Leasehold and Freehold Property Ownership in Thailand, Which is Right for You?

 Understanding Freehold Ownership in Thailand 

Freehold means absolute ownership of the property, granting the owner full, permanent control over the property and the land it sits on (unless there are specific legal restrictions).

• Freehold owners have the freedom to use, develop, modify, transfer, or sell their property at their discretion, with no time limitation on ownership.
• Foreign individuals can own freehold condominium units, provided that the total foreign ownership of the condominium project does not exceed 49%.
• Freehold ownership is regarded as more stable with minimal annual tax costs, greater ease of resale, and voting rights in condominium corporate meetings.
• However, acquiring a freehold property typically requires a more significant capital investment compared to leasehold properties, due to the complete transfer of ownership rights.

What is Thai Leasehold property ownership

On the other hand, buying a leasehold property in thailand provides the right to use a property for a specific period, typically 30 years, with the possibility of renewal for two additional 30-year periods (theoretically up to 90 years if all conditions for renewal are met).

• Leasehold is the most common route for foreigners to control land or villas, as outright land ownership by non-Thais is generally prohibited.
•  Leaseholders do not own the land or property outright; instead, they possess contractual rights for the lease duration. Ultimate control remains with the lessor (usually a Thai national or company).
• Leasehold contracts must be registered at the Land Department for legal protection, usually incurring a registration fee of around 1.1% of the property value, which is generally lower than the transfer fees for freehold properties.
• Leaseholders can transfer their lease rights to another person during the lease period.
• One of the most attractive aspects of leasehold properties is that they tend to be cheaper than comparable freehold properties, making them appealing for short- to medium-term expatriates or investors.
• However, it is crucial to note that once the lease expires (unless renewed), all rights to the property revert to the owner, and renewal is not guaranteed by law; it is subject to lease term agreement.

Key Differences Between Leasehold vs. Freehold Property Ownership

Practical Guidance for Buyers

If you’re considering owning a property in Koh Samui, it’s vital to understand when each type of ownership is suitable:

• Freehold is ideal for those seeking long-term security and full control over their property, especially if eligible for condos.
• Leasehold offers flexibility and a lower entry cost, but comes with time-limited control and potential uncertainties regarding renewal.
• Foreign buyers must carefully weigh legal restrictions, consider their investment horizon, and outline long-term plans before selecting between foreign freehold and leasehold, as both options carry unique risks and benefits.

What’s the Best Option for Foreigners property investment in Thailand 

Investing in Thailand’s real estate market presents enticing opportunities for foreigners, particularly in popular areas like property in Phuket and Koh Samui. When considering how to buy property in Thailand, understanding the difference between leasehold and freehold is crucial. Foreigners can acquire freehold units, which grant full ownership rights and the ability to enjoy the property indefinitely, subject to the foreign freehold quota. Conversely, leasehold properties are generally more accessible, allowing foreigners to enter the market with leasehold options that typically last for 30 years, with potential extensions.

When evaluating type of property, buyers should consider whether they prefer freehold or leasehold arrangements. Freehold land is ideal for those seeking indefinite ownership, while a leasehold unit might suit investors looking for a shorter commitment. Understanding these aspects will help potential buyers navigate Thailand’s property market effectively, ensuring they make informed decisions about owning property in Thailand.

 FAQ About Property Ownership in Thailand

1. Can foreigners buy freehold property in Thailand?
Yes, foreigners can buy freehold condominium units if the foreign ownership does not exceed 49%.

2. What is the maximum duration of a leasehold in Thailand?
Thai Leasehold is 30 years, with up to two additional renewals for a total of 90 years.

3. Is leasehold ownership in Thailand secure?
It is less secure than freehold as rights revert to the owner after the lease expires, unless renewed.

4. Can leaseholders sell their lease?
Yes, leaseholders can transfer their lease rights to another person.

Conclusion

Property ownership in Thailand presents a clear legal and practical distinction between leasehold and freehold arrangements, which carry significant implications for both Thai nationals and foreigners looking to buy, rent, or invest in property in Koh Samui Thailand.

Ready to start your journey in buying a propertyin Koh Samui? Contact Koh Samui Villas today for expert guidance and assistance in finding your dream property!