Asia Pacific Region Fourth quarter 2012 housing finance news from Thailand GH Bank home loans to qualified foreign borrowers More and more foreigner non-thai citizens are now finally able under certain conditions to obtain housing mortgage financing in Thailand. Under a relatively new program, foreigners can now borrow up Bt10 million ($US333,333.00) from GH Bank for new homes. These loans are available for purchasing condominiums, townhouses and single-family homes. Purchasers should consult their advisors on foreign property ownership laws before buying. 50 per cent of appraisal price Foreigner home loans at GH Bank are limited to the lesser of 50 per cent of purchase price or appraisal value. The maximum loan term is 10 years. Moreover, the loan term plus the borrower s age should not be more than 75 years. GH Bank is currently offering its MRR (Minimum Retail Rate) for foreign loans. Qualifications Foreigners applying for GH Bank housing loans must have lawful occupations with regular incomes in Thailand and must be living in Thailand legally when applying for the loan. 1 They must have valid unexpired passports, visas and work permits. If foreigners own their businesses, they must present copies of company registrations, photos of business premises, and past three-years financial statements.. They must also present company and individual tax returns for past two years, and evidence of individual and company bank deposits for past one month. In addition, they must provide bank statements of not less than six months. 1 These qualifications have been published in Government Housing Bank Foreigner Housing Loan Regulations 548/2553-25531129
At the time of application, they must have a permanent residence in Thailand so that the Bank can contact owner and certify that the borrower lives in the house. The residence cannot be the workplace or a hotel. Loan applications Foreigners may apply for the loans with Thai co-borrower that may be a spouse but not necessarily be an ultimate owner on the purchase contract. The Thai person can also be a co-buyer on the contract and must be in the census registration. All above documents must be presented with the loan applications. Foreign ownership restrictions Foreigners are still primarily forbidden to own land in Thailand. These restrictions have hindered the growth of foreign ownership, a trend that is prevalent elsewhere in South East Asia. 2. Aliwassa Pathnadabutr, CB Richard Ellis (Thailand) managing director said that Foreign purchasers of Thai housing properties said that some foreign buyers married to Thai spouses or expats that live permanently in Thailand, use various forms of corporate nominee structures to buy land and build houses. 3 However, she added that these structures are not completely fool proof and foreign buyers using these structures should obtain top legal advice. Leasing land Aliwassa also said that many foreign buyers in resort areas such as Phuket and Samui have elected to lease land for luxury villas under 30 year long-term leases that can be extended for two or three additional 30-year terms. These types of long-term leases should also be thoroughly reviewed at the onset by legal counsel to ensure their enforceability under Thai law. Condominiums foreign ownership 2 Aliwassa Pathnadabutr, Foreign purchasers of Thai housing properties, Asia Pacific Housing Journal, Volume 4, Number 12, July to September 2010 3 ibid
Under current Thai law, Aliwassa said foreigners can own up to 49 per cent of the units in any condominium project. Foreign currency must brought in from overseas to qualify for ownership, she said. Anyone seeking a Thai bank loan for purchasing a condominium should check with legal counsel to ensure they have structured their transactions properly. Enjoying your new Thai home With its year-round warm sandy beaches, great food and friendly people, Thailand has long attracted foreigners that want to purchase homes for living and investment. Many condominium projects are now specially built for the foreign markets with accompanying amenities that they prefer. With Thai financial institutions gradually opening their vaults for foreigner home loans, more and more foreigners will purchase their dream homes in the Land of Smiles. Reverse mortgages for ageing societies A feasibility study is now being conducted in Thailand for home equity loans geared toward homeowners who are over 60 years old and are unable to qualify for a traditional mortgages. The Secondary Mortgage Corporation (SMC) plans to be the country s first to offer this type of loan, according to a report by the Bangkok Post. The SMC is not a bank, but will make the loans by contracting with particular banks. The proposed new reverse mortgages will require no monthly payments. Older people will be able to use their homes as collateral for loans and when they die, the collateral will be sold to repay lenders. He said the product will allow retired people to obtain loans by using their houses as collateral, with no need to repay debts, but after Similar to many other Asia Pacific countries, Thailand s population is graying and policy makers are now being forced to develop new innovations to ensure they can deliver high quality lives for senior citizens. The feasibility study s topics include interest rates, spousal issues and the amount of home equity that can be borrowed Ageing population
Edwin Sim, managing director of Human Capital Alliance recently presented some statistics that he gathered from the 5 th Thailand Roundtable Global Investment Forum on pensions and investments, At the conference Pisit Leeahtam, the Provident Fund Association of Thailand s president explained how Thailand is facing an aging society with people living longer and families producing fewer children. In 2005 about 23% of the population were under-aged youth while 10.3% were considered old-aged. His statistics also predicted that by 2035 the population distribution will be completely reversed with only 14.4% classified as under-aged youth while our old-age population will reach more than 25%. Perhaps more importantly, he showed that the ratio of labor-aged workers to the old-age population has also been dramatically decreasing. In 1960, Thailand s labor force was 11.3 times the number of old-age citizens and by 2035, the labor force is expected to be only 2.4 times the number of old-age citizens.
These dramatically decreasing ratios have alerted leading economists such as Pisit to seriously consider what Thailand must do to ensure our old-age citizens can enjoy a high-standard of life through sustainable adequate pensions during their retirement years. World Bank s three pillars Thailand is attempting to meet its old-age pension requirements by following the World Bank s three pillars theory that includes: obligatory state pension insurance, obligatory private pension insurance and voluntary private pension funds..