Fractional ownership has not taken off well in Thailand where it concerns the locals. With a lack of laws governing fractional ownership it is still mainly foreigners who buy into it. There are however questions raised about the 49% condo ownership rule.
When buying a condo complex in Thailand foreigners may not own more than 49% of the units. With timeshare or fractional ownership now on the rise in Thailand questions are being raised about the current law regarding 49% ownership. Phanom Kanjanathiemthao, managing director of property consultant Knight Frank Chartered (Thailand) had this to say with regards to the current debate about property ownership in Thailand.
Restrictions on the foreign ownership of property create difficulties for developers using fractional ownership, who have to apply diverse strategies to attract Thai buyers, said Mr Phanom.
“Many properties in Pattaya and Phuket are not affordable for Thai buyers due to very high prices,” he said. “They cannot even buy with leasehold prices in some projects. Even a discounted price remains unaffordable for them.”
To encourage foreign buyers and prevent problems associated with using Thai nominee companies to purchase property for foreigners, Mr Phanom suggests extending the maximum property leasehold for foreigners to 75 or 90 years, from the current 30 years. In Vietnam, the government is amending the law to allow foreigners to own residential units, similar to Singapore and Malaysia.
“Today almost every country allows foreigners to buy property but they have a committee to set the conditions on what properties foreigners can own and how many they can hold,” he said.
Creating zones where foreigners could own condominiums outright was another approach, he said. Extending the maximum leasehold would benefit Thais and the country, said Praphaisith Tankeyura, managing director of Boathouse Hua Hin Co Ltd.
“We have to accept that almost all properties in Phuket and Samui now do not belong to Thai people,” he said.
Boathouse was among many projects that had to adjust their strategies to cope with shrinking foreign demand. Fractional ownership is a new concept in Thailand so speak to an attorney before you buy into any property scheme. There are currently no laws governing the concept and this might leave the system open to abuse.