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Ask here about the pleasures and pitfalls of buying, selling or renting property and real estate in Hua Hin. Building, design and construction topics welcome. Commercial or promotional posts for real estate companies or private properties are forbidden.
JW
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Post by JW »

OOPS, forgot something

Worse still are those who are duped into paying expensive house money for the same cheap rubbish! They believe the old line, its expensive so it is obviously good. Do your homework everyone.
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Post by caller »

JW - I know you are in the industry of selling houses, but to people like myself, I cannot help but listen to posters like Johny K who recently queried - with seeming expertise on the subject matter - why adjacent sites had no difference in quality, despite the differences in the price.

So how true is it that you get what you pay for?

I saw houses last year that had never been occupied, apart from Thais housesitting, where windows didn't shut properly and drainage seemed a mystery, but they were virtually all occupied.

Ans I recall looking at a show house at Laguna that was really badly finished - a show house!!

This is the type of situation where you cry out for some sort of regulatory body and things like 10 year guarentees to help the unwary i.e. me.

Its also why I'm beginning to think buying an established house might be a safer bet than new.
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Post by caller »

JW wrote:OOPS, forgot something

Worse still are those who are duped into paying expensive house money for the same cheap rubbish! They believe the old line, its expensive so it is obviously good. Do your homework everyone.
I wish I'd seen this before my last post, I only saw the earlier one from JW on the earlier page. Now when an agent says this its worrying!!!!!!

Who do you trust?
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Post by Big Boy »

JW Wrote:
Problem is many people are buying these cheap 2 million baht new builds with no idea of what they are gonna get. If its cheap its is so for a reason - like buying a pair of shoes, you get what you pay for, you can be re-healing pretty soon! - It aint rocket science.
Worse still are those who are duped into paying expensive house money for the same cheap rubbish! They believe the old line, its expensive so it is obviously good. Do your homework everyone.
Until 10 minutes ago, I thought I was probably going to buy a couple of cheap 2 million baht new builds when I retire. JW's now completely thrown my plans. :(

How does one do their homework? I've visited a few friends in their cheap 2 million baht new builds and have thought they looked quite nice - albeit, unless the roof was falling in, I probably wouldn't have noticed anything wrong.

Any advice would be gratefully recieved. :cheers:
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Post by Burger »

Caller/Big Boy,

As I said in an earlier post, there are good projects and there are bad projects out there. If you do not feel qualified (ie: not from a design/construction background), to fully inspect the properties yourself, then take along someone who can. This may involve using the services of a local Thai engineer, certainly will not be costly, but may prove crucial in selecting your future home.

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Post by malcolminthemiddle »

Hua Hin is undergoing an unprecedented transition.

The property boom is only one element of this transition and fueled, I suggest, by the increase in equity wealth enjoyed by US and European property owners, the relatively low cost of living in Thailand and the fact that Thailand is hard to beat and now easy to reach from nearly any where in the world.

But be beware, where there are winners there surely will be losers.

Much has been written on HHAD and other Thai forums regarding the pros and cons and procedures of buying property, so I won’t go there. Instead let’s consider some hypothetical issues which may or may not appear within the project you are considering.

On paper the project is wonderful, the concept and the location are great, price a little expensive but then exclusivity costs

So what are the problems?

Land Transfer – Some projects do not allow transfer of the land ownership until the house is built. Effectively meaning that you are funding the construction of a house on land owned by some one else. You have no tangible security throughout the construction phase and are at 100% risk should the developer go bust before the house and land are transferred.

House Completion – Linked to the land transfer is the House Completion. The land and house are only transferred once the house is complete and all payments are made in full, but what happens if you disagree with the developer that the house is complete? You have no choice if you want to transfer, you have to pay and get some one else to complete the work.

Transfer Charges – When land is transferred there are particular governmental fees that have to be paid such as taxes and stamp duty, the rate of tax depends on the length of time the land has been held by the seller. The fees are calculated by the Land Department on either their assessed value of land or the declared selling price, as a rough guideline allow 5.5% when the land has been held by the seller for a period of less than 3 years.

