BOT Notification No (1 September 2017)-check-format#2

Transcription

1 Unofficial Translation This translation is for the convenience of those unfamiliar with the Thai language Please refer to Thai text for the official version The Notification of the Bank of Thailand No. FPG. 3/2551 Regulations on Leasing of Immovable Property Business of Finance Companies That Operate Housing Finance Business and of Credit Foncier Companies 1. Rationale Previously, the Bank of Thailand permitted finance companies that operate housing finance business and credit foncier companies to operate leasing of immovable property business by acquiring land and/or houses and leasing them out to customers. In order that regulations on leasing of immovable property business are under the same standard and are comparable to other types of lending, the Bank of Thailand thereby specified a method for calculation of interest on lease agreements in the same manner as the calculation of interest on installment loans, which will be of benefit to customers using leasing service. In addition, there must be the disclosure of key information to customers in order to earn customer trust and appreciation of services provided by finance and credit foncier companies. The objective of the issuance of this notification is to align the statutory power with provisions of the Financial Institution Business Act B.E.2551 and to combine the Bank of Thailand notifications with respect to leasing of immovable property into only one notification, where essence of the regulations remain unchanged. However, for finance companies and credit foncier companies that have operated or have been approved to operate the service before the effective date of this notification, they may continue the service as approved. 2. Statutory Power By virtue of Section 36 of the Financial Institution Business Act B.E.2551, the Bank of Thailand permits finance companies operating housing finance business and credit foncier companies to operate leasing of immovable property business in accordance with the regulations as specified herein

2 2 3. Scope of Application This notification shall apply to all finance companies operating housing finance business and credit foncier companies under the Financial Institution Business Act 4. Repealed Notifications/Circulars 1. The Notification of the Bank of Thailand Re: Regulations, Procedures and Conditions for Operating Leasing of Immovable Property Business of Credit Foncier Companies dated 4 December 1980 (B.E.2523) (enclosed with the Circular of the Bank of Thailand No. NgorPor. (C) 1674/2523 dated 15 December 1980 (B.E.2523)) 2. The Notification of the Bank of Thailand Re: Regulations, Procedures and Conditions for Holding of Immovable Property of Finance Companies Operating Housing Finance Business dated 21 October 1981 (B.E.2524) (enclosed with the Circular of the Bank of Thailand No. NgorTor. (C) 699/2524 dated 30 October 1981 (B.E.2524)) 5. Contents 5.1 In this notification Housing finance business means the business that acquires funding from people for the following arrangements, as ordinary course of business: residential houses; or (1) Lending to people in order to take ownership of land and/or (2) Lending in order to acquire land and/or residential houses to be sold or leased out to people; or out to people (3) Acquiring land and/or residential houses to be sold or leased House means to a house or building that an individual normally lives in, excluding a building for other purposes that an individual normally lives in Lease means to a contract under which the owner (lessor) rents out an asset with a pledge that he/she will sell out that asset or transfer ownership of that asset to the lessee, where the amount to be paid by the lessee is in accordance with the Civil and Commercial Code. Sale price means leasing price or cash price

3 3 Leasing price means the sum of down payment and all installments that the lessee must pay to the lessor in accordance with time frames and conditions as specified in a lease agreement so that ownership of the leased immovable property will be transferred to the lessee. Down payment means money paid by the lessee to the lessor when entering into a leasing agreement, which is part of cash price and is not an installment. Installment means money paid by the lessee to the lessor for a particular payment period, which consists of interest and cash price for a particular payment period, according to conditions as specified in a leasing agreement. Cash price means to a price at which immovable property can be sold in the market in cash on the effective date of a lease agreement. Cash price installment means portion of a cash price paid by the lessee to the lessor for a particular payment period. Net cash price means the net amount, at a particular time, of cash price less down payment and cash price installments that have been made. Leasing interest means money that the lessor receives from the lessee as a return on a leasing agreement, apart from cash price installment and down payment, calculated from a net cash price at the starting date of any particular payment period or the starting date of a payment period over which the interest is calculated. Rate of leasing interest means an annual percentage rate that the lessor uses to calculate leasing interest. Lessor means a finance company that operates housing finance business or a credit foncier company that operates leasing of immovable property business. 5.2 Finance companies operating finance housing business and credit foncier companies are permitted to operate leasing of immovable property business. 5.3 Regulations on business operations The lessor must prepare a leasing agreement in duplicate (2 identical copies) and one copy will be given to the lessee as evidence. In case where the agreement is damaged or lost and that the lessee asks the lessor for a photocopy of the agreement, the lessor must arrange for that as requested by the lessee and may collect any charges from the lessee as deemed appropriate.

