PHUKET: It can be completely legal to operate a hotel in a condominium, but there are lots of laws, regulations and requirements to comply with and meet.
Recently, there has been controversy stirred up by announcements of enforcement of existing laws where unlicensed and non-compliant hotel operations are being thrown out of condominiums. I note it is often those who complain about the lack of enforcement of certain laws who then contrarily criticize the authorities for choosing to crackdown on what are often flagrant violations. You can’t have your cake and eat it, every time.
There is a lot of confusion in the discussions about hotels and condominiums. This is partly due to the advent of social media and ‘super quick’ unresearched opinions and speculation, often with rumor trumping common sense, fact and law. The information on how to conduct hotel operations legally in any suitable environment is available from the authorities, but the issue is that many simply didn’t ask, deliberately took a risk and didn’t seek to comply with quite basic regulations.
Like many aspects of law, there are different opinions on what can and can’t be done in a condominium environment. Condominiums were initially designed to be residential-only environments. The Condominium Act has gone through several revisions, with the latest, 2008, version attempting to bolster consumer protections and even providing a mandatory form of sale and purchase agreement to be used during the sale. Given the complexity of real estate, in particular the popularity of ‘mixed use’ environments, developers are left with little choice but to supplement such standard agreements with addendums and clarifications, beyond that which the legislator thought of. Provided such addendums don’t dilute consumer rights protected in the legislation, this is acceptable. However, many cross the line and then find out in court cases where the lines are drawn.
The Condominium Act doesn’t contemplate hotel use at all. The Hotel Act doesn’t contemplate hotels being operated in condominiums at all. That said, there is no prohibition on the concept of business being conducted in a condominium. However, there is a logical process relating to condominiums that must be followed to even build a condominium, and if you do not plan for the condominium to contain hotel operations in the future, then it can become very difficult to ever ‘convert’ retrospectively.
A condominium must have an environmental consent, normally in the form of an Environmental Impact Assessment (EIA) survey. The regulations and rules for buildings and design relate to condominiums, not hotels. Therefore, if there is a plan to operate a hotel, the architect, environmental consultant and developer must all work together to ensure the design of the condominium would also be appropriate for hotel use. Car parking, lift design, sewage, and health and safety features, to name a few, must all be planned carefully.
At the point a condominium is built, a developer will apply for registration of the condominium building and issuance of individual condominium unit titles. At that stage, a hotel cannot be operated in the property. The EIA is still for condominium use. Subsequent to issuance of the condominium unit title deeds, there must be a new EIA application for hotel use. This process can take around a year or more, depending on how organized and competent the developer and consultants are.
After an EIA is obtained, the developer must submit to the authorities not only the EIA, but also a consent to operate hotel and change use of building documents to the District Office, among other items. If the co-owners didn’t pre-agree to sign these documents, then this means the application cannot be filed and the condominium cannot be operated as a hotel. Management between the ‘Condominium Juristic Person’; ‘Condominium Juristic Person Manager’; the Condominium Committee and the co-owners also requires careful attention to ensure rules and regulations are not violated.
It is not necessary to ‘dissolve’ a condominium in order to obtain a hotel license. The titles can still remain issued and valid.
The issue that exists now is that many developers and owners didn’t foresee the hotel style of use in their projects. Instead of thinking about compliance, many jumped in and advertised their properties on hotel style websites – Airbnb, Agoda and the like. The authorities have seen this, and it gives rise to multiple issues. Many are not paying proper taxes – business taxes or personal income taxes. If there is no licence, then the facilities that must be provided to guests cannot be inspected or supervised.
Thailand has a very strong hotel and tourism market. It has every right to protect that market and those who make money from a segment of tourists, be it visitors or real estate buyers. And naturally, they must abide by the laws and regulations.
Desmond Hughes has been an owner and operator of his law firm in Thailand for 14 years, and is a Senior Partner at the Hughes Krupica law firm: hugheskrupica.com
— Desmond HughesKeep in contact with The Thaiger by following our Facebook page.
