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Buying property in Myanmar: scams and pitfalls

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Everything you need to know is included in our Myanmar Property Pack

Myanmar's emerging market opportunities and beautiful landscapes are drawing more foreign buyers into its real estate market.

Navigating the local property market can be a bit of a puzzle though, especially for non-residents. There are several hurdles and surprises that you should be ready for.

Both our customers who purchased properties there and our on-site local experts have reported a significant list of pitfalls. We've listed them all in our Myanmar Property Pack.

This article will give you a quick overview of some of the potential pitfalls you could face.

Is it safe or risky to invest in real estate in Myanmar?

Safety concerns loom large when investing in Myanmar's real estate market.

While political stability has improved, scams targeting property buyers remain a significant risk. One prevalent scam involves counterfeit property titles, where unscrupulous individuals forge ownership documents, leading unsuspecting buyers into costly legal battles.

For instance, a foreign investor, Mr. Smith, encountered this issue when purchasing a condominium in Yangon. He later discovered that his property title was forged, leaving him in a dire legal and financial predicament.

One of the most glaring pitfalls for foreign investors in Myanmar is the limited land tenure options. Foreigners cannot own land directly but can secure leasehold rights for up to 70 years. This limitation can deter long-term investment and potentially lead to disputes over lease extensions.

Another critical issue is the lack of comprehensive land records and surveys, particularly in rural areas, leading to disputes over land boundaries and competing claims, as exemplified by the case of Ms. Rodriguez, a foreign investor who found herself embroiled in a dispute over her Mandalay property's boundaries.

While Myanmar has made efforts to improve legal protections for property buyers, the efficiency and fairness of the legal system remain areas of concern. Transparency in property transactions, especially concerning land titles and encumbrances, has seen some progress but lags behind international standards.

As a result, foreign investors, such as Mr. Johnson, have encountered difficulties in securing their property rights, often mired in bureaucratic red tape and unclear legal procedures.

Resolving property disputes in Myanmar can be a protracted and frustrating process. The legal system's efficiency and impartiality may not match those of more developed nations.

To illustrate, Mr. Chang, a foreign investor, found himself embroiled in a lengthy legal battle over his property's ownership, highlighting the challenges foreigners face in seeking timely and fair resolutions.

Conducting meticulous due diligence is a prerequisite for foreign investors in Myanmar.

This entails verifying land titles, assessing property conditions, and understanding local zoning regulations. It is essential to engage proficient legal and real estate professionals to navigate the complexities of the market successfully.

The lack of reliable information and documentation can create a daunting task, as Ms. Foster discovered when purchasing a heritage property in Bagan.

The Myanmar government has initiated measures to regulate the real estate market, aimed at combating land speculation and illegal land grabs. However, the effectiveness of these measures remains a subject of debate. Investors should monitor changes in regulations closely, as they can impact property values and ownership rights.

Mr. Patel, for instance, experienced difficulties in repatriating his profits due to evolving government policies.

Foreign buyers have shared numerous challenges when investing in Myanmar. These include navigating bureaucratic obstacles, repatriating profits, and adapting to an evolving legal framework.

As an example, Ms. Kim found herself entangled in regulatory hurdles when trying to sell her property in Naypyidaw, highlighting the complexities of dealing with Myanmar's shifting regulations.

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Watch out for mistakes when buying property in Myanmar

The concept of "Form 7"

When buying residential property in Myanmar, a common and unique pitfall you should be aware of is the complexity surrounding the concept of "Form 7."

This is a specific document in Myanmar's real estate context. Form 7, also known as the Landholding Certificate, is crucial for any property transaction.

However, the challenge arises because in Myanmar, especially in areas outside major cities like Yangon or Mandalay, a significant number of properties don't have Form 7 due to historical and administrative reasons.

In the context of buying property, you might encounter sellers who don’t possess Form 7.

This situation is frequent in areas where local practices historically didn't emphasize formal documentation. As a foreigner, you must be particularly cautious because the absence of Form 7 can lead to legal complications in proving ownership or in the future transfer of the property.

It's not just about having the document, but ensuring its accuracy and legitimacy.

You are advised to verify the existence and authenticity of Form 7 before proceeding with any purchase. Hiring a local lawyer or a real estate expert who understands the intricacies of Myanmar's property laws and local customs is highly recommended.

They can help you navigate through these unique challenges and avoid potential legal issues that might arise from incomplete or inaccurate documentation.

The risks related to the "Farmland Law"

Another unique pitfall when buying residential property in Myanmar is dealing with the "Farmland Law" and its implications on property ownership.

This law is particularly relevant in Myanmar and might not be well-known to foreigners.

Under the Farmland Law, there are restrictions on the use and transfer of land designated as farmland. In Myanmar, a significant portion of land, even near urban areas, may be classified as farmland. This is where you need to be cautious.

You might find a property that appears suitable for residential purposes, but if it's legally designated as farmland, there are strict limitations on its conversion and use for non-agricultural purposes.

