Project
Himmapan, Beach Samui, Bophut Koh Samui, Suratthani, Thailand
www.himmapanbeachsamui.com
Developer
Q Name of the Company or Individual who holds the title deeds of the land to be built on?
A Gled Hill International Co. Limited.
Q Name of the company or individual who has obtained planning permission and when was this obtained?
A Gled Hill International Co. Limited. All permissions were obtained in 2006/2007
Q Registration number of the company, address, phone number, fax and email?
A Registration Number: 0105548135430,
119/23-24, Moo 1, Tambon Bophut, Koh Samui, Suratthani, Thailand
Tel: +66 (0) 77 245 830
+66 (0) 77 960 910 – 19
Fax: +66 (0) 77 430 464
info@himmapanbeachsamui.com
Q Land and company papers – maybe even build permits?
A All relevant documents are in the LVLA.
Purchasing Process
Q What are the rules around property ownership by foreign nationals in your country? E.g. do purchasers need to establish a local limited company?
A Non Thai nationals (foreigners) are generally not permitted to own land freehold in Thailand.
Consequently, in the past most foreigners established a Thai Limited company in which they held a minority shareholding stake, but controlled the company by way of weighted voting rights. Recently, however, that structure has come under severe scrutiny and proposed amendments to the relavent laws aim to make such structures illegal. Therefore, for the time being, the only certain way for a foreigner to have a secure long term possessory right to real property in Thailand is by way of a long term lease.
Q Are the properties sold freehold or leasehold?
A Leasehold, but by giving the buyers/lessees effective control of the lease as discussed above the buyers/lessees effectively have a quasi-freehold interest in the property.
Q What are the advantages of purchasing as leasehold?
A Leasehold – more straight forward, secure and tax efficient under present laws:
• 30-year renewable on land and property
• 1.1% tax on sale and purchase
• No capital gains tax to pay in Thailand (unlike freehold)
• No company set up and annual audit expenses as for freehold
• Legal certainty
Q How long will it take to register the lease to the new owner on completion?
A Approximately one month from when all monies have been paid to the developer.
Q Is there an initial reservation fee and if so is this refundable? Will these properties be reserved for our
clients for a limited period from receipt of reservation fee?
A £500 non refundable. All monies to be sent to Fareps. Property held for 30 days while investor
reviews contracts.
Q What is the deposit structure? How do our clients pay for the property and to whom?
A All monies are paid direct to FAREPS in sterling. Himmapan Beach Samui operates a milestone payment structure. With 10% deposit followed by further payments of 10% on commencement of works (September 2008), 10% on completion of foundations, 10% on completion of roof, and the balance of 60% upon registration of lease at the local land office.
Q Are there volume discounts for multiple purchases?
A Yes, open to negotiation with developer.
Q Where does any deposit or stage payment sit? Do monies go directly to the developer or do they sit in an escrow account?
A Escrow accounts are not available in Thailand. As Himmapan Beach Samui operates a milestone payment system all monies go to the developer towards construction payments. As with all off plan sales the discount is given as the developer uses the deposit monies towards construction costs this effectively reduces the need for construction finance.
Q What are the closing costs – e.g. stamp duty, local taxes, national taxes and lawyer fees?
A Closing costs are 1.1% of the purchase price (compared to 6.3% via a Thai limited company purchase). Estimated legal fees of up to £1,500
Q Do you know an independent lawyer that can act on behalf of our clients for the purchase?
This lawyer cannot also be acting for the seller.
A Yes, the following lawyer is one of the biggest in Thailand and has already acted for pension
trustees who have invested in Himmapan properties.
Mr Matthew Minnillo
LS Horizon Limited,
14th floor, GPF Witthayu Tower A, 93/1 Wireless Road,
Lumpini, Phatumwan, Bangkok 10330, Thailand.
Tel: (+66) 2627 3443
Email: information@lshorizon.com
Web: www.lshorizon.com
Q What is the normal time frame from reservation to the completion of the property?
A Depending on when the purchase is made but usually around 12-18 months. The first phase of
Himmapan is due to be complete by December 2009.
Q Is a 30 year lease term renewed 3 times to make the lease 90 years, the maximum?
