Freehold vs. Leasehold in Thailand: What You Need to Know Before Buying Property
When considering purchasing property in Thailand, understanding the difference between freehold and leasehold ownership is essential. Both options come with distinct legal implications, and your choice can have a significant impact on your investment. Here’s a detailed guide to help you understand the differences and make an informed decision when buying property in Thailand.
What is Freehold Ownership?
Freehold ownership means you own the property outright, with your name on the title deed (Chanote), giving you complete legal rights over the property. Foreigners are allowed to own freehold condominium units, but direct ownership of land is restricted.
Freehold for Condominiums
Foreigners can legally own freehold condominium units in Thailand, provided that no more than 49% of the total units in a building are foreign-owned. This allows foreigners to hold the title deed in their own name, giving full ownership rights.
Benefits of Freehold:
– Complete and indefinite ownership of the property
– Ability to sell, rent out, or pass the property to heirs without restriction
– Generally higher resale value compared to leasehold properties
Limitations:
– Foreigners can only hold freehold ownership for condominiums, not land or houses directly
What is Leasehold Ownership?
Leasehold ownership gives you the right to use and enjoy the property for a fixed period, typically 30 years, with the option to renew for additional terms. While the land or property technically remains under the ownership of a Thai individual or entity, leasehold agreements often function similarly to ownership, especially when it comes to long-term use.
Although leasehold is not full ownership, it often feels like ownership for the duration of the lease term. You have nearly all the same rights to the property as a freeholder, but only for a limited period. Many foreigners find this option suitable when purchasing villas or houses, as Thai law restricts land ownership for non-citizens.
Leasehold for Land and Villas
Foreigners can lease land or houses under a leasehold arrangement. You can lease land for up to 30 years, with the option to renew twice, allowing up to 90 years of total control over the property.
Benefits of Leasehold:
– Provides nearly the same level of control as ownership during the lease term
– Foreigners can lease land or villas without legal obstacles
– Often less expensive than freehold properties
– Offers long-term security, especially for those interested in villas or houses
Limitations
– The lease is limited to 30 years (with an option for renewal)
– The property returns to the landowner when the lease expires if it is not renewed
– May have a lower resale value compared to freehold properties
– Lease renewal is not guaranteed and depends on the landowner
Combining Freehold and Leasehold for Houses and Villas
In some cases, a house or villa itself can be registered under freehold ownership, while the land it sits on is leased through a leasehold agreement. This arrangement is quite common for foreigners who want to invest in villas, allowing you to own the structure outright, even if the land is leased.
This option provides more security, as you hold the freehold title to the villa or house, while leasing the land gives you long-term use rights, which can often be renewed. It’s an excellent compromise that enables property ownership while adhering to Thailand’s land ownership laws for foreigners.
Thai Company Ownership Option for Land
Another option available to foreigners is to establish a Thai company with the assistance of a trusted lawyer. Through this company, you can legally own the land. In this case, the land title will be registered under the company’s name, while you retain control as the major shareholder.
Key Points About Thai Company Ownership:
– The company must be majority Thai-owned (with at least 51% of shares held by Thai nationals), but you can be the primary decision-maker through specific legal structures.
– This option provides a legitimate way to own land, including villas and houses, but it’s important to work with a reliable lawyer to ensure that the company is structured in full compliance with Thai law.
Which Option is Best for You?
– If you prefer full ownership: Freehold is ideal, but limited to condominiums and possibly the structure of a house or villa if the land is leasehold.
– If you want to invest in villas or houses: Leasehold is a great option, providing near-ownership control for up to 90 years.
– If you want to own land: Establishing a Thai company is a viable option, but it’s important to work with a trusted lawyer to ensure everything is legally compliant.
– Budget: Freehold properties, particularly in the condo market, typically have higher market values, while leasehold properties may be more affordable upfront.
How Real Estate Building Co., Ltd Can Help
No matter how you want to invest in our project, you can consider any of the listed ways, Real Estate Building Co., Ltd offers expert assistance at every stage. We will help you understand the legal intricacies and ensure the safety and profitability of your investments. Our services include legal support, property management and comprehensive support for remote investors.
Both freehold and leasehold ownership in Thailand offer unique advantages, and the best option depends on your personal goals. Freehold provides full ownership, which is ideal for condos, while leasehold allows foreigners to enjoy near-full ownership for villas or houses for extended periods. Additionally, setting up a Thai company offers a legal pathway to land ownership. With the right guidance from professionals like **Real Estate Building Co., Ltd**, you can make informed decisions and invest confidently in Thailand’s booming real estate market.
