Types of property ownership in Thailand: freehold and leasehold

Freehold in Thailand is the equivalent of perpetual ownership of real estate, which exists in most countries.
A lease is a long-term form of ownership registered by the state. Formally, the lease is a long-term lease, and an advance payment is made immediately for the entire period of ownership — 30 years with the possibility of a two-time extension.
In the classic lease agreement, real estate is registered for 30 years, this period is guaranteed by the state. The extension for the remaining two terms of 30 years is guaranteed by the developer (the owner of the land) in the contract. Unless conditions for exclusive ownership are specifically included in the contract, the lease is inherited in the usual manner (requires the consent of the lessor). It can also be resold, donated, and inherited for the rest of the contract period. In the event of the tenant’s death, the heirs must notify the landlord and may face the need to renegotiate the contract.
The heirs should ideally be named in the contract at the stage of the transaction. This can be done later, but then legal services for changing the contract will cost 50–100 thousand baht (from 1,400 to 2,800 dollars).
Both the freehold and the lease are registered with the Land Department of Thailand. The owner who transferred the property to the leasing company is not entitled to dispose of it during the entire term of the contract. He will not be able to sell or mortgage real estate, lease it to third parties or make other transactions without the lessee’s involvement. In addition, the owner is obliged to conclude a deal with any other person indicated by the leaseholder when transferring ownership.
Quotas for foreigners in Thailand
There is a freehold quota for foreigners in Thailand. The area of the property on the site is divided into: 49% of the area is sold with the right of ownership (freehold), and 51% — with the right of ownership (leasehold).
The property purchased in the leasehold, with the consent of the owner and the availability of a free quota for foreigners in the building, can eventually be transferred to the ownership of the freehold with an additional payment, the amount of which is agreed individually. Usually, freehold properties are 5–10% more expensive.
Foreign individuals cannot register land plots in a freehold.
In Pattaya and Bangkok, freehold properties are most often bought. It is divided into a Thai 51% (for Thai citizens and companies) and a foreign 49% quota. The exceptions are premium projects on special plots of land in top locations: some of them can only be registered in a leasehold.
Features of owning apartments, condos, and villas in Thailand
Condominiums and apartment buildings differ in the form of registration and ownership.
Apartments (condos) in condominiums have separate cadastral numbers and can be registered with different owners in both freehold and leasehold. At the same time, foreigners can own only 49% of the condominium area by right of freehold, while foreigners can purchase the remaining 51% of the condo only in a leasehold.
The apartments do not have separate cadastral numbers. A building with apartments can have only one owner, and the apartments themselves can be transferred to the ownership of the leasehold.
Since land in Thailand cannot belong to foreign individuals, only the apartment itself and a share of common buildings are transferred to ownership: swimming pools, gyms, etc. Residents can use common buildings on equal terms, regardless of the form of ownership — leasehold or freehold.
Foreigners most often take possession of villas under two contracts: the building is in freehold, and the plot of land is in leasehold. It is also possible to register land in a freehold, but only through a legal entity resident in the Kingdom of Thailand.
Leasehold or freehold: the pros and cons
Foreigners purchasing property for investment purposes often prefer leasehold. Leasehold properties are typically 5–10% cheaper, and the leasing structure also reduces transaction registration and tax costs..
Pros of freehold and leasehold:
Freehold | Leasehold |
Unlimited property management | Property is not declared and is not subject to municipal annual tax |
No need to renew the contract every 30 years | Property price is lower by 5–10% |
No need to keep in touch with the owner | No transfer fee |
Cons of freehold and leasehold:
Freehold | Leasehold |
Property is declared and subject to property tax | Limited ownership |
2% property transfer fee | To sell or to renew the contract once every 30 years, it is necessary to keep in touch with the owner |
Property price is higher by 5–10% |
Freehold and leasehold taxes:
Freehold | Leasehold |
Property transfer fee — 2% | Lease registration fee — 1% |
Stamp duty — 0.5% | Stamp duty — 0.1% |
Annual municipal property tax — from 0.02% to 0.1% depending on the property value and number of registered residents | |
Withholding tax (income tax on sale) — from 1% to 35% depending on the value and tax status of the owner |
You can read more about property taxes in Thailand in our article.
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