Property Rights in Thailand

In this article, we take a look at the two types of property used to buy real estate in Thailand. Freehold is equivalent to full ownership and is available to foreigners when purchasing a Condominium license apartment. Leasehold is a long-term lease used to purchase a villa or apartment outside the Condominium license.

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Le Freehold

With Freehold, the buyer is the full owner of the property, with a title deed in his or her name. It is possible in Thailand for a foreigner to access Freehold under certain conditions, notably when purchasing a Condominium license apartment.

A “condominium” is a jointly owned building in which each apartment is owned by separate owners, but the building’s common areas are jointly owned.

It is possible for a foreigner to be the full owner of his or her apartment in a Condominium as long as no more than 49% of the total surface area of the building is owned by foreigners (known in Thailand as the “Foreign Quota”) and the remaining 51% is owned by Thais.

Freehold is particularly attractive because it gives investors full ownership of their property, with an indisputable title deed in their name. In rental investment with hotel management on Phuket, some developers offer this type of property in exchange for a slightly higher sale price. This brings additional security to the investment, especially for those planning to keep the property for the long term, to live in or invest in, or to pass it on to loved ones.

In the case of buying a villa, however, it is not possible to invest legally in Freehold as a foreigner, as only citizens of Thai nationality can fully own land. In this case, the most advisable solution is to invest in Leasehold.

Leasehold

Leasehold is equivalent to an emphyteutic lease: a long-term lease of 30 years, renewable with the agreement of the landowner.

If the property you wish to buy is not a condominium-licensed apartment, it will not be possible for you as a foreigner to fully own your property, and in most cases the purchase will therefore be made on a leasehold basis.

Particularly if you want to buy a villa, only Thai people can own land in their own name. Leasehold is therefore an alternative way of acquiring a villa or apartment (without a Condominium license), often used on the islands of Koh Samui or Phuket. The advantage of Leasehold is that the purchase price of the property will be lower than in Freehold (10 to 15% on average).

This type of property can be a good solution for people wishing to invest in rental property with the intention of reselling their property in the short to medium term. This is also possible if you are planning to buy a villa for residential purposes. At the end of the 30-year leasehold period, the landowner must decide whether or not to renew the lease. It is therefore advisable either to sell before the end of the 30 years, or to deal with a landowner you trust to renew your Leasehold.

Buying with a “Thai Company”: to be avoided

Buyers interested in real estate in Thailand will certainly have heard of this type of purchase. This involves setting up a Thai company in which you are a director and minority shareholder, together with one or more Thai nominees who hold 51% or more of the company’s shares, enabling you to own property through this Thai company. Beware of this type of acquisition, which in addition to being risky (you can only hold a maximum of 49% of the shares in the company that owns the property) is not a legal way of owning property as a foreigner, and has recently been the subject of legal proceedings, notably on Phuket and Koh Samui. If you own a company in Thailand, it cannot exist for the sole purpose of owning property: it must be managed, with up-to-date accounts, a real activity and the partners must be genuinely involved.

Whatever your project, it’s important to be accompanied by someone who knows the advantages and disadvantages of each type of property, and who can, if necessary, refer you to a lawyer to help you with the legal and purchasing process.