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Wednesday, 30 May 2007

Property News from Koh Samui in May

The most important news item and event this month has been the ruling of the Constitutional Court on the future of the Democratic Party and the Thai Rak Thai Party. There were fears of mass demonstrations and riots in Bangkok but despite the ruling exonerating the Democratic Party and banning Thai Rak Thai and nineteen officials for five years, the matter seems to have passed off peacefully, at least so far. Reports suggest that most people think the ruling is correct and indeed all the Thais I spoke to last night (both of them) thought this was good for the country. It seems far more likely that the elections scheduled for December will now go ahead as planned which has to be a good thing for everyone.

The South West Monsoon has arrived and inevitably we are getting a few rain showers coming through, some heavier than others but actually very welcome and as this is low season, just the right time. This is where Koh Samui beats Phuket during the summer months as they get the full force straight off the Andaman Sea and we just get the remnants which keeps things green and lush, fills the sub-aqua but is not so constant that you cannot get a sun tan!

I have been criticised by one or two local readers of my monthly Newsletter for including an article last month which included some misleading and incorrect statements. The criticism was possibly correct in as much as I did not add a comment disagreeing with the content but simply plagiarised it from The Nation. To set the record straight – there is no 150 metre rule on Samui and no one can name more than one of these foreign investors who have pulled out. The view of the market on Samui was also distorted and whilst no one can deny that things have slowed down, we are still receiving regular enquiries for both land and property on the island. My impression is that many people want to buy in Thailand and in Koh Samui in particular, but are unsure how to do this safely and legally. I expressed part of the solution in last months Newsletter and, whilst there are no public statements to support this, the grapevine suggest that the powers that be have at last realised that their proposals are not practicable.

The leasehold structure is certainly becoming more acceptable and Lynx Developments have been very successful in selling their townhouses in Choengmon on this basis. We have also in this last week concluded both a house sale and a land sale on long leases so it is not all doom and gloom as some people would like to think. In fact many people seem to be thinking that now is the right time to get into the market and some of the enquiries we are getting are for quite substantial areas of land or properties. In fact (and I am touching a lot of wood as I type this!) this last week has been as busy in the office as I have known it for a long time.

The concern of most people, as we have stated before, is what happens at the end of the initial 30 year lease period if the original landowner is no longer around for whatever reason? With a management company owning the freehold this is not really a big issue and is becoming an increasingly popular way to go. It is always when the freehold of the land is held in the name of an individual that the potential problem arises. As far as we are aware – and we have made enquiries – no renewal options against heirs of original owners after 30 years have been tested through the Courts – mainly because no leases are that old and it may be a good few years before they are. The positive side is that even under present law, provided the structure is owned separately, the landowner cannot simply take the property back without compensation, so there is good reason for them to grant a new lease.

Another issue was highlighted this month from two different people. One has his pension paid to him from the UK every month and he found that his last payment received in Thailand was Baht 7,500 (£110) less than usual. The bank were their usual unhelpful selves and blamed the difference on the routing through various different banks and charges at each stage. That is absolute rubbish! We have funds coming into our Clients Account on a regular basis and this does not happen. What actually happened was that the UK bank converted to Thai Baht before transferring the funds which even in the past was the wrong thing to do, but now we have an onshore and an offshore exchange rate and there is a 5 Baht spread. The Baht against the UK Pound offshore is about 63 whilst onshore it is 68. It is vital when transferring funds to Thailand to give clear instructions to your bank to transfer in your home currency and have the conversion made to Thai Baht here in Thailand. Even before the present disparity in exchange rates emerged this year, we always obtained a better rate on exchange in Thailand than overseas. The other main point is that for amounts over $20,000 you can get a Foreign Exchange Transfer Certificate issued by the receiving bank which you need to take the money back out of Thailand at a later date without problems. If you send the funds in Thai Baht you cannot get this certificate. The second case was a Client who was considering buying Baht offshore in respect of a considerable purchase here in Koh Samui. If he had done so the difference in the offshore/onshore rate would have cost him £31,000 and he would not have received the Foreign Exchange Transfer Certificate. Always buy Thai Baht in Thailand – not overseas.

In this months Newsletter you will read a couple of reports of buildings and cars damaged by fire. This came a little to close to home this month when we experienced an electrical fire in the cabling at the rear of our office. Luckily this was spotted quickly and extinguished before any serious damage was done to the building although it took a full day to restore power and we were off line until the next day so we apologise if there was a time when we were not responding as quickly as usual to your emails. However, it does make you realise how important insurance is, not just to have it but to ensure you have the right cover, correct insured amounts and pay the premiums on time. For those of you who know our building, the upper parts of which are timber, very dry timber, you can imagine how quickly the fire could have spread. The Koh Samui Chaweng Fire Station is on the Laem Din Road near to the Beach Road and so only a short drive away, but ten minutes might have been too long. Fire extinguishers are essential – we have two but only needed to use one. Dry powder makes a mess (ask our Maid!) but was very effective on this fire. The emergency number for the Fire Station is 199.

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