BUYING AND GETTING A LOAN FOR A HERITAGE HOUSE IN JAPAN
Q : As a non-resident of Japan, can I buy any property in Japan without restrictions? I am thinking of buying a 200-year-old residential landed property in the outskirts of Tokyo for own stay and maybe as a guesthouse. Am I entitled to get a loan from a Japanese financial institution? If yes, what is a typical loan margin and tenure? What kind of interest rate can I expect?
ZNM :Some heritage properties in Japan are indeed culturally protected, and cannot be sold to non-residents (in fact, not even to resident non-Japanese). Kyoto city, for instance, has a large proportion of such properties – less so in other parts of the country, but considering the age of the building, it would be wise to check in advance, regardless of seller’s willingness to part with the property, to avoid last minute cancellations. A property lawyer or judicial scrivener (“shihoshoshi” in Japanese) can easily find this information out if they receive the property’s true address as per the title deed or registration certificate.
In regards to mortgage loans, these are quite attractive in Japan. The loan tenure can be for any number of years and up to 100% financed at interest rates of less than 2%. However, these are usually not available to non-residents, who might however get a housing loan from some large international banks such as Citibank, HSBC or Bank of China.
Local banks in general will require a minimum 5-6 years of local residency, with a steady and sufficient Japanese income stream. Of these, Shinsei Bank seems to be the most foreigner-friendly, but would still require a minimum period of residency and proof of local income. Even the international banks, such as the ones mentioned above, will usually only lend for properties in central Tokyo (and occasionally Osaka), which are relatively new, and come with a minimum price tag of approximately USD300K.
However, if you indeed plan to use the property as a guesthouse, it may be worth your while to incorporate in Japan, as a branch office of a foreign company, and then apply for a business loan, which could be secured against the property. This would naturally require some research on your part, such as the criteria relevant to these loans, the preparation of a thorough and viable business plan, and the profitability of the required incorporation and upkeep fees.
The CEO would need to be a Japanese resident, but doesn’t need to be a genuine full-time employee of the business, so it is viable to reach an agreement with someone you know and trust, such as a reliable accountant or business partner, for a sharing of the profits or some other financial arrangement. In any case, having a Japanese partner for these types of ventures is generally a good idea, as local entities are often quite reluctant to deal with foreigners.
Best of luck, sounds like a great property and potential business!
Vimol Kogar is Principal at bangkok 101 agency and is a long time realtor and Advisor in the Bangkok condominium market as well as consults for foreign investors interested in the Bangkok real estate sector. He can be contacted at +66816165987 or bangkokhomes@hotmail. com
GETTING A PROPERTY LOAN IN THAILAND
Q1 :How easy would it be for me to get a housing loan from Thai banks?
VK :Housing loans to foreigners in Thailand are highly restricted. The two banks which seem to have such facilities are UOB Bank of Singapore and Standard Chartered but of late only UOB seems to have a facility to offer non-Thai speaking foreign buyers an organised structure and clear terms and conditions for a mortgage loan.
Q2 :I am 50 years old and my income is in the range of USD100K per year. Could I still obtain a housing loan in Thailand and what is the usual loan margin to buy a property in Bangkok?
VK :Most mortgage loans in Thailand allow the borrower to pay monthly installments till they turn 65 years old. UOB generally allows buyers to borrow between 50% and 75% of the appraised value of the property.
Once a price is agreed upon, the buyer typically puts a 10% non-refundable option on the property for 90 days. The buyer can effect the sale any time within 90 days by preparing 90% of the remainder payment. Buyer and seller then go to the Land Title Office together and after vetting all documents, the Title Deed is transferred to the Buyer’s name. The Seller subsequently hands over keys to the Buyer to take possession of the property.
Ross Wheble is the Country Manager for Knight Frank Cambodia, offering the full spectrum of professional property related services.