4 In a leasing agreement, apart from key terms and conditions that should normally be contained in the agreement, the following details must also be specified by the lessor: (1) Cash price (2) Down payment (3) Rate of leasing interest and conditions on reservation of rights to revise the rate (if any) methods (4) Installment, number of payments and payment (5) Any expenses to be paid by the lessee, apart from down payment and installment, namely, insurance premium, property tax, local maintenance tax, fees for transfer of ownership, or any other expenses according to laws or lease agreement (if any) other than leasing interest (6) Conditions on transfer of ownership of the leased immovable property to the lessee (7) A Clause indicating that the Notification of the Bank of Thailand Re: Regulations on Leasing of Immovable Property Business of Finance Companies That Operate Housing Finance Business and of Credit Foncier Companies is considered part of a lease agreement The lessor is not permitted to collect leasing interest for each payment period or for any period of a lease agreement exceeding the leasing interest as calculated using the interest rate as specified in the agreement, and is not permitted to collect any other expenses other than those as specified in Clause (5). This is except for a late payment penalty or indemnity for prepayment, which can be collected as specified in Clause or Clause 5.3.9, as the case may be In case where the lessor reserves rights to revise a rate of leasing interest by specifying it as a condition in the agreement, the lessor must notify this to the lessee at least 2 months prior to the revision of rate of leasing interest. This is except for cases where the revision is of benefit to the lessee, and the lessee gives his/her consent When the lessor has received any payment from the lessee, the lessor must issue a document, signed by the lessor or authorized person, and give it the lessee as evidence. The document must, at least, contain details of the amount and type of payment that has been made.

5 The lessor must have the account of each individual lessee that, at least, contain the following details: (1) Cash price (2) Prepayment (3) Payment of leasing interest, cash price installment and installment for each payment period (4) Net remaining cash price (5) Payment of other expenses as specified in Clause (5), fines as specified in Clause or indemnity as specified in Clause (if any) In case where the lessee fails to make an installment payment for any particular payment period, the lessor may collect fines from the lessee, but this must be specified in the agreement. Those fines when calculated as a ratio of the outstanding balance and late payment period must not exceed an interest rate that the lessor can collect according to law If the lessee fails to make installment payments for two consecutive payment periods or fails to comply with key conditions of the agreement, the lessor may consider this the reason for terminating the agreement. In doing so, the lessor must notify the termination of the agreement together with reasons in writing and submit it to the lessee at least 30 days in advance. The notice of termination of agreement must specify that if the lessee make overdue installment payments or can meet the conditions of the agreement formerly failed to comply with, as the case may be, within 30 days from the day the notice is received, the agreement will no longer be terminated. In case where the lessee fails to make installment payments for two consecutive payment periods, when the lessee can make those installment payments to the lessor within 30 days from the day the notice of termination of agreement submitted by the lessor is received, the termination of the agreement is thereby suspended. In case where the lessee breaches key conditions of the agreement, if the lessee can resolve that breach to the satisfactory the lessor within 30 days from the day the notice of termination of agreement submitted by the lessor is received, the termination of the agreement is thereby suspended.