A 90 years is not the maximum under our contracts. The lease is written as 30 year renewable perpetually.
Q What would be the cost/taxes applied to renewing the lease?
A The cost of renewal would be 1.1% of the assessed value of the apartment.
Q If the value of my property upon renewal has risen one hundred-fold, then the 1.1% lease tax would be a lot more than the one-off 6.3% if I had originally purchased through a Thai limited company?
A Statistics show that the average time for keeping a property abroad is less than nine years.
Realistically look at your own situation: how long are you likely to keep this investment for? Is it
likely that you will sell this investment within the first 30 year renewal period? Most important is that on resale of your apartment within the period of your lease the 1.1% lease
tax becomes the responsibility of the new buyer. Furthermore, the buyer automatically gets issued a new 30 year lease and not the reduced balance years of your lease. You, as the seller, do not have to pay any capital gains tax to the Thai government, although you will need to check your tax obligations in your country of domicile. If you were to keep the property past the renewal period then the 1.1% calculation for the renewed lease will be based upon the national government assed rateable value of the property which is always a lot less than the market value.
Furthermore a purchase through a Thai limited company is full of problems, such as additional
set up costs, annual audit fees, and capital gains tax on resale but most importantly lack of control. Annual audit costs over a 30 -90 year period amount to a considerable expense in their own right. Government rules state that a Thai limited company has to have 51% of its shares in the names of Thai nationals (many have tried to circumvent this issue by issuing preference shares in the favour of the foreigner but be warned: this is illegal under current Thai law). Another perfectly legal and acceptable solution is to use Thai and off-shore companies but it is extremely complicated and only financially viable for very expensive villas of £500,000+, or for whole blocks of apartments.
Q What security do I have that in 30 or 90 years time the lesser (land holder?) will renew my lease?
A The contracts have been written so that the buyers/lessees can ensure that the lease is perpetually renewed.
Q Who legally owns the land that the apartments are on?
A During the build stage the land with buyer units on is put into a non-trading SPV (Special Purpose Vehicle Company). Once units are complete the shares in this are handed over to Hampton's International Mortgages who do the following;
1) Provide buyer finance to those buyers who require it
2) Provide a finance option for secondary buyers i.e. if people sell their units new buyers can also get finance making the units much easier to sell
3) Hampton's look after the lessee's interests by providing an independent renewal of lease services etc. etc.
Q Is there possibility of purchasing freehold if I am a UK expatriate or foreign resident from Thailand?
A Under current Thai laws only Thai nationals or Thai limited companies can own land freehold.
Construction
Q Are there builders' warranties on the new build? If so, how long do these last?
A Halcrow the project managers will be undertaking the tender process within the next few months and on awarding of tender the exact details of the warranties will be available.
Halcrow is a reputable engineering and project management corporation with offices spanning the globe. Halcrow will insist on warranties that will satisfy any investors.
Q Do the construction company have any other close ties with the developer other than construction purposes?
A No. The developer has no close ties with construction companies and as a result will not have any close ties with the selected contractor after the tender process.
Q What is the construction of the building?
A Column and beam construction.
Q When is payment for the furniture pack required and how is it paid?
A You will be sent information about the furniture packs around three months before completion,
when you will need to pay a deposit of 50%, with the balance to be paid when it is shipped, usually around one month before completion.
Q If I bought your furniture package would that mean that items needing replacing would be replaced by the management company or by me?
A Himmapan Beach Samui is a five-star resort hotel. All items that become defective for whatever
reason will be replaced by the management company (consistency of quality and style for rental
pool requirement).There would be no additional cost for this to the owner as its replacement forms part of the management company’s structured replacement program and all costs are paid for by the hotel group. For example: if one of your apartment’s flat screen TVs was to break down it would automatically be replaced and all you would notice is a new TV on your next holiday. No extra money to find and no hassle!
Q Does the property come with a car parking facility?
A Each apartment has an allocated car parking space on site.
Q Please give details of any stage construction in terms of current phase and number of planned
phases with dates.
A The whole of Phase One is to be built as a single phase. Works will commence in October 2008 with planned completion in December 2009.
Q When will the whole project be completed and will further building works infringe on my holiday?
