Leasehold vs freehold in Thailand: the honest comparison

What the law actually provides

Thai law caps property leases at 30 years. A lease over three years must be registered on the title deed at the Land Office to be enforceable beyond three years, and a properly registered 30 year lease is a genuinely robust instrument: it survives a sale of the land, binds the new owner, and is enforced by Thai courts without controversy. For three decades, a registered lessee's position is strong.

The difficulties begin at year 31. There is no statutory right of renewal. Everything beyond the registered term rests on contract, and this is where the market's favourite structure deserves scrutiny.

The truth about renewal clauses

Most leasehold villas and quota-full condo units are sold with a lease containing promises of two further 30 year terms, marketed as 90 years of tenure. Thai courts have been consistent about what such promises are worth: a renewal covenant is a personal contractual obligation of the original lessor. It does not run with the land, and it does not bind the lessor's successors. If the landowner sells, dies, or is a company that becomes insolvent or changes hands, the new owner of the land is generally not obliged to honour the renewal, whatever the contract says. Structures that tried to guarantee renewal more aggressively, including collective pre-signed renewals and secured lease arrangements, have periodically drawn regulatory hostility rather than protection.

None of this means renewals never happen. Professional lessors, particularly established Phuket estates whose business is the ongoing management of leasehold communities, have commercial reasons to renew and routinely do. It means renewal is a counterparty judgement, not a legal entitlement, and a buyer should ask the only question that matters: who will own this land in 25 years, and what incentive will they have to sign again.

Freehold, where it is actually available

For condominium units within the 49 percent foreign quota, foreigners can hold true freehold: perpetual, registered, inheritable and mortgageable ownership of the unit, with the currency-trail formalities covered in our FET briefing. For landed property, foreign freehold is essentially unavailable; the Board of Investment exception at the 40 million baht investment level is narrow, and nominee shareholding arrangements to hold land through Thai companies are illegal and increasingly enforced against. In practice the comparison facing most buyers is therefore either quota freehold condo versus leasehold condo, or leasehold villa versus not buying a villa at all.

Two supporting instruments round out the toolkit. A usufruct grants a right to use and enjoy property, registrable for life rather than for a fixed term, which can make it a stronger personal right than a lease for a spouse or family member, though it dies with its holder and cannot be sold. A superficies grants the right to own buildings on another's land, and is the natural companion to a land lease under a villa. Neither substitutes for ownership, but layered deliberately they can turn a bare lease into a considerably more resilient position.

The comparison in one table

Mechanics and costs of a registered lease

Registering a lease is a Land Office transaction like any other. Both parties, or their attorneys, attend the office where the deed is held; the lease is registered against the title, with the term, the rent and any special conditions recorded; and a registration fee plus stamp duty, together roughly 1.1 percent of the total rent across the term, is paid at the counter. Because the fee is calculated on declared rent, some lessors propose understating it, which saves a little at registration and creates problems later, at renewal, at assignment and with the tax authorities. Register the real numbers.

Buyers should also be aware of the recurring policy conversation around longer terms. Proposals to extend registrable leases to 50 or more years, or to liberalise foreign ownership more broadly, surface in Thai politics every few years, attract headlines, and have so far not become law. If such a change ever arrives it will be a windfall for existing structures, but no purchase should be underwritten on the assumption that it will. Buy the law as it stands: 30 years registered, everything beyond it contractual.

Pricing leasehold correctly

The market's quiet scandal is that leasehold is often priced at only a shallow discount to freehold, typically somewhere around 10 to 20 percent below an equivalent freehold unit. Priced as what it is, a 30 year terminating interest with uncertain renewal, the discount should be materially deeper, and the shortfall compounds at resale: a buyer ten years in is selling a 20 year asset into a market that prices remaining term. A useful discipline is to value a leasehold as the present value of 30 years of occupation or rental yield, plus a probability-weighted, not guaranteed, renewal. Run that arithmetic and compare it to the asking price. The gap between the two numbers is what you are paying for optimism.

Structure matters as much as price. The lease should be registered on the day of payment, name spouse and heirs as co-lessees or successors where family continuity matters, deal explicitly with the building where there is one, and be examined for the lessor's right to terminate. For villas, separating building ownership from the land lease materially improves the position, as our Phuket structures briefing sets out.

When leasehold is the rational choice

• The asset only exists as leasehold: villas and landed houses, where foreign freehold is not on offer at any price.
• A condo you specifically want in a building at foreign quota, where leasehold is the only route in and the discount is genuinely deep.
• A time-bounded plan: a 10 or 15 year residence horizon, where paying for perpetuity would be buying duration you will not use.
• Yield-driven purchases where the numbers work within the registered term alone, treating any renewal as upside rather than assumption.

Treat 90 year tenure claims in marketing materials as a statement about the contract's ambitions, not about Thai law. Only the first 30 years is registered and certain.

Our view

We are not against leasehold; we are against leasehold bought at freehold prices on freehold assumptions. Where clients pursue leasehold assets, AGP's role is to underwrite the lessor as a counterparty, negotiate the succession and renewal mechanics into the strongest available form, and make sure the price reflects the term. Bought with clear eyes, a good leasehold is a serviceable instrument. Bought on the brochure, it is a 30 year countdown with a marketing story attached.

This briefing is general information, not legal, tax or investment advice. Thai rules change frequently and individual cases differ. Verify current requirements with the relevant authorities, including the Immigration Bureau, the Board of Investment, the Land Department, the Department of Business Development and the