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LPN Development issues advice to potential condo customers


LPN Development is confident that by suggesting its customers initially apply for a mortgage more than six months before having a home transferred to them, and cut their overall debt before submitting an application, the bulk of its newly completed condom

"We have to transfer condominium units worth Bt3.5 billion in the final quarter. As a result, we suggested that our customers apply for a mortgage since March this year, so that if they faced any problems, we could suggest ways to solve them and they could get financing from their bank in the last quarter of the year," managing director Opas Sripayak told The Nation early this week.

One of the most common problems is that many potential home-buyers do not have bank statements showing their income history, with some also having a debt level that is higher than their assets, hence the banks cannot agree to lend to them, he added.

As to the first problem, the listed developer suggested to its customers that they apply for a home loan early this year in order to give them the best chance of gaining approval from the bank, especially for LPN’s Lumpini Township Rangsit project.

"For those customers that are freelance and have their own business, we suggested that they open a savings account and then deposit their income into the bank every month from April onwards. This would show they have sufficient purchasing power to pay the monthly instalments after getting a mortgage," Opas explained.

LPN Development issues advice to potential condo customers

Meanwhile, for those customers with mortgage applications rejected because their debt exceeded their ability to repay further credit, the company suggested that they reduce their debt level to the point that they were well placed to get a home loan.

By following these two approaches, LPN has succeeded in reducing its customers’ mortgage-rejection rate from 12 per cent early this year to just 5 per cent over the rest of the year, said the managing director.

The strategy has worked particularly well for the company’s latest condominium project, the Lumpini Township Rangsit – the Bt2.4-billion first phase of which is being transferred to buyers during the remainder of this year – as most of them have had their mortgage requests approved.

This should enable LPN to achieve its overall transfer target of Bt3.5 billion for the final quarter, and Bt16 billion for the full year, having already delivered homes worth Bt12.5 billion during the first nine months, he said.

However, Opas acknowledged that the residential market in the final quarter would likely slow, as those projects launched earlier in the year had absorbed available demand, while overall purchasing power had declined.

As a result, the company has lowered its 2015 presales target to Bt17 billion, from Bt20 billion early this year, in line with market sentiment.

Government measure

"We hope the government’s new measure to boost the residential property sector will drive the market in the final three months of the year," he added.

Last week, Finance Minister Apisak Tantivorawong said his ministry would introduce a financial package to support the lower-income market when it came to getting a bank mortgage.

"We have no plans to launch a tax incentive for the property sector, but we are trying to find a way for the banks to approve more mortgages for home-buyers, especially in the lower- and middle-income market," said the minister.

According to a survey by the Thai Condominium Association, condo projects completed and ready for transfer to customers over the rest of this year comprise around 48,000 units, worth more than Bt120 billion.

About 8,000 of the units are priced below Bt2 million per unit.

Meanwhile, with an overall mortgage-rejection rate of 20 per cent, developers of 9,600 homes worth Bt24 billion will face the problem of banks rejecting their clients’ home-loan applications, the association predicts.

"If the finance minister can launch a financial package that makes it easier to get a mortgage from a bank, that will be better for the market during the remainder of this year," said Thai Condominium Association president Prasert Tullayasatit, who is also managing director for condominiums at listed developer Pruksa Real Estate.

Published : October 02, 2015

By : Somluck Srimalee The Nation