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Banks, developers try to overcome transfer hiatus

Property firms are joining with commercial banks to offer special financial packages to overcome the stalled process of transferring finished residences from development projects to buyers.

The hiatus began in June when the Pheu Thai Party announced its policy to provide special mortgages with interest-free repayment conditions for the first five years for first-home buyers purchasing homes valued up to Bt4 million.

Even though the new government has presented its policies to Parliament, the Finance Ministry has not yet announced details of the populist first-home buyer policy, and a vacuum has developed in the residential market for properties in the low-to-medium price range.

Anticipated cost savings under the scheme have prompted consumers to delay transferring homes from projects and wait for its introduction. Registrations of new homes have dropped by about 20 per cent since June

In an attempt to speed up the transfer process, commercial banks, whose home-loan targets look likely to be battered by the government plan, have joined developers to offer a range of new deals.

Kasikornbank has joined Asian Property Development, Sansiri, LPN Development and others to offer special financial packages for home-buyers who are ready to transfer homes from residential projects. They are offering interest-free conditions for periods of six months to two years, loans covering 100 per cent of the property value, loans for interior decoration, and so on.

In like arrangements with leading developers, Siam Commercial Bank, Thanachart Bank and Bangkok Bank are offering similar deals, although with differing interest-free terms.

Those banks that are offering mortgages covering 100 per cent of property value are overcoming the restrictions imposed by the Bank of Thailand’s loan-to-value cap of 90 per cent on condominium units by reserving the right to extend loans to the full value, rather than breaking the rule by handing over 100 per cent of property value in one settlement.

“We have to join with the banks to offer special financial packages because home-buyers are delaying the transfer of finished residences from projects while they wait for the government’s policy to be implemented,” said Asian Property Development’s deputy chief marketing officer for strategic marketing Vittakarn Chandavimol.

Sansiri’s senior executive vice president Uthai Uthaisangsuk said his company had joined Kasikornbank and Siam Commercial Bank to offer special financial packages for people who had bought residences at its Block 77 condominium. The offers including mortgages covering 100 per cent of property value and interest-free conditions for the first 10 or 12 months.

A survey by The Nation early this week found that home-buyer delays have affected between 20 and 30 per cent of all new residences that are ready for transfer to their new owners. These are first-home buyers who are waiting to see if they can benefit from the government’s policy.

Meanwhile, registrations of new residences in Bangkok and its suburbs reached 39,411 units in the first half of this year, 19-per-cent fewer than in the first half of last year.

The Real Estate Information Centre expects the number of newly registered residences in Bangkok and its suburbs to reach between 77,000 and 80,000 units by the end of this year – a drop of 9 or 10 per cent from last year.

Source: The Nation

ThaiVest Editorial Team

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