Laws to keep in mind when buying property in certain Asian countries
Mar 21, 2017 – In an increasingly globalised world, people are travelling more than ever. Those who travel often consider buying properties abroad, many in Asia. However, those wishing to invest in property in other countries should bear in mind local laws and restrictions on acquiring real estate. Are you interested in purchasing a condo in the Philippines? Perhaps a coastal villa in Galle, Sri Lanka? Or maybe a large luxury property in Indonesia? Lamudi explains the various aspects that need to be taken into consideration if you expect to own a property in a foreign nation
It’s now possible to purchase your Indonesian dream home!
While foreigners were not previously permitted to purchase homes in Indonesia, 2016 brought good news. Those who wish to own their own place in one of the country’s beautiful islands now have the chance to do so. However, a certain level of wealth is required, and freehold ownership by foreign nationals is still prohibited.
In early 2016, the Indonesian government released a new regulation enabling foreign nationals to take over the ownership of their homes. The decision about whether this acquisition is permitted is based on minimum home values. In East Java, for example, a home must be worth at least five billion Indonesian Rupiah in order to be eligible for acquisition by a foreign national. In DKI Jakarta, the amount is 10 billion Indonesian Rupiah.
Only foreign nationals who are already residents are permitted to purchase property, and there are a number of other conditions to be met. Indonesia is unlikely to relax laws altogether any time soon, and home financing for foreign nationals is not currently possible. However, as evidenced by last year’s regulation, steps are being taken in an encouraging direction.
Foreigners cannot purchase land in the Philippines, but they can purchase condo units
The Philippines proves to be a hot territory for foreign property investors in 2017, with rising tourism and a demand for affordable, yet high-standard housing from its locals. Just like in its neighbours, Vietnam, Thailand and Cambodia, foreigners are prohibited from having free ownership of land in the Philippines.
Despite this, there are some exceptions to this rule e.g. If your property was acquired before 1935 and you are a foreign national who either purchased it or inherited it, you can legally own your property. In terms of property sold after 1935, foreigners are not prohibited from owning property in the Philippines altogether.
Thanks to the Condominium Act foreign nationals are permitted to purchase condominium units in the Philippines. However, in a single condominium project, at least 60% of the project must be owned by nationals of the Philippines by law. This regulation prevents one extremely wealthy foreign buyer from purchasing entire blocks and subsequently driving prices up. Unit owners are free to sell their unit and can make reasonable renovations to their unit, as long as these renovations do not affect any areas outside of the boundaries of their unit. Long-term lease is another viable option for foreign investors, looking to acquire land.
2017 promises to be the year of the condotel, which is sold as the foreign investors dream, due to its ‚hassle-free’ nature. A condotel is a set of condos, grouped together like a hotel. One of the main benefits of the condotel is that the maintenance of the property is taken care of by property management, a particularly attractive prospect for those based abroad, unable to keep a close check on their property.
Sri Lanka is relaxing its property laws
Three years ago, in an attempt to curb tax evasion (Reuters), Sri Lanka’s Government imposed strict restrictions which prevented international buyers from purchasing land or property on the island. Unfortunately, instead of pulling the country forward, this move ended up holding it back with its goal of competing in a global economy.
The exciting news is that during the 2017 Budget announcement, which took place at the end of 2016, Sri Lanka’s Finance Minister announced the relaxation of land ownership laws in the country. The Government is set to “remove freehold right restrictions” starting in 2017. In addition, foreigners entering Sri Lanka (e.g. those with an intention to buy) will be allowed to bring an increased sum of money with them.
They will be entitled to bring a maximum of $45,000 into the country, without needing to provide documentation showing where these funds came from. This allowance is significantly higher than the previous allowance of $15, 000. As well as these policy amendments, Sri Lanka is to see the introduction of Real Estate Investment Trusts (REITS) in the coming years; yet another positive step towards becoming a main player in a booming Asian real estate market.
Myanmar: A new player with prospects for foreign investors
It is now possible for foreigners to own property in Myanmar, following the Parliament’s decision at the beginning of 2016 to finally approve a foreign ownership law. The Condominium Law, passed on 22nd January 2016, permits over-seas buyers to own up to 40% of a condo building, a condo constituting of six+ storeys, on land measuring 20,000sq ft. However, the law also stipulates that said foreigners are not allowed to manage condos, so those looking to rent out units, beware.
Current laws also prevent foreigners from owning land, though clarity is lacking as to what this means for foreign condo owners, who, with the purchase of a condo, also receive partial ownership of the land. It is wise to seek legal advice from an experienced legal professional, if you are a foreigner investor looking to buy in Myanmar. Following the election of the new Government in March 2016 and reports of a slowing economy, Myanmar is expected to revise its corporate law in 2017, which would allow foreign businesses to hold stakes in existing domestic companies, as well as make foreign investment more attractive on the whole, which would signal good news for foreign property investors looking to buy in Myanmar.
When purchasing property in any country the best piece of advice is to always get help from a real estate professional. Get them to do as much research as you can, and do your own supplementary research too. Do your due diligence and always question deals that seem too good to be true. Asia is a stunningly beautiful continent, and as the markets open up further and further to international buyers, the demand for property can only rise.