Each parties share of these fees is by negotiation, ensure the Land Purchase Agreement clearly states how these fees are shared.

Payment of the House Construction – Believe it or not some projects ask for payment of the construction in stage payments based on time irrespective of what work has been carried out whereas payments should always be based on stages of progress defined within the Construction Contract.

Service Charge - Once the house is completed, you will be expected to pay a service charge per m2 of land to pay for maintenance services. Yet the services to be provided are not defined, the Developer has reserved the right to increase the charge whenever he sees fit meaning you will be forever at the mercy of the Developer.

To prevent this undesirable situation, it is vital that once the Project is complete the Owners have the right to appoint the management company or manage the project themselves.

Sinking Fund – Once the house is completed, you will be expected to contribute to a Sinking Fund under the control of the Developer for repairs and improvement of the common amenities after the project is completed.

It is important that the contract(s) state this fund will be eventually handed over to the Owners or their nominated management company.

Meanwhile the fund should be held in a separate designated bank account with regular statements made available to the Owners.

Municipal Utilities - The expansion of HH municipal utilities is not keeping up with new developments so for projects out of town there is no guarantee of when municipal water and electricity will be connected to the project.

Make sure that the Land Purchase Agreement states that the cost of the land includes bringing future municipal utility supplies to the boundary of your land including water, electricity and telephone.

If the project has to rely on well water under the control of the Developer until municipal supplies are available, make sure the price of the water is defined within the contract(s) and if the well runs dry the developer will pay for any water that needs to be trucked in.

Also ensure the water storage tanks are a minimum of 5,000 litres and once municipal supplies arrive, meters are registered in your name.

Utility supply is also linked to Service Charges, there are examples where Developers have asked for an unsubstantiated, inflated Service Charge and used the utility supplies, which remain under their control, as leverage for payment.

Project Plan - The advertised Project Plan shows a maximum number and type of villas with common amenities such as club house and swimming pool. The price of each land plot includes a share of these common utilities as well as provision of municipal water and electricity to the boundary of the land and for this reason the unit price per m2 is high. Yet the Land Purchase Contract does not define the Project Plan or what is included within the land price other than the land itself meaning that the Developer is under no legal obligation to develop the Project as planned.

To prevent any future manipulation of the Project Plan, make sure a copy of the Project Plan is incorporated into the contract(s) as an integral part.

Warranty & Guarantees – Within the Construction Agreement although there is a one year warranty on workmanship and materials, there is no guarantee of the integrity of the structural design which should be guaranteed for a minimum of 10 years.

Drawings & Specification - Within the Construction Agreement provision has been made to list the contract drawings but no provision to define the specification has been made.

Ensure drawings of all disciplines (S = Structural, A = Architectural, SN = Sanitary, E = Electrical, ID = Interior Design) including each drawings revision reference, together with a defined material and equipment specification are bound into the Construction Agreement.

Variations - Within the Construction Agreement there are no unit rates or provision to deal with Variations should you wish to make changes to your villa. Whether changes are requested or not is not the issue, the lack of procedure is leading to likely dispute in particular dispute over the cost of the change.

Developers Default – Missing from the Construction Agreement clauses dealing specifically with default by the Developer, provision should be included to (1) police construction progress such as a penalty clause should the Developer fail to construct the villa within the prescribed time or (2) provision should the Developer fail to progress or complete the villa or (3) should the Developer go bankrupt.

Insurances - Individual villas are responsible for their own flood and fire insurance which will be impossible to police and could result in a villa within the Project being left derelict, leading again to an undesirable position for the other owners and future owners of the project, no provision has been made to insure the common facilities.

A project wide insurance policy paid through either the Service Charge or Sinking Fund offers the solution.

Other Undefined Costs – Check within the contract(s) for any undefined costs attributed to the Buyer these could include VAT, expenses for securing any permit or approvals required for the Construction or connection of public utilities.

Developers Representative - It is not unknown for a Developer to appoint a representative without any executive authority to deal directly with the Buyer. This leads to miscommunication and the false impression that what you are being told is authorised.

