Low-cost Thai housing scheme off to slow start

High rejection rate for prospective borrowers

Pattaya,Thailand. FUN FUN PHOTO/Shutterstock

Almost 80 percent of loan applications for a low-cost housing scheme in Thailand have been rejected, the Bangkok Post reported.

The Pracharath Thai housing scheme was beyond the means of some loan applicants, many of whom could not afford the downpayments, according to Chatchai Sirilai, president of GH Bank.

Along with the Government Savings Bank, GH Bank is an official lender of the affordable housing scheme.

A source close to the Post said the Treasury department will encourage the Bank of Thailand to ease its lending requirements for the low-cost homes.

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Aside from relaxing lending guidelines, the state can subsidise some interest costs to make the units more affordable, the source recommended.

The scheme invites private developers to bid on the construction of residential projects that cater to individuals who earn no more than THB100,000 (USD3,200) a year. Developers must sell units no pricier than THB1 million each and pay 3.3 percent specific business tax.

Tenants are able to lease homes built on state land, the Post noted. Property seekers with a monthly income of up to THB35,000 can rent unoccupied units before they are offered to the general public.

The source also recommended for the housing scheme to lets low-income earners choose units in locations that are convenient to them. Citing high construction costs, developers mostly shunned bidding for projects in Chon Buri and Nakhon Phanom.