The context where this becomes a pitfall is when buying land or property without thoroughly investigating its legal status. It's not uncommon in Myanmar for land to be informally converted to residential use without the necessary legal changes in its status.

As a foreigner, you should be particularly vigilant about this.

To navigate this pitfall, you are advised to conduct a thorough due diligence process. This should include verifying the land's legal status, understanding any potential restrictions under the Farmland Law, and ensuring that the land's use is legally compliant with its designated status.

Engaging with local legal experts or real estate professionals who understand the nuances of Myanmar's land laws is crucial.

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The concept of "Kwin Rights"

Another unique and often overlooked pitfall in buying residential property in Myanmar relates to the concept of "Kwin Rights."

This is particularly relevant and unique to Myanmar's property market and might not be well-known to foreigners.

Kwin Rights refer to a traditional form of land tenure in Myanmar, where individuals hold customary rights to use land, often passed down through generations, without formal legal ownership. This system is especially prevalent in rural and semi-urban areas of Myanmar.

The challenge for you as a foreign buyer is that properties with Kwin Rights may not have clear legal documentation, making it difficult to establish formal ownership.

In the context of buying property, you might encounter sellers who claim ownership based on Kwin Rights.

While these rights are locally recognized and respected, they often lack the formal documentation required in a legal property transaction. This can lead to complications in establishing a clear title, securing mortgages, or in the future resale of the property.

To navigate this pitfall, you should ensure thorough due diligence is conducted.

It's crucial to verify the ownership history and legal status of the property.

You are advised to work with a knowledgeable local lawyer or real estate professional who understands the intricacies of Kwin Rights and can guide you through the verification process.

"Sittaung" and its risks

In Myanmar, a unique and often overlooked pitfall in buying residential property is dealing with the complexities of "Sittaung," a term referring to the physical boundary markers of a property.

Understanding and verifying Sittaung is crucial, particularly in rural or less developed areas of Myanmar.

Sittaung refers to the physical demarcation of property boundaries, often marked by natural or man-made features like trees, rocks, or small structures. The challenge arises because these markers are sometimes not officially recorded or mapped in a formal land registry system.

This situation can lead to disputes over land boundaries and the actual size of the property.

As a foreigner, you might not be familiar with the local practices of land demarcation and the importance of Sittaung in property transactions. When you are considering a property purchase, it's essential to verify the physical boundaries of the property.

This is particularly important in Myanmar, where formal land surveying and mapping may not always align with local understanding and practices.

Additionally, it's important to ensure that any discrepancies between the physical boundaries and formal documentation are resolved before proceeding with the purchase.

This may involve negotiating with neighboring property owners or seeking legal assistance to clarify and formalize the boundaries.

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"Kyaung Yay" or "Monastery Land"

Another distinct pitfall in the residential property market in Myanmar, particularly relevant to foreigners, involves the complexities surrounding "Monastery Land" or "Kyaung Yay" in Burmese.

This term refers to land that is traditionally owned or managed by Buddhist monasteries.

In Myanmar, a significant amount of land, especially in rural and some urban areas, is under the stewardship of Buddhist monasteries. These lands, known as Kyaung Yay, are often leased or used by local communities for various purposes, including residential.

The challenge for you as a foreign buyer is that such lands can have complex legal and cultural implications.

When considering the purchase of property on or near monastery land, it's crucial to understand the unique status of this land.

You might encounter situations where the land appears available for sale or development, but in reality, it is under the monastery's control or influence. Transactions involving Kyaung Yay can be complicated due to the religious and cultural significance, and often, the legal framework governing such lands can be ambiguous or contested.

Also, be mindful of the potential for community resistance or legal challenges if the transaction is perceived to negatively impact the monastery or local religious practices.

In Myanmar, where Buddhism plays a central role in society and culture, sensitivity to these issues is not just a legal matter but also a key to maintaining good relations with the local community.

"Naing Ngan Myo Yay" or freehold land

A further unique pitfall in Myanmar's residential property market, particularly for foreigners, relates to the concept of "Naing Ngan Myo Yay."

This term refers to the specific classification of land as 'Freehold Land' under Myanmar law, which carries particular significance and potential complications for foreign buyers.

In Myanmar, Naing Ngan Myo Yay, or Freehold Land, represents a type of land ownership that provides the highest degree of ownership security under Myanmar's legal system. However, as a foreign buyer, you need to be aware that the laws regarding foreign ownership of Freehold Land are restrictive.

Foreigners are generally not allowed to own Freehold Land directly, and navigating these restrictions can be a complex and often misunderstood process

When you are looking into buying property in Myanmar, you might come across opportunities that seem to offer direct ownership of Freehold Land. However, you should approach these with caution.

There are cases where arrangements are made to circumvent the restrictions, such as through local nominees or complex legal structures, but these can carry significant legal risks.

