In Thailand, land ownership and property rights can be complex, especially for foreigners. There are two primary types of property ownership: freehold and leasehold. Understanding the differences between these two forms of ownership is crucial when purchasing property in Thailand.
Freehold ownership grants the owner complete and perpetual rights to the property, including the land it sits on. The owner has the right to sell, lease, or transfer the property without restrictions. However, it’s important to note that Thai law generally restricts foreigners from owning freehold land directly. The few exceptions include investing a substantial amount in the country or setting up a Thai limited company to purchase the land, with the foreigner holding a minority share in the company.
Foreigners are allowed to own freehold condominium units, provided that no more than 49% of the total area of the condo project is owned by foreigners. In this case, the ownership is perpetual, and the property can be sold, leased, or transferred without restrictions.
Also, the foreign buyer must transfer the funds for the purchase from a foreign bank account to a Thai bank account in foreign currency. The bank will issue a Foreign Exchange Transaction Form (FET-form, previously known as Thor Tor 3) to certify the transaction, which is necessary for the land office to register the condominium under the foreign buyer’s name.
Foreign buyers must provide their valid passport and, if applicable, a valid visa. In some cases, the land office may also require a copy of the marriage certificate if the foreign buyer is married to a Thai national.
Leasehold ownership, on the other hand, involves a long-term lease agreement between the property owner (lessor) and the tenant (lessee). The lessee gains the right to use and occupy the property for a specified period, typically 30 years, but it may be renewable for additional terms. Leasehold is a more common option for foreigners in Thailand, as there are no legal restrictions on leasing land or property.
In a leasehold arrangement, the lessee is usually responsible for the property’s maintenance, taxes, and any applicable fees. While leasehold properties can be sold and transferred, the new owner is subject to the terms of the original lease agreement. It is essential to review the lease terms carefully and consider the remaining lease period before purchasing a leasehold property.
In summary, the primary difference between freehold and leasehold ownership in Thailand is the level of ownership rights and restrictions placed on foreign buyers. Freehold ownership offers greater rights and freedom to the owner but is generally restricted for foreigners, while leasehold offers limited rights and is more commonly available to foreigners. Always consult with a local attorney or property expert before purchasing property in Thailand to ensure compliance with local laws and regulations.