With Contracts and major issues, deal only directly with the principal(s) since you are doing business with them and not the Sales Manager who may or may not be employed by the Project next week.

The advice is simple; do the Due Diligence, while you may not get all you want at least you will know the areas of risk that you are buying into.
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Post by JW »

Malcom,

Great post, great issues, have copied and pasted for a folder of my own, hope its not copywrited!
I think (dont really know, just an opinion) that maybe only a handful of developers meet those criteria. I have been told that the Thai law for structure guarantee is 3 years, no matter what the contract states. Most give 1 year in the contract. Maybe someone knows for sure, it seems a grey area.
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Post by Burger »

Sorry very good and valid points there Malcolm.
Obviously there are projects in Hua Hin where many of the above do not apply, or where the contracts clearly define the above points.
I have seen the one regarding staged payments being based upon time and not progress, that is laughable.
Unfortunately the regulations, safety measures, quality standards, contractual protection etc that we are used to in the construction industries in US/Europe/Australia etc, can not be found here in Thailand in the private housing sector. If they were then the prices would certainly not be attractive as they are.
It is, as you say, worth prospective buyers knowing and understanding the potential risks they may be putting themselves at, and your post certainly gives plenty of food for thought.

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Post by Jim »

One point and one question, if I may.

I am more than happy to recommend my developer and builder. It would be out of order to name names, but if anyone wants a personal recommendation, then please pm.

Second, can anyone let me know the current price of land, per m. Between town and Palm Hills. I'm being offered some, which is 50% more than this time last year, and I would be interested in knowing what the current going rate is.

Thanks all.
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Post by caller »

I've changed my mind - anyone know the price of a caravan!!!

MITM - invaluable, thanks very much. I thought I'd researched this, but now realise how little I knew.

Burger - again, many thanks. I'm a layman in this area, but even cursory inspections have alarmed me at some places.

I guess a good lawyer is invaluable?

Jim - thanks for the offer, I'll pm you.

Out of curiosity, what happens after heavy rainfall, where there is no guttering as such and "channels" just direct rain to the ground. I can guess the effect when its grass, but what about on concrete? Does it have an effect?

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Post by HansMartin »

Thanks to Malcolm for addressing some of the legal issues. However, it should be pointed out that the buyer should be setting the contract terms. We have the $$, and if the developer doesn't agree, well there are other fish in the sea. Some of the terms that Malcolm writes about, I simply would not agree to.

But what I really want to write about in this post is the aspects of infrastructure that I look at as a civil engineer.

ROADS/DRAINAGE
This is a real problem in some areas and will only get worse. The natural drainages as you go west of HH are being blocked by development and no provisions are being made for drainage. Roads without ditches, culverts or storm drains. In addition the permeable sandy soil is being covered wtih impereable concrete and asphalt. This increases the amount and rate of runoff and it has no place to go.

Drainage is basically west to east, and the main highways and railway tracks run north and south. They form dams during peak runoff as I am sure the exisitng culverts are undersized, too infrequent and not maintained. The moral of this is not to buy property unless you know where the rainwater and runoff will go as it is not being planned for. Go to the Amereican SW in Los Angelses and Las Vegas to see how bad it has gotten.

We were in HH in late November and looked at property, but the relator could not drive to many of the developments because the roads were so bad. Not much of a sales job!!!

I will be looking in areas on higher ground with access roads that don't look like they will be washed out.

WATER
I either want municipal water or a private well. I don't want to share a well with 5-10 or my best friends. That will rapidly put an end to those friendships, and it gets even worse when a newbie moves in.

Surprisngly, I don't particulary care about the quality of water as long as it is not muddy. I'll be drinking bottled water (or beer) or can go to HomePro and buy a good RO unit if I want.

Quanity is important, and this may required below grade storage tanks and booster pump systems, but I'm OK wtih that as long as I know upfront that I will have to make those expenditures.

SEWER
Well I'm somewaht puzzled on this one. I see septic tanks going in, but I don't know where the effluent goes. A lot of the lots I've seen are too small to support a conventional drainfiled, so I guess a seepage pit is used or a "straight pipe". I know in town the sewage lines are tied into the strom drain system, but I am not as sure outside of town where there is no hard piped storm drain system.