You are strongly advised to seek detailed legal counsel before considering any purchase that involves Freehold Land. Ensure that any transaction you are involved in fully complies with Myanmar's property laws, particularly those pertaining to foreign ownership.

It's also important to stay updated on any changes in the legal framework, as Myanmar's property laws have been evolving.

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"Shwenyaung Bin" or "Golden Land"

An additional unique pitfall in the residential property market in Myanmar, particularly for foreign buyers, is the concept of "Shwenyaung Bin" or "Golden Land."

This term refers to land or properties considered to be of high value or strategic importance, often due to their location, historical significance, or cultural value.

In Myanmar, certain properties or land parcels are designated as Shwenyaung Bin, which can carry specific legal and social implications. These properties are often highly sought after due to their prime location or cultural prestige. However, for a foreign buyer, acquiring such properties can be particularly challenging due to several factors.

Firstly, properties classified as Shwenyaung Bin may have restrictions on sale and ownership, especially to foreigners. The government or local authorities might impose specific conditions on the transaction or even prohibit the sale to non-Myanmar citizens.

Secondly, due to their high value and significance, these properties often attract considerable attention, leading to competitive and sometimes opaque bidding processes.

Engaging with experienced local real estate professionals and legal advisors who are familiar with the nuances of Shwenyaung Bin properties is crucial.

They can provide valuable insights into the market and help navigate the complex legal landscape.

The issue of "Incomplete urban planning and zoning regulations"

Yet another unique pitfall in Myanmar's residential property market, particularly relevant for foreign buyers, is the issue of "Incomplete Urban Planning and Zoning Regulations."

In many parts of Myanmar, especially in rapidly developing areas and new townships, urban planning and zoning regulations can be underdeveloped or inconsistently applied.

For you as a foreign property buyer, this presents a challenge because the intended use of a property or land might not align with the future urban development plans. For example, you might purchase a residential property in an area that later becomes zoned for industrial or commercial use, significantly impacting the property's value and livability.

This issue is particularly prevalent in areas outside major cities like Yangon or Mandalay, where urban planning is still evolving.

The inconsistency in how zoning laws are applied can lead to uncertainty about the future development of an area.

Understanding the long-term development plans for the area where you intend to buy property is crucial. Engage with local authorities, urban planners, or real estate experts who can provide insights into future development plans and zoning changes.

Additionally, be aware that in Myanmar, urban planning and zoning laws can change relatively quickly, sometimes with little notice.

Staying informed about potential changes and maintaining flexibility in your property investment strategy is key.

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The risks of "Historical Land Claims"

Another unique pitfall in Myanmar's residential property market, especially for foreign buyers, involves dealing with "Historical Land Claims."

In Myanmar, there are instances where land and properties have historical claims or disputes that are not immediately apparent or recorded in modern legal documents.

This issue is particularly relevant in regions of Myanmar where there have been historical shifts in land ownership due to various factors, such as changes in government policies, local conflicts, or inheritance practices.

In some cases, families or individuals may claim ownership of land based on historical possession or ancestral rights, which might not be clearly documented or recognized in current legal frameworks.

For you, as a foreign property buyer, this presents a significant challenge. You might encounter situations where you purchase a property believing the title to be clear, only to discover later that there are unresolved historical claims.

These claims can lead to legal disputes, complicating your ownership and use of the property.

Engaging with a local lawyer who has expertise in property law and is familiar with the region's history is crucial. They can help uncover any historical claims and assess their validity.

Additionally, seeking out the local community's perspective can provide valuable insights into any known disputes or claims.

The concept of "Bureaucratic Inconsistencies"

A further unique and often overlooked pitfall in buying residential property in Myanmar, especially for foreigners, is the challenge of dealing with "Bureaucratic Inconsistencies."

Myanmar's property market can be characterized by complex and sometimes inconsistent bureaucratic processes, particularly in terms of property registration, transfer of ownership, and obtaining necessary permits.

In Myanmar, the process of buying and registering property can be laden with bureaucratic hurdles.

These may include unclear or varying requirements from different government departments, slow processing times, and the need for numerous approvals and stamps.

As a foreign buyer, navigating this landscape can be particularly challenging due to language barriers, unfamiliarity with local processes, and the potential for differing interpretations of regulations by various officials.

When engaging in a property transaction, you might face delays and unexpected requirements.

For instance, the process of transferring ownership might stall due to incomplete or inconsistent documentation, or you may encounter unexpected requirements for additional permits or approvals.

To navigate this pitfall, you are advised to work closely with a trusted local lawyer or a real estate agent who is well-versed in navigating Myanmar's bureaucratic system.

They can help streamline the process, anticipate potential issues, and ensure compliance with all legal requirements.

Moreover, it's important to exercise patience and flexibility.

Bureaucratic processes in Myanmar may take longer than you are accustomed to, and being prepared for delays and last-minute requirements can help reduce frustration and ensure a smoother transaction.

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