A The whole of the Himmapan Beach Samui destination resort has a five year build program. The
site has 3 rear access points. All construction traffic will enter and leave the project from these.
Furthermore, as Phase One is completed the shell and hard construction works of Phase Two front line apartments will be erected at the same time. The landscape architects will skilfully introduce vegetation to these areas. These three main factors will minimise the effect of ongoing construction. Remember that your off-plan introductory price takes these types of disturbances into consideration.
Costs and Finance
Q Is there a homeowner's fee payable monthly for the upkeep of the communal areas such
as lawns and pool?
A There is no monthly fee payable as this is covered by Himmapan Beach Samui.
Q What is the cost of building insurance?
A The annual cost for building insurance will be paid for by Himmapan Beach Samui.
Q Are mortgages available?
A Yes Fareps are now able to offer 60% LTP (loan to purchase price) on most Fareps project.
• The term of the loan can be for 25 years or up to a maximum age of 85.
• Six months bank statements required with a credit check and proof of employment.
• Current interest rate is based on Thailand’s MLR rate (minimum lending rate),
at the moment being 6.8%
• In addition to the interest cost you will need to take out off-shore life insurance and
a savings plan for the loan repayment. The cost of the life insurance depends on your sex,
age and life style (smoker etc), whilst the savings plan depends on the term chosen.
We estimate that these additional costs will be not more than 2.5%, as they would be on
a traditional mortgage in the UK.
• Therefore the all-inclusive cost is around 9.3%.
• Closing costs, including legals and local taxes are 2%, which can be added to the loan.
• Payment of 40% is required during construction. The remaining 60% being covered by
the mortgage.
• The gearing and cash flow benefits of the scheme provide a huge investment benefit
importantly; the 8% guaranteed yield means that a cash surplus would remain after the
loan repayments have been made.
Q Are there any other purchase options?
A All units at Himmapan Beach Samui can be purchased through an approved S.I.P.P. (Self Invested Personal Pension). Himmapan Beach Samui has full approval from the UK authorities.
Q Can you explain how we can purchase through our pension funds?
A Hotel bungalows and suites at Himmapan are deemed as commercial property and are elegible
for Self Invested Personal Pensions. They can be opened by anyone under the age of 75, can
receive both transfers from existing personal pensions and cash contributions equal to 100% of total gross earnings and receive up to 40% additional funding through Inland revenue tax relief.
Q What is the currency structure for buying the property?
A Thai Baht is the currency structure for buying the property
Q Do you know the estimated cost for water and electricity?
A The costs of the above utilities are paid for by Himmapan Beach Samui
Q Do the management take care of all bills for the suite owner?
A All bills relating to the hotel operation are taken care of by Himmapan Beach Samui though any
personal bills for suite owners staying at Himmapan are the responsibility of suite owner.
Rentability
Q Are all the properties licensed for rental locally? If so, are there any restrictions on the time
of year or the number of weeks these can be rented out?
A All units are sold compliant for the rental market. There is no restriction on time for personal
use though the 28 days offered will be reduced if utilised during high season.
Q Do you have a management programme in place for rentals? If so, what are the charges? Are there any rental guarantees?
A Himmapan Group will be running the management program. Owners have a choice of a fixed rental guarantees being 7% over two years (8% if deposits are paid by 30th June 2008), alternatively they can opt to go into the Himmapan Beach Samui rental program where the owners’ return will be 40% of all the rental income of units that are participating within the rental pool program (the rental pool program is outside of the rent guarantee system).
Q What comes out of our 40%?
A Your 40% is net of charges and costs. Please see the explanatory diagram below for a full breakdown.
Q Once I go into the rental pool how does my share of the 40% work out?
A Basically when the hotel is open there are three types of room being:
• Lockout room
• 1 bedroom suite (two bedroom suite after taking out the lockout
room)
• 1 bedroom penthouse (two bedroom suite after taking out the lockout room)
To keep things fair all units that are available for rent are allocated the rack rate (the published hotel room rate) for the day and the total revenue for distribution is multiplied by their rack rate divided by the total of all rack rates. It is done this way because there are so many different discounts and occupancy levels that this method simplifies the calculation. This is just a weighted average calculation which smoothes out the distribution.
