As foreigners cannot claim ownership over land as freehold, the preferred method of acquiring land is through leasehold.
A foreigner can safely acquire the right to use the land and register the right for a maximum lease term of 30-year lease at the Land Department.
Lease term – A lease agreement will usually guarantee the initial 30-year lease term.
Renewal of lease in Thailand is not in Perpetuity. There is no automatic right to renewal and parties must take an active step to renew the lease towards the end of the initial term.
It is difficult but possible and success will depend upon careful drafting of the clause regarding the intention to renew and there it will still subject to the Registrar’s discretion.
Renewal periods thereafter the initial period must not exceed 30 years.
Have your lawyer advise you on renewal clauses.
Drafting of the Lease
The lease contract is usually drafted in the Thai language, however we do provide English versions if needed.
It is recommended to include family members such as young adults as co-lessees in the contract. In the uneventful demise of the parents, the children can carry on the full term of the lease period.
Leases for more than 3 years are able to be registered at the Land Office, which will then further protect your interest in the house, as it becomes an encumbrance.
Upon registration, the title deed will then contain your name and particulars as to the lease. The lease contract is then attached to the title deed and maintained at the Land Department.
The foreigner can construct a house on the land if the lease agreement permits. The construction permit must be applied for in the name of the foreigner and subsequently the foreigner will own the structure in his/her own name.
Most importantly, leases are valid even upon the demise of the lessor, or in the event that the land is sold. However, leases are only transferable to third parties in the event that the guarantor of the lease permits it.
The advantage of leasehold is a lower registration fee. The registration fee for registering such a lease is 1.1% of the rental value.
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