6 If the lessee requests to make an early payment of cash price installment, the lessor must not collect interest on decreased portion of net cash price due to that early payment according to a period that the payment is made in advance. If there is remaining net cash price, the lessor may recalculate remaining payments if the lessee gives his/her consent. Practices as specified in the first paragraph shall also apply to cases where the lessee requests to make a payment for remaining net cash price. If the lessee requests to make a payment of cash price installment according to the first paragraph or remaining net cash price according to the second paragraph, the lessor may collect an indemnity from the lessee. An amount of that indemnity must not exceed 1% of cash price installment or portion of net cash price paid by the lessee The lessor must allow the lessee to transfer rights and responsibilities according to a lease agreement to other person who is eligible to be the lessee according to guidelines as specified by the lessor for its ordinary operations of leasing business During the contract period of a lease agreement, if the lessee inquires the following information: paid (1) Portion of leasing price that has been paid (2) Portion of leasing price that has been due but not yet (3) Portion of leasing price that has not been due (4) Remaining net cash price When the lessee has made full payments of leasing price or net cash price as well as outstanding leasing interest or indemnity according to Clause (if any), the lessor must transfer ownership of the leased immovable property to the lessee according to conditions as specified in the agreement promptly Supervision requirements (1) The book value of all plots of land held by a particular finance company for operating housing finance business at end of the day must not exceed 30 percent of capital of that finance company. This does not include plots of land under lease agreements.

7 7 (2) The book value of immovable property and plots of land according to (1) held by a particular finance company for operating housing finance business at the end of the day must not exceed two times of capital of that finance company. This does not include immovable property under lease agreements. (3) Plots of land held by finance companies for construction of houses for sale or leasing, even for less than 10 plots of land, they must be equipped with: (3.1) System and standard for roads, pavements and sidewalks on those plots of land as well as connection to main roads or streets services, as deemed necessary (3.2) Drainage system (3.3) System and standard for public facilities and On this, the systems and standards according to Clause (3.1), Clause (3.2) and Clause (3.3) shall be in accordance with requirements on land subdivision as specified by the Land Subdivision Supervision Commission. (4) After finance companies have been transferred ownership or claims on immovable property for operating housing finance business, the finance company shall: (4.1) Notify the Bank of Thailand that it has been transferred ownership or claims on immovable property in writing within 15 days from the day the ownership/claims have been transferred (4.2) Submit documents with respect to its project to the Bank of Thailand within 3 months from the day the ownership/claims have been transferred, which must cover the following details: the project (4.2.1) Name of the project (4.2.2) Size and location of the project (4.2.3) Operation policies and time frames of (4.2.4) Details of road system, drainage system, public utility system and public services to be allocated development under the project (4.2.5) Progress of the project (if any) (4.2.6) Expected expenses for land

8 houses 8 (4.2.7) Sale price per square wah (4.2.8) Expected expenses for construction of (4.2.9) Designs and number of buildings, and sale price per unit for each design of buildings (4.2.10) Expected cash inflows and outflows of the entire project, separated by each period of operations project (4.2.11) Details of sources of funding for the (4.2.12) Marketing policies (4.2.13) Distribution channels (4.3) Finance companies must commence any arrangements under the project according to Clause (4.2) within 9 months from the day the ownership/claims have been transferred, unless the relaxation is granted by the Bank of Thailand. If finance companies cannot meet the aforementioned time limit, it must sell that immovable property within 1 year from the time limit. (5) For immovable property acquired for operating housing finance business - if those land and buildings are required to undergo development, finance companies must finish the project and sell or lease them out within 3 years from the day the ownership/claims have been transferred or within 1 year in case where the development is not required, unless the relaxation is granted by the Bank of Thailand. In this case, the Bank of Thailand may impose any other conditions. (6) Finance companies are prohibited to use immovable property for operating housing finance business to enter into an agreement with any entity that may incur obligation on that immovable property, unless it is required to do so and approval is granted by the Bank of Thailand. In this case, the Bank of Thailand may impose any other conditions. (7) Land acquired according to Section 80 (2) (Khor) of the Financial Institutions Businesses Act B.E.2551 divided into small plots to be sold and leased out to people is considered land trading, which requires approval from the Minister of the Interior and is also under the application of the Land Code.

9 9 6. Effective Date This Notification shall come into force as from the day following the date of its publication in the Government Gazette. Announced on 3 rd August 2008 (Mrs. Tarisa Watanagase) Governor Bank of Thailand