I don't want raw sewage surfacing on my property or my neighbors. In general if it percolates into the soil you get some treatment. It may not be the best, but it is better than raw sewage flowing in ditches. (There are still plenty of places in the US, where this still occurs).

LAND USE PLANNING
Well there is none. So I buy a nice new house, and the new development next to me turns into a high density two-story townhouse mess and my view is now someone's laundry drying. So I would prefer to buy where neighboring development is in place, or controled by a developer interested in a development of a similar qulatiy to what I am buying into.

So in sumamry:
1. Know the existing and future drainage patterns
2. Buy in higher or upgradient areas as long as you can get to them and the access roads will not get flooded
3. Know the quantity of water that you can receive from the water system
that you hook into
4. Know where your sh*t goes
5. Know what future development will be going in
6. Strongly consider exisiting homes, especially resales, where a lot of these factors are known with more certainty.
7. Remember Mother Nature is a harsh mistress, and she will f*ck you whenever she can.

So much for infrastructure 101. I'll put a post up on housing constrcution in a couple of days. My brother-in-law is a architect/builder in BKK and does some good work, and some that is nt as good; but I have been with him on proejcts and have a sense as to what makes up acceptable construction in Thailand, what is crap, and what is exceptional.
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Post by Norseman »

Some very good and useful tips from malcolminthemiddle and HansMartin.
Thank you gentlemen!!
More cut and paste job JW!!
I intend to live forever - so far so good.
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Post by Limey711 »

Some very good points covered here fella's.

I am at the stage were my house will be complete over the next few days, although it will be 6 months behind schedule, which we have grown to accept, because of weather conditions and contractor's.

I will make sure that some, if not all the points raised here are covered, before I hand over my last payment for the house, which is a considerable amount.

You never know, because of the fact they are handing the house over to me 6 months late, they may offer me some compensation.
But I wont hold my breath.

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Post by Burger »

Regarding infrastructure, my advice (for what it's worth), would be as follows:

Road Drainage - Check out the area where you are thinking of buying and see if it's subject to flooding. See if the roads are eroded away due to rain floods. Obviously the best time to do this is during the rainy season, if in dry season ask the local residents.

Land/House Drainage - Make sure your house and land have adequate drainage and that it then connects to road drains, or better still discharges straight into the local 'klong'. Don't be afraid to ask the developer/seller to show you the drainage system.

Well Water - It's fine to have your water supply from the project's own well, providing it's controlled by the development management company and that it has the capacity to serve the number of houses on the project. Ask the developer/seller what the capacity of the well is during dry season. Get a clause put into the contract that if the development is added to over and above the current project plan, then the developer will dig another well to cater for the increased demand.

Sewerage - The most common type here in Hua Hin on the new projects is the 'septic tank'. If sized correctly for your house (and providing you don't over-occupy the house), then they only need pumping out every 2-3 years at a massive cost of 300-500 Baht. If the natural biological process is in balance and working well, then you may never need to pump out the tank. I have friends who have been here 7 years and have not pumped theirs out.

Electricity - Tricky one, the elctric supply may be fine now, but more demand in the road/area as more houses go up, can obviously affect your supply. Best situation is to find a project whose electric supply is direct from the local high voltage supply (11kv or 22kv), you can usually check this by seeing if they have their own transformer mounted adjacent to the project. Again, ask the developer/seller to show you where there supply comes from.
Also some projects put in a 3-phase supply, rather than single phase, this would be advantagous to you.

All this stuff is important to you, and it's your right to know what's what with the property you are buying. Don't be afraid to ask the developer/seller to detail all the above to you. If you don't receive a suitable response, then draw your own conclusions.
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Post by malcolminthemiddle »

Burger,

Please explain the advantages of having 3 Phase?

I know places with 3 Phase where it is never used, yet there is an additional monthly charge for having the supply irrespective of usage. The charge is indefinite since once 3 Phase is in it cannot be disconnected, as I understand it.

Cheers.
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