1. Legal aspect
Freehold versus Leasehold
Under the current Thai legislation, foreign land ownership is restricted. The Land Code of Thailand generally prohibits the ownership of land by foreigners within the Kingdom; this applies to both individuals and legal entities. However, there are different ownership structures which allow foreigners to acquire real estate in Thailand.
In the past, foreigners have often established a Thai company to purchase freehold land ownership. This is still a method often used by other project developers. To be considered a Thai company, at least 51% of the shares needs to be in hands of Thai people. However, at present times the Thai authorities are closely scrutinizing every land transaction involving companies and are checking whether the company is truly a legitimate Thai company (Thai shareholders must truly invest monies into the Thai company and this could be investigated by the authorities through their income tax returns, etc.). Due to the latest evolutions we would not really recommend going down that road and we have therefore set up a leasehold structure which offers you the same protection as a freehold structure. In addition our leasing contracts provide the right to convert the leasehold interest into a freehold interest if changes in Thai legislation were to occur.
Leasing is a popular and straightforward option to acquire property. The maximum duration of a lease permitted for non-commercial use under Thai law is 30 years. This lease can be renewed for two additional terms of 30 years if contractually agreed.
To insure that the lease will be renewed after 30 years, we provide the following structure, giving additional protection to the ordinary leasing contract: we offer the property with a leasehold structure in combination with a subscription to a certain number of shares in the Thai company which owns the land underneath the property and leases the land to the different owners of the property. This structure offers far more security to the lessees of the land as they are now also indirectly the “joint-landlords”. The fact that this land owning company which is jointly controlled by the owners becomes the lessor gives the owners the added protection of getting their leases renewed.
Tor Tor 3 and payment slips
A Tor Tor 3, also called a Foreign Currency Transfer Form, is necessary if you transfer in excess of 20,000 USD into Thailand in any foreign currency to buy property and if at a later date you wish to sell the property and transfer the money back out of the country. If you wish to use another payment method, then you will need to obtain a payment slip if you wish to transfer money back out of Thailand.
This is how you can collect a TT3 or a payment slip:
•If you transfer a foreign currency amount in excess of 20,000 USD to Thailand directly into the developer’s bank account the developer can get the TT3 from the bank for you.
•If you transfer a foreign currency amount lower than 20,000 USD to Thailand straight into the developer’s account the developer can get the payment slip from the bank for you as support documentation (instead of a TT3 form).
•If you transfer a foreign currency amount in excess of 20,000 USD into a bank account you hold in Thailand and subsequently transfer that money to the developer’s bank account in Thailand your bank will give you the TT3 form.
•For all other methods of payment, you will need to get a payment slip from the bank as support documentation (instead of a TT3 form).
2. Investment summary
As Phuket has experienced massive growth in the last 15 years and has become a playground for millionaires, Koh Samui will become the new investment place in Asia. Koh Samui is situated in the Gulf of Thailand, nestled between two of the world’s most rapidly emerging powerhouse economies, India and China. Visitors from all over the world are attracted to Koh Samui for its breathtaking nature and stunning beaches. With direct flights to Bangkok, Pattaya, Phuket, Hong Kong, Kuala Lumpur and Singapore, the rest of Asia is only a few hours away.
Due to its geographical location, Koh Samui enjoys an all year round tropical climate, sheltered from the worst of South East Asia's monsoon season by mainland Thailand, with only the month of November bringing consistent rainfall and winds. Therefore, Koh Samui greatly benefits from an eleven to ten month tourist season.
Being a relative new property market, Koh Samui offers interesting opportunities for investors. Real estate consultants suggest that land and property prices will continue to rise in the coming years. Samui is now one of the most popular resort destinations and has lately become a real international tourist spot on the east coast of Thailand. After the Tsunami adversely affected the west coast of the country, Samui’s property development has improved greatly. Unlike Phuket, Koh Samui is more protected from disasters like a tsunami due to the fact that it is isolated in the gulf of Thailand. Samui has also better weather conditions than Phuket thanks to its geographical location.