Coronavirus, and Thailand’s property market
The Coronavirus outbreak poses challenges for Thailand’s real estate market as potential Chinese condominium buyers remain stranded in China. Analysts believe Chinese condominium transfers in 2020 will be at least 25% lower than average because of the challenges. Meanwhile, some believe that the outbreak may bring opportunities for non-Chinese buyers and in the long-run, the Chinese may be looking for an overseas refuge in the event of these types of emergencies.
Market remains weak
The pandemic, which started in China, is hurting the condominium market as Chinese nationals account for half of the international buyers in Thailand, or 57.6% of the total foreign condo owners in 2018.
Vichai Viratkapan, acting director-general of the Real Estate Information Centre says that 50% of Chinese condo transfers are expected to disappear in the first 2 quarters of this year and the total transfer value by the Chinese will miss the mark of the usual 29 billion baht by about 25% (around 7 billion).
However, since Chinese property buyers only make up 6% of the total international and domestic housing transfers in Thailand, the total housing transfer number in the country is likely to be similar to last year.
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On Monday (February 17), the Office of the National Economics and Social Development Council said Thailand’s GDP growth rate is predicted to be about 2% this year, a record low in the last 6 years. They forecast the rate will be achieved if the pandemic ends before April or May, tourist arrivals reach 37 million, and the world economic growth grows 3.2%, among other factors. Otherwise…
The Chinese are reluctant to complete transfers
The virus has continued to affect hospitality operators, including hotels and condominiums that service tourists, nationwide. Since China has suspended tours, put restrictions on movement, and locked down cities, home to over millions of people, it also poses a threat to real estate developers as their clients are unable or unwilling to fly.
“Currently multiple off-plan condominium developments are approaching completion, and Chinese clients are unable or unwilling to transfer. Chinese clients who made a reservation in Q4 2019 are requesting a refund and withholding their investment,” said Marciano Bijmohun, Business Development Director at FazWaz Property Group.
He believes every condominium that is in transfer status will see the percentage of non-transfer units rise in the coming months.
“These non-transfer units will cause a big financial hit to developers.”
If a client refuses to transfer, does not comply with the terms and conditions stipulated in the sales and purchase agreement, and decides to release the property, their deposits will be forfeited.
“However, there is some good news, these non-transferred units can be offered with a discount to new clients.”
Also, as China has been susceptible to a few disease outbreaks – from bird flu and swine fever and the current coronavirus – it may prompt Chinese buyers to look for second homes outside of China.Keep in contact with The Thaiger by following our Facebook page.
Major condo developers in Bangkok are looking for rental clients
As sales have taken a nosedive since last year, major condominium developers in Bangkok are looking for rental clients.
As an example, L.P.N. Development, which developed condominiums and houses under the Lumpini brand, is offering newly-launched condos for rent. The company plans to attract tenants by offering lower or slightly lower rents than the market price for a 3 year contract. The rented units are then combined and sold together to investors with 5-6% guaranteed rental returns which LPN adds on top to boost sales.
The strategy has been rolled out as some newly-built projects have seen less than 50% sales. Rents that are collected will be used for room maintenance. LPN condominiums that offer this strategy include Lumpini Township Rangsit-Klong 1 (2,700 units), Lumpini Place Rama 3 Riverine (100 units), and Lumpini Park Phahon 32 (100 units), or the total of 2,900 units worth 2 billion baht.
Another Bangkok developer, Supalai, has also unveiled Supalai Smart Solution, which offers a 30 year lease as an alternative to buying freehold, with the price 35-40% lower than purchasing the units. Buyers can pay 20-40 installments to Supalai with 0% interest within the period of 60 months.
Supalai believes this will meet the demands of high-earning customers, senior customers, and foreigners. Condominiums that offer Supalai Smart Solution are in Bangkok, Pattaya, Chiang Mai, Phuket, and Rayong such as Supalai Oriental Sukhumvit 39.
