Aidan Wee is the Managing Director of Somot Realty Co., Ltd. and is a Licensed Property Salesperson (Accredited by the Council of Estate Agencies in Singapore). www.Somot-vn.com, (+65) 9345 8633 or e-mail aidan.property@ outlook.com
SAFE TO BUY VIETNAMESE PROPERTY YET?
Q :Vietnam has amended existing laws to encourage foreigners to buy property since July 2015. However, I understand that the government has yet to finalise the regulations guiding the implementation of the amended laws. So, at this point in time, can I purchase Vietnamese property without any hindrance or delay?
AW : Yes, you can. The law has been passed and has taken effect. However, various government departments such as taxation, foreign investments, and the Ministry of Construction, have not been issued a circular from the state regarding the procedures guiding the implementation of the law.
For example, what are the necessary documents foreigners need when applying for ownership certificate and how to check if the quota for foreign ownership of properties in a district has been met, etc.
The issuance of this guiding circular or decree has been delayed due to the grey areas with some points in the law needing to be clarified. It was supposed to be out at the end of September 2015.
That said, no delay is expected upon purchase of property because when you buy an off-plan new launch in Vietnam, the developer will submit the necessary documents for application of Ownership Certificate only upon the completion of the building and handover of the apartment unit a few years down the road.
The developer guarantees in its Sales and Purchase Agreement that the Ownership Certificate can be obtained, otherwise the paid amount will be refunded to the buyer.
Laksamon Dhamminch is Head of the Legal Department at Antares Advisory, a law firm based in Bangkok’s CBD. She specializes in Property Law, and advises clients on property acquisitions, development planning and construction regulations. She can be contacted via antaresadvisory.com or emailed at laksamon@ antaresadvisory.com
SELLING YOUR PROPERTY IN THAILAND
Q :I am planning to sell my condominium in Bangkok worth about THB10 million. I bought it since 2012 for THB8 million. The condo is jointly owned under my name (I am Malaysian) and my Thai wife’s name. At the moment, there is a tenant staying there and the expiry date of the tenancy is next January. Are there any restrictions I should be aware of e.g. Can I sell to anyone including both locals and foreigners, is there Real Property Gains Tax, and how much commission do I need to pay to the agent to sell for me? Can I let potential buyers view the condo while the tenant is still staying there? Any other information on selling property in Thailand would be very much appreciated.
LD : Your case is very common and clients coming to our law firm often wonder about the tax and legal implications of a sale. There are several parts to your question and therefore I will endeavour to answer them in chronological and practical order.
Firstly, the Thai Revenue Department does not enforce a Property Capital Gains Tax; however before you start “popping the champagne”, it is important to note the profits from the proceeds of a property sale are instead subject to Income Tax. The calculation for this can be complex and depends on the individual’s situation and circumstances; however the Tax is charged at a progressive rate starting from 5% to 37%.
From the brief review of your situation, I understand you have owned the Unit since 2012 so that would mean that the term of ownership is less than 5 years. You would also therefore be subject to the Special Business Tax (SBT) which is 3.3% of the sale price or appraised value. Except if the seller has registered the name in the House Registration Book more than one year, the SBT will be exempted and there will be the duty stamp at 0.5% of the sale value applied instead.
The final Fee on the Sales of your Property would be, the Registration Transfer to the new owner. This is usually at 2% of Appraised Value; however due to recent changes in legislation, if you were to sell before April 28, 2016 you would only be subject to a 0.01% Transfer Fee.
In terms of restrictions on the Sale, provided the unit is registered in the Foreign Quota of the Condominium, there will be no restrictions on the sale to Thais and Non-Thais.
Therefore to recap:
The final part of your question pertains more to the “marketing” of the property. Upon consultation with a property agent, I understand that this Fee is a standard 3% of the Sales Price throughout Bangkok.
Conducting successful viewings while the Property is tenanted will depend on your Rental Agreement and the relationship you have with your Tenant. Rental Agreements tend to have clauses allowing access to the property “provided adequate notice” is provided. However, since the key to a successful sale at a good price is to “maximize viewings”, this may disturb your tenant’s peaceful occupation of the property. Therefore, the best course of action is to discuss with your tenant and have an arrangement in place (i.e. Viewings can be conducted only on certain days).
Property Law and Tax can be quite complex in Thailand; on top of this, the government departments involved in property transactions, notably the Revenue Department and Land Department operate in Thai which is an added obstacle. Therefore, I would advise anyone looking to buy or sell to engage the services of a good and reputable law firm.
Q : Will the S & P be both in English and Vietnamese? And which one takes precedence? What is the track record of Vietnamese developers in terms of construction time? If beyond the time stipulated in the S & P, would there be problems getting compensation from the developer?
AW : Prior to the implementation of the existing Law on Housing, foreign developers in Vietnam have all these while practised issuing the S & P in both English and Vietnamese language. Both versions are of equal standing and are governed by the laws of Vietnam. With the existing Law on Housing, an increasing number of domestic developers are following suit with this practice; currently most developers that are targeting foreign buyers have both language versions of the S & P.