There are many reasons to do so. The site has stunning ocean views and is located in a zone for residential use only. These are the key facts that will turn an investment in Infinity Samui into a success:
- High capital growth
- On-going rental income
- Luxurious facilities and excellent management
- High standard resort facilities
For a long time Samui was considered a back packers’ paradise, and whilst the island is still a popular destination on the traveller's trail, it has moved on considerably since those early days and now boasts many five star hotels and international hospitals. However, the property market is still in its infancy. Samui is therefore an emerging market. We believe that on Samui property prices will continue to rise by as much as 15 to 20% per annum, which means that the market is currently undervalued in terms of actual property prices. We expect this process to accelerate over the next two to three years, as the following factors drive the Samui market forward:
• Development of tourist infrastructure on Samui is now attracting an increasing number of high-end holidaymakers. • Direct links to regional hubs such as Hong Kong, Singapore and Kuala Lumpur are increasing the demand for holiday homes due to Thailand's desirability as a destination, and the ease of access to Samui •Limited supply of high quality hotel rooms continues to drive demand for luxury villa rentals. • The structure of Samui's accommodation market and the limited supply of suitable land for hotels makes villa and apartment rental more and more desirable. • The Thai government's tourism policy is assisting in Samui's expansion as an internationally renowned holiday destination. • The Thai authorities are currently investing in the road infrastructure of the island and are tightening the zoning rules and limiting the building lots. This insures that both environment and nature will remain protected from haphazard building projects which will greatly benefit existing projects.
Infinity Samui is a luxurious project development run by our own professional management company who will manage the whole rental process as well as provide a full range of services for owners and their tenants. Koh Samui is experiencing a high demand for quality accommodation which offers great opportunities to property owners.
2. Sales Process
As mentioned above, Thai law generally prohibits foreigners or foreign majority owned Thai entities from owning land directly. In order to maximize the security of your ownership and to provide uniformity in the management and control of the common areas of Infinity Samui we provide you with an irrevocable and secure long term renewable leasehold ownership which is equivalent to a freehold purchase.
This form of ownership has become a popular and tested method to secure your investment and is in keeping with good management of a premium class estate.
1. Reservation Form
2. Lease Agreement
3. Management and Service Agreement
4. Rental Agreement (if applicable)
5. Rules and Regulations
After signing the reservation form, you will be given 30 days to conduct your due diligence and review the contracts. On signing day, all parties will be legally bound to complete their obligations.
At the time you sign the lease agreement, the ‘landlord’ shall be the land owning company on which your property will be constructed. In the lease agreement, you are provided with the maximum term permitted under Thai law – 30 years – with two options for renewal, each for a period of 30 years. In addition, the ‘landlord’ company agrees that at the end of all the terms it will issue a new lease. Additionally, the ‘landlord’ company agrees to issue a new lease of 30 plus 30 plus 30 years upon request from a lessee, normally when a lessee seeks to sell the property, at the lessee’s expense.
Upon re-sale of your property, a buyer will either be granted a new lease with a new term or the existing lease will be assigned, whichever facilitates your sale.
Infinity Samui‘s concept is designed to provide you with a peaceful and quiet enjoyment of your investment and in the event you wish to generate a rental income, the same will apply to your tenants. This is supported by a management and service agreement which shall provide for management and maintenance services in Infinity Samui. To supplement the use of common areas and to regulate the estate, we have provided a set of rules and regulations, to set out the principles by which Infinity Samui will be operated and inhabited for the benefit of all.
We provide a completely transparent breakdown of costs prior to your commitment to purchase. Your costs and budget for this transaction should comprise:
Total Purchase Price of the unit, payable in instalments. The payment of these monies is linked to the construction stages which are set out below.
• Lease Registration Fees • Stamp Duty and Government Transfer fees • Legal Costs • Optional Furniture Package • Common area service charges: 45 THB per square meter per month. • Sinking Fund: once-off payment of 100,000 / 150,000 / 200,000 THB (according to the type of apartment, cf. price list) payable upon completion.
The Landlord Company will require annual maintenance, filing of accounts and legal compliance. The fees therefore shall be taken out of the management fees and an adjustment will be made at the end of each year to provide for any surplus or shortfall. The Sinking Fund is designed to encourage a cash surplus for any common area renovation or repair works. The Sinking Fund fees are non-refundable upon sale of your unit – they will accrue to the benefit of the buyer and remain part of the estate.
We offer different payment method options and even offer important discounts along with these options.
Please contact us for further information.