CAMBODIAN ‘LAND GRAB’ MOSTLY IN RURAL AREAS; DECREASING
Q : I am very keen to invest in property in Cambodia, having visited the country several times and liking the life there. I do have a nagging concern however over ownership of property (apart from the restrictions imposed on foreigners). I read that hundreds of thousands of poor Cambodians have been forced out of their homes and/or ancestral land due to what is described as ‘land grab’ by the ruling elite. If this could happen to their own people, isn’t there a risk that it might happen to foreigners?
RW :Firstly, I think it’s important to bear in mind that this also happens in developed countries, with governments compulsorily acquiring land for development that benefits the public such as infrastructure improvements and public amenities; an example of this would be in Singapore, where approximately one-third of the total land area was acquired by the government between 1959 and 1984. When this occurs, the evictees are offered compensation, as is the case in Cambodia.
In an effort to boost investment and development in Cambodia, the government has granted Economic Land Concessions (ELC), largely for agricultural and tourism development in the provinces. With agriculture being the main source of employment in Cambodia and tourism being one of the biggest contributors to the country’s GDP, the aim of these ELCs was to encourage investment in these sectors, thus sustaining economic growth and accelerating the rate of poverty reduction.
Unfortunately, the legal framework that sets out the criteria for granting ELCs has often been circumvented which has been a source of controversy. Since 2012, the Cambodian Government has ceased issuing ELCs and is reviewing all existing concessions, with more than 330,000 hectares having already been taken back from ELC concessionaires.
Secondly, the vast majority of these land disputes are in rural locations where the owners of the disputed land are often unable to prove ownership due to a lack of supporting legal documentation. This is rarely the case in city centre locations as the majority of land has now been registered with the Cambodian Government so land disputes are becoming less frequent.
Matthew Yeoh is managing partner of Yeoh Mazlina & Partners, member of ASEAN Legal Alliance.
CREATING A TRUST IN CASE OF INCAPACITY
Q : I am a 52-year old businessman, having Malaysian citizenship and permanent residence in Australia. I have properties in the UK, Japan, Singapore, Vietnam, Australia and Malaysia. I have two school-going children and a stay-at-home wife. Recently, I have been diagnosed with liver cancer and may have to take a break from work. I even contemplated moving permanently to Australia and starting early retirement. However, some of my properties are still under loan. Shall I sell off some of my properties in order to reduce my liabilities and consolidate my property holdings in more stable jurisdictions?
MY :From the description of your assets and your career, apparently you are a high net worth individual, with a health problem that could affect your income in the near future and possibly also impact on your life expectancy. Your ailment could also lead to insolvency of your business and problems with creditors which will in turn have repercussions on your family.
You will be well advised to have a wealth management plan in place for your assets and business, and put them into a trust.
In common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created when you, as the settlor, transfers your property to a trustee. The trustee holds that property for the trust’s beneficiaries. A settlor can be a beneficiary of the trust too, including other beneficiaries such as your family members.
An owner placing property into trust turns over part of his rights to the trustee, separating the property’s legal ownership and control from its equitable ownership and benefits. This may be done for tax reasons, where the trust is located in a more favourable tax regime, or to control the property and its benefits if the settlor is absent, incapacitated, or dead.
If the trust is located in certain countries such as Jersey, Samoa, Singapore or Hong Kong, the law recognizes that the settlor may reserve powers in the trust so that he can maintain a certain control, such as to change the trustee or even to terminate the trust, unless this settlement of his property into the trust is clearly a sham and the trustee is merely an agent.
The trustee is given legal title to the trust property, but is obligated to act for the good of the beneficiaries. The trustee may be compensated and have expenses reimbursed, but otherwise must turn over all profits and proceeds from the trust properties.
There are professional trust companies in many jurisdictions and you are advised to locate your trust in a jurisdiction which uses common law and has the most advantageous tax regimes.
However you may need to arrange with the banks on the transfer of your property into the trust on account of your existing loans.