Holiday Home Schemes and the Financial Risks
HOLIDAY HOME SCHEMES AND THE FINANCIAL RISKS – It hit the news this week that a Caribbean property scheme, that was promoted by the famous tennis player Pat Cash, is under threat of legal action for not making good on its promises, leaving 3,000 Brits out of pocket to the tune of £250 million.
A large number of the investors are pensioners who have stated that they basically put everything they had into the ‘Off Plan’ scheme; being run by Essex based Harlequin Property.
The idea, or the promise, of the holiday scheme was to build 6,000 luxury villas in St Lucia, St Vincent, Barbados and the Dominican Republic, but to date only 300 of the units have been constructed.
According to a statement by Harlequin Property, David Ames, work has begun on the ‘show village’ situated in Barbados, however investigations by some newspapers, such as the Daily Mail, have shown this to be little more than an abandoned building site, with no visible signs of any real construction development.
This is not the first time I have come across an “Off Plan Holiday” scheme and no doubt it won’t be the last. There are many thousands of Britons who wouldn’t mind packing their bags and heading off to sunnier hills but unfortunately all those glossy brochures can often hide a very different set of circumstances.
The lure of buying ‘Off Plan’ is often due to the fact that people can save money on the finished home, villa, apartment or condominium, therefore making them a tidy sum of cash on completion, should they wish to sell.
It is this lure that often lays the biggest danger and many people often fail to fully investigate the company who is supposedly building the project.
We Brits have a reasonably easy legal system when it comes to buying property. Yes, there are pitfalls, but in general most property transactions go according to plan and that the title of ownership is transferred. With many foreign countries the title deeds to land and property can be extremely confusing and in fact there are many foreign countries that do not allow foreigner to own land.
One such place that often attracts property investors is Thailand, and in particular tourist destinations within the country such as Hau Hin, Phuket, Pattaya and Krabi. It is irrelevant where a foreigner might want to buy as the simple truth is it is illegal.
Foreigners are often duped into setting up a Thai Nominee Company in order to acquire the land. As with most countries a company is a legal entity and this is the case with Thailand. A Thai Nominee Company consists of Thai Partners that own 51% of the assets of which is the idea to make it legal – Thais owning the majority therefore have control, although they don’t normally exist and therefore the whole scheme is illegal.
Regardless of the legalities thousands of foreigner buy property each year in Thailand using this scheme and many being led to believe this is perfectly legal. The stark truth is that if Thailand’s land officials ever decided to take a look at the Thai Companies that have been set up for such a purpose the result would be a confiscation of the property, leaving the foreigner very much out of pocket.
Again, buying ‘Off Plan’ can certainly have its benefits, but for anyone thinking about buying any type of foreign property, ‘Off Plan’ or not, should always be approached with caution and should always be fully investigated before entering into a legal agreement.