When buying property, especially resort property, unobstructed sea views or the element of privacy can account for a significant part of the purchase price. In cities, the premium commanded by a good view is mentioned to be in the region of 20% of the purchase price; it is possibly much higher with resort properties.
Important tip: When viewing properties, it is essential to recognise the premium price represented by the view and to evaluate the risk posed to that premium. If a property is bordered by an open expanse of land with mature coconut trees waving gently in the wind, don’t assume it will stay that way forever; if your property has unobstructed sea views but the land plot in front has building regulations that would allow structures to obstruct the view, that vacant plot poses a risk to the future value of your property.
In Thailand, except for the registration of easements, there is no system for recording restrictive covenants directly over land titles to protect your property from the potential impact of construction on adjacent land; any limitation could only be set out contractually between the parties. In other words, there is no direct enforceability over land, only the threat of civil contractual penalties, and if the land is sold to a third party privity of contract is broken.
Therefore, when buying property it is essential to be familiar with the zoning laws and building regulations for the area in which you are buying property (see chapter 21). It is also important to investigate the ownership of adjacent land, together with any potential plans for development that could have a future impact on your property. It is possible for your lawyer to make relevant enquiries at the land office, although bear in mind that such enquiries might only uncover development plans that have been submitted; in other words, plans that are still on the drawing board might not be discoverable through formal enquiry. Thus, vacant land with the potential for future construction should be identified as a risk, although there are various degrees of risk. If adjacent land is semi-agricultural and in the hands of local “ancestors”, the planning process to upgrade the land and obtain the necessary permits for construction could take many years. If, however, the land title is Chanote or Nor Sor Sam Gor and is in the hands of a property developer, it may only be a matter of months. To err on the side of caution, if the land title is anything other than agricultural land or primeval jungle, assume the worst and accept that it is likely to be developed at some point in the future.
Important tip: In the excitement of viewing a property, it is crucial not to get tunnel vision, where your focus is entirely on the property to the exclusion of what is going on around it. By including the surrounding land as part of your due diligence, you will at least be aware of the potential risks posed by future construction and can take decisions conscious of these risks. Be aware also that properties sometimes come onto the market for the very reason that the owners have become aware of planned construction on adjacent land.
What happens on an adjacent land plot can and will affect the value of your property, either through obstructing the view, affecting rental income due to construction noise, or through its impact on the attractiveness of the local area. Therefore, to secure the long-term value of your property, choose a property that is not only attractive today but whose premium price is protected from the negative impact of future development.
• When buying property, especially resort property, unobstructed sea views or the element of privacy can account for a significant part of the purchase price.
• It is important to investigate the ownership of adjacent land, together with any potential plans for development that could have a future impact on your property.
• What happens on an adjacent land plot can and will affect the value of your property, either through obstructing the view, affecting rental income due to construction noise, or through its impact on the attractiveness of the local area.
This is an excerpt from the new book “The Essential Guide to Buying Property in Thailand” – available at www.amazon.com