestry Land or National Park Area, buildings had been demolished and returned to its former self. Fortunately, our Island of Koh Samui had remained relatively quiet in the main headlines, though places such as Chiang Mai, Hua Hin, Phuket, Khao Yai amongst others, have featured quite heavily, with encroachment issues on a grand scale. The introduction of a DSI Map on the public domain, allows for an instant snap shot to determine the level of risk required when financing land. If the DSI consider as possible Forestry or National Park Area, than finance can be more difficult to obtain, regardless of whether chanote titles had been issued legitimately.
Before finance discussions can than take place, it is now preferred to simply check out a land plot first, via a Google map link, copy of chanote and recent photos to see if it flags up on any “watch list”. At the same time looking for possible development/ construction issues under various Land acts. How high above sea level? How far from the beach? What are the building regulations? Etc.… Important questions to consider before making a purchase or finance agreement! Often, we’ve been left in bewilderment by enquiries, where development goes up before any permit has been applied for and than when making the application, it is completely against the relevant authority regulations. As a lender, being left with a land plot, a half built project that would never get any permit, is not the best scenario as will incur a time & cost to remove the building. If that development also happened to be a condo and we had pre-approved the project for end user finance beforehand, we could than be left with a number of unhappy clients waiting for end user finance on contracts already signed, which in fact, could never happen since the building was illegitimate in the first place.
Some of the easiest, low risk finance cases with reasonably quick timescales over the past year surprisingly have been for Condominium loans where we have not even seen the building before! A most recent example, for a Condo in Pattaya with a client whom we never met applied on a Thursday afternoon through one of our regular real estate agent introducers and paid for an appraisal. A purchase price of around 2.5m and a loan required of just 1.1m. The next day we were provided all relevant supporting documentation and by the following Friday, the loan was approved and loan agreement ready for signing a few days later (even with a public holiday in the middle). The client background was a retiree living in Pattaya and on a regular pension income coming from the UK, able to provide bank statements to verify income. It was decided at present the exchange rate was not worthwhile to bring a lump sum into Thailand and would prefer to borrow whilst waiting for a better exchange. From start, to loan approval, in just 5.5 working days! Usually the appraisal company states a 10 working day turnaround however, if you happen to catch at the right time, things can certainly go smoothly and quickly.
Cases that have fallen down or had hurdles to overcome, have often been due to miscommunication possibly from third parties, little understanding of Thai regulations and methods or, as mentioned earlier land, which has been built on without any relevant permits. We had one case where the person who would be signing on behalf of a Thai company would not sign. Joint applications, where one applicant would assume ok that we don’t meet the other applicant and allow them to sign overseas with no notary or witness that the person was real. New condo buyers who assume that once the developer say the project is ready, assume it is 100% and ready to transfer with chanote and no snagging to be fixed (one case took 9 months snagging) and finally, another who after emailing all paperwork through to gain a loan quotation and than asked to print and sign in wet ink on all printed pages than post, so we have all original wet ink signatures…..simply posted without any wet ink signatures and expected to be approved. Often the minor issues can cause delays, though in some cases lead to a deal being lost.
This time of year, real estate investment in Thailand can be considered coming up to peak season. Tourists and even local residents seem to have cash on the hip and are ready for direct property investment. Whether it maybe for a future retirement home, a condo for next year’s holidays or just looking for an investment return in real estate, property purchases tend to spike and along with that, comes people looking for finance options. My “tips” to help easily clarify whether an individual will be going through with finance is the following:
Land
Send the following to the lender for quick confirmation consideration. Google Map, Land Title (Chanote), Recent Photos
Villa
Similar to Land, send Google Map, Land Title, Recent Photo & Construction Permit
Condo
Send the following to lender for quick loan quotation of all fees. Condo Name/Location, Floor No & Floor Plan, Size, Purchase Price, Chanote (if available), Date of Birth Borrower
The above can be sent via Email, Line, Whats App, Messenger etc. The lender will first tick off if they are interested in the property with a loan size estimate and than, will confirm document requirements for the client. If the lender has no interest in the property or, if the lender lends to conservative or, if the loan property loan quotation is considered costly, there is little point to reach the document requirements step.
To conclude, 2016 was a year where lending and refinance saw a massive increase in applications, with many properties doing the “Kai Faak Circuit” on a regular basis looking for quick cash, condo owners looking for refinance to shore up liquidity and businesses, looking to offer collateral in exchange for quick cash. I would expect 2017 to continue in a similar format with an increase in end user finance. As the world observes Thailand continue to hit headlines pushing publicity that could capture new arrivals with spending power ultimately, helping to drive Thailand’s real estate market into the future growth that it commands.
I would like to wish all readers a pleasant December and a healthy and prosperous New Year.
For further information on how to "Finance Property & Condos in Thailand", please feel free to email enquiry@globalmortgagefinance.com OR call 66 (0) 81278 5382 and either shall be happy to assist.
Link to Website of Samui Phangan Real Estate Magazine where Published - Link