Most of the established (financially stable) Vietnamese developers keep to their construction schedule as stated in the S & P very well; from experience, most projects are completed and handed over well within the stipulated construction time frame. The same cannot be said for lesser known developers.
If the construction drags beyond the time frame as stipulated in the S&P, or if the developer goes bust, or for whatever other reasons, a guaranteeing bank will compensate the buyers. This is in accordance with the existing Law of Real Estate Business whereby all developers are legally required to take up a banker’s guarantee on their real estate project. Moreover, the issuing bank must be approved by the State Bank of Vietnam. Photography by Jan Yong
Ho Chin Soon is a map maker, author, valuer and is Chairman of Ho Chin Soon Research, a property information company that specialises in land use and ownership maps. He can be contacted at firstname.lastname@example.org Website: www. hochinsoon.com
WHERE ALONG HIGH SPEED RAIL ROUTE TO STAY TO COMMUTE TO WORK IN SINGAPORE?
Q : I work in Singapore CBD and currently own a condominium in a nice neighbourhood. However, with the Singapore – KL High Speed Rail coming up in a few years’ time, I am seriously looking at staying in Malaysia and commuting to Singapore to work. Which part of the route along the HSR should I stay at? I understand it takes 2.5 hours door-to-door including immigration to arrive from KL to Singapore. Would Iskandar be the best place especially around Puteri Harbour/Horizon Hills area. I also understand there is a ferry terminal already built linking Puteri Harbour to Singapore. Or should I stay somewhere further like Melaka or Seremban which is far cheaper and yet the commute time is not too long?
HCS : The location of the High Speed Rail station in Singapore is in Jurong Country Club which is not exactly the CBD. At this point in time, we are not sure what the price of a “season ticket” is and by “season ticket” we mean a ticketing system and pricing for regular travellers who make, say 3 to 5 trips per week back and forth.
Staying at Batu Pahat or even Ayer Keroh in Malacca and working in Singapore is possible with the high speed rail. Much depends on where you actually work in Singapore and how much the “season ticket” is going to cost you.
The other factor is the RTS (Rapid Transit System) which is between Bukit Chagar in Johor Bahru and Woodsland North in Singapore. This is where the MRT train from Singapore punches into Johor Bahru. The Woodsland North is part of the Thomson East Coast Line and one can imagine the flexibility once a person takes the MRT from Bukit Chagar at Johor Bahru and being able to connect to almost every part of Singapore.
As for the ferry from Puteri Harbour, the magic will begin when the Singapore Government allows the ferry from Puteri Harbour to stop at Tuas at Singapore which will have an MRT Station.
So the answer to the question depends on where your work place is in Singapore and how easy it is to get on the High Speed Rail station located in Gerbang, Batu Pahat, Pagoh, Ayer Keroh or Labu or even Bandar Malaysia; how near to Bukit Chagar MRT station in Johor Bahru one is and perhaps a residential development that is within walking distance from the Puteri Harbour ferry terminal. And of course, not to forget the prices of “season tickets” for whichever mode one chooses.
‘PERFECT’ TENANTS ARE FOR REAL
Q : I understand there is no credit check system in Japan, so how do I check out a potential tenant for my downtown Tokyo apartment? Are there credit guarantee companies and if so, how reliable are they?
ZNM : Credit guarantee companies or rent insurance companies, as they are known in Japan, are quite reliable, and are one of the three types of guarantees a tenant can potentially provide when leasing a property (the other two being a security deposit and personal guarantors – which can be of various degrees of reliability, from friends or colleagues, through family members, and all the way up to employers). These companies will interview a potential tenant, review their income status and require documentation to prove it, prior to approving them – and will often refuse to issue the insurance contract and advise against the tenancy, if they are unsatisfied with the results.
Generally speaking, Japanese tenants, while not as officially verifiable as tenants in most Western countries, also tend to be far more reliable, and would rarely have payment issues compared to other countries. In over 130 properties managed by our company, we have so far only had one tenant with chronic payment issues, and another one who absconded altogether (the rent insurance paid three months of missing rent on his behalf, as well as for the cleaning and removal of personal items following that).
Perhaps most importantly, tenants here would almost never intentionally damage a property, use it for illegal purposes, squat/allow unauthorised sub-tenants to move in with them, or any of the other ills often associated with bad tenants elsewhere – and, surprisingly enough, this is also true for the lowest end of the tenancy market.
The reason for this is that, culturally, “doing the right thing”, or behaving in the “correct” way is one of the main pivots of Japanese society – strictly governed by social expectations, concepts of respectable and honorific behaviour and appropriate citizenship – which, to the average Japanese, can be a far stronger deterrent than legislation and fear of repercussions. This is doubly true in the case of company employees, whose biggest fear is that their bosses and colleagues may somehow find out that they have behaved inappropriately. Strange but true