Many developers have seen sales plummet since last year, due to internal and external factors, including slowing economic growth, tighter mortgage regulations, and the strong baht which affects Chinese buyers, who are the major condo investors in Thailand.
SOURCE: positioningmag.comKeep in contact with The Thaiger by following our Facebook page.
Tips when buying a vacation home in Thailand
by Marciano Birjmohun
Imagine beachfront villas, riverfront condominiums and mountain hideaways. Vacation homes like these are often purchased for particular lifestyles and leisure activities. However, buyers may need to consider other factors to make the best buying decision. Rental management, for instance, should be considered as holiday home usage often peaks during the holidays, and many homeowners want to benefit from their investment, all year round.
Back in the 80s and 90s, close proximity to your primary residences was a major factor; most vacation homes were within driving distance or a short domestic flight away. However, globalisation has removed the barrier, and these days, investors cross land and sea to acquire their dream homes.
Location is the most important aspect when purchasing a vacation home for both residential and commercial reasons. When considering the location, keep the following questions in mind: Which recreational activities are available? Is there sufficient infrastructure such as mass transit, restaurants, and entertainment spots? Does the location offer a short commute to the airport? And, what kind of developments can we expect to see in the area?
Set in lush tropical gardens, Trichada Sky villa offers a private sanctuary. The pool & garden beckon while the elegant layout & design confirm you are here to relax. Pitched roofs over the common living spaces emphasise the tropical lifestyle.
Holiday lodges in Chiang Mai are best visited during the cooler period of the year, while the opposite is true for beach front homes in Phuket. Vacation homes are directly linked to seasons and climates. When purchasing a vacation home, consider which season matches with your preference and schedule – investors who live in the colder hemisphere often prefer a home that offers a “warm” welcome while people in tropical countries are tempted by a crisp hideaway.
Chiang Mai Onsen Wellness Resort is primed for wellness investment, set amidst unspoiled nature on a natural hot spring in Northern Thailand.
Nature and scenery
Whether you’re looking for oceanfront, mountains or beaches, everybody is looking for that perfect, personal vacation sentiment. This is a very subjective aspect of vacation homes and often the underlying trigger in buyers’ choices. It can be the rhythmic ebbs and flows of the waves that lull you to sleep or the grand mountain that inspires awe and ignites adventurous spirits. Your ideal home should be a retreat where your inner self feels at rest – or at its best.
Beachfront Bliss does not compromise when it comes to ocean views. The low-rise condominium sits on one of Phuket’s most beautiful beaches, making for a perfect seaside escape.
Thanks to vacation rental companies, holiday homes have gained global popularity and opened doors for millions of travellers each year. When purchasing a holiday home for investment, it is important to research rentability in the area, including: Which homes are in my area, and what kind of rental and hospitality services do the competitors provide? Is there demand and potential in this location? Which seasons will have the highest occupancy and how can I accommodate those travellers? The good news is high demand and a good reputation put your property ahead of the game and increase your rental returns.
Every detail in Chandra Villa on Koh Samui speaks of harmony with nature, from the lounge couch to the woven lanterns.
As a vacation homeowner you will not be able to manage your own property on a weekly or even monthly basis, and expect seamless results. It’s important, therefore, to work with a reputable rental management company or hospitality operator. These days, merely managing rentals is not enough; providing top tier hospitality is the key to success.
Keep in mind that the largest operator is not always the best operator. In many markets, boutique operators have created positioning that penetrates niche markets. In either case, that company will become your business card – and the point of contact between your clients and your property. Maintain frequent communication with the operator and have them provide regular reports.
M Gallery Residences, MontAzure Lakeside exudes charm and luxury in its design. This hotel-operated community is surrounded by lakes and tropical gardens.Keep in contact with The Thaiger by following our Facebook page.
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