What is freehold?
Freehold is the absolute ownership of property and the buildings on the land. It’s 100% yours. You have full freedom to do whatever you wish with it and the things that are fixed to your land. Fixed things include buildings and even trees. If you happen to be sitting on a reserve of oil, all of it yours. Just as good, your freehold ownership never expires until you decide to sell it or give it away. Your name goes on the property title deed. Henceforth, you are known as the ‘Freeholder’. Congratulations because it’s the most preferred and most indisputable way of owning property.
What is a lease?
A lease is an agreement to have the ‘right’ of possessing a property for a certain number of years. It’s a temporary ownership with some restrictions. You are not entirely free to do what you wish with the property, but you can consider it yours. Especially because ideal property leases are for long periods of time, preferably 30 years up to 99 years. The person leasing the property is called a Leasee. The Leasee has the right to use the property from the Freeholder. Once the lease agreement has expired, all the property is returned to the Freeholder.
What about the title deed that goes with the Leasehold in Thailand?
Unlike in other countries, there is no such thing as a title deed for a leasehold in Thailand. No current law supports it. What you receive is a ‘right’ to possess a property for a period of time. This legal ‘right’ is registered under the Freeholder’s title deed.
Can a foreigner have Freehold ownership in Thailand?
A foreigner can obtain Freehold ownership in Thailand for condominium units only. Freehold ownership of land in Thailand is not supported at this time. Up to 49% of the total units of a condominium can be owned with freehold ownership. This rate can vary depending on the property and depending on the by-laws of an area. For example, condos in areas such as Ratchaprasong and Ratchadamri do not allow for foreigner freehold ownership. Visit our page for a list of freehold condos in Bangkok.
So how can a foreigner build a house in Thailand?
A foreigner can lease a piece of land and build a house on top of it provided the lease agreement allows for it. He will in essence ‘own’ the house. However, when the day comes that the lease term expires, the house and its ownership is forfeited to the real owner of the land, the Freeholder. The longer the leasing period, the greater its value.
How long can a lease last in Thailand?
In Thailand, the maximum number of years property can be leased for is 30 years. Once expired, the lease can be renewed for another 30 years, and another 30 years again after that, for a total of 90 years – when in your favor. However, the renewal is not always guaranteed. For example, the Freeholder may have a change of mind and change the terms of the agreement against your favor. So if you hear guaranteed property leasing periods of 90 years, it’s simply not true. 30 years is the maximum guaranteed leasing period. There are no Thai laws that facilitate a strict 90 years leasing term without having to renew.
For free advice on securing your freehold or leasing structure, get in touch with Shambala Realty