Dodgy Thai emails
Buying a property in Thailand sounds great, but make sure you don't conned by some dodgy property scamsters.
I have never been to Thailand but with the beaches, the food and the people, I can understand the attraction for a visitor.
And even better would be owning a Scandanavian-designed luxury flat in a resort that I am told in an email, is not just one of the top holiday spots in the world but “the world's premier tourist attraction”.
That does not allow for doubt - it's bigger than the Great Wall of China and more significant than the Vatican – not bad for a beach village somewhere in a country which has hundreds of great places to stay.
And just so that buyers know they are moving into the big celebrity league, the resort can claim a “ski legend, an ice-hockey star and a table tennis phenomenon” among those who visited and had a great time. It would be unworthy to assume they were offered free accommodation in return for endorsing the properties.
Sky high commission
Even better, my email tells me that I could get “sky high” commission for selling the apartments and penthouse suites. It does not specify the rate but to compete for agents against other developments elsewhere, it will be 15 to 20 per cent. And as the typical list price of a two bedroom flat is over £100,000, even selling two or three a year would keep me in beach bum laziness and luxury.
And for those who cannot find £100,000, I could offer other options. One is a zero per cent loan from the developer for those who put a 33 per cent deposit down Or if that's too much, there is “fractional ownership” - a form of cleaned-up timeshare. This starts at just £6,500 for a week.
But like so many foreign property deals, there is a whole lot in the offer that doesn't quite add up. Anyone buying something thousands of miles away has got to be doubly sure as they can't pop round every time a new light bulb's needed.
The email said – presumably to give me confidence either as a buyer or as a potential agent – that the deal is an “FSA Regulated Transaction”. This puzzled me. So I called the Financial Services Authority and asked the watchdog about its role in this.
There must have been much scratching of heads at FSA Towers. But after a very long pause, they admitted they had no idea. “We don't regulate property sales, and we don't regulate anything in Thailand. It seems like our name has been used to give a layer of of confidence. If it does not go according to plan, we can't do anything and there is no compensation scheme.”
It might be, however, that the transaction of sending money to the Thai developers is regulated because it would come from a UK bank which would have to ensure the money went to the right account.
Buyers can put the property into their Self Invested Personal Pension (SIPP) but then SIPPs accept lots of assets – as long as it is on the HMRC list, it can go in. But as the taxman tells me, that is no guarantee of the asset's present or future value.
The marketing looks like a financial deal. It seems that the properties have been going like hot cakes with, according to the email, more than half “sold out before the launch”. That should mean rarity and a soaring resale value. The developer's own website, last updated in January, shows only a handful of the fifty or so properties bought at that date. If more had been sold, surely sellers would wish to record this.
But for those who might harbour doubts, there is a double clincher – the word “guaranteed” appears twice in the email. There is a “10% guaranteed return from day one” - so on the £100,000 example, I could get £10,000 a year (tax-free into my SIPP). Sounds great.
Plus, there is a “120% guaranteed buy-back after 10 years” so I would get £120,000 plus the £100,000 in returns by 2022. Sounds unbeatable, especially as most beach-side properties in tropical countries soon start to look shabby and depreciate in value.
There's just one little problem. A guarantee is only as good as the company backing it – even some of the world's biggest banks can go bust – and there is no indication who is backing this warranty.
Thailand is a great place for a holiday. But would I want to invest £100,000 or more into a beach-side flat even after a short inspection tour? My answer is no.