So for example if a person has a two bedroom apartment then his/her revenue would be calculated by adding one lockout and one 1 bedroom suite.
In the example below the revenue would be:
Single Lock out rack rate 9,600 divided by total rack rates added up of 4,344,000 times the actual revenueof 2,254,200 which is 4,982
The one bedroom suite is 14,800 divided by total rack rates added up of 4,344,000 times the actual revenueof 2,254,200 which is 7,680
Add both of these together and get the two bedroom suite gross revenue of 12,662 which is then multiplied by 40% to get their portion which is 5,064 for the day.
Q When if ever I should decide to leave the rent guarantee system and opt for the rental pool program?
A Difficult to say as it all depends on your attitude towards risk. Most SIPP purchases will be
staying for the long term rental guarantee, though historically all new resorts take about four years to reach maximum occupancy levels. The majority of purchasers will opt for this time point and go into the rental pool system.
Q Can you explain further what the rental pool program is?
A All units (when not being used by their owners as apart of their allocated 28 days a year
personal usage allowance) can go into the rental pool system if they have purchased a furniture
pack. All units benefit from income even when they are not being rented out.
Q What is the average rental income per week that can be obtained? Is this currently being achieved or this is an estimate?
A The rental season is 48 weeks per year. Koh Samui’s average room occupancy is running at 72% with an average room rate of £130 per night. The units will attract the higher end because of their quality, resort facilities and their beautiful location.
Q What is the length of the tourist season for rentals?
A 48 weeks per year:
• Super High Season 20th December to 6th January
• High Season 7th January to 30th April & 1st July to 30th September
• Low Season 1st May to 30th June & 1st October to 19th December
Q On what level of occupancy does Himmapan Beach Samui require in order to pay the rent guarantees?
A Himmapan Beach Samui has been very conservative in all of their calculations in order to offer
maximum investor security / returns. They have only used 55% occupancy as their bench mark in
order to obtain sustainable income levels. In year four of operation occupancy levels are expected to be in excess of the island’s already high 72%.
Capital Growth
Q What is the annual percentage rate at which property is currently growing in value in your country? Please include the last five years’ percentages and future three year projections.
A Koh Samui has experienced average annual capital growth of 15% over the last 5 years and all
economic factors are indicating that this will continue for the foreseeable future. In fact BDO Richfield have said “Thai assets have become more attractive, with the potential to generate annual returns of 20 per cent or more”
Q Are destination resorts likely to outperform their surrounding areas growth even if they are
already high?
A Yes due to the higher achievable room occupancies attainable as a result of the wider selection of resort facilities and restaurants coupled with Micros Opera Reservations system to maximise
reservation traffic.
Resale
Q Will the client be able to resell the property through you in the future?
A Yes we will assist in the resale of property as we have a large network of agents around the world.
Q Are the sales contracts assignable?
A The contracts are assignable for an administration fee of £500 payable to FAREPS.
Q Who pays the administration fee and when?
A The seller pays the fee when the instruction to issue contracts to the buyer is given.
Q What is the cost of the re-sale of the property?
A Typical agent costs vary from 5% - 10%.
Q Does the apartment have to be sold on as leasehold?
A Yes the apartment has to be sold in the same way that it was purchased. However on resale the new owner will get a new 30 year perpetual lease and not the remainder of years as in the UK.
Location
Q Exact location of the development (with map preferably), showing location in relation to surrounding area (nearest village, town, city) and proximity to amenities.
• Most exclusive area of a five-star island
• On the beach
• North-east of Koh Samui on the Choeng Mon peninsular
• 10 minute drive from airport
• 15 minute drive from Santiburi Golf Course
• 5 minute drive from the boutique restaurants of Fisherman’s village
• 15 minute drive from Chaweng the island’s main resort area with its night life and wide
range of shops and restaurants
• 15 minute drive to the island shopping mall area with Big C, Macro and Tesco Lotus which
has a cinema, 10 pin bowling complex and multiple shops and restaurants.
Q If we want to go and explore outside of the complex how easy is it to get around, are there
taxis or other transport close by?
A Resort is close by to all major tourist attractions and has easy access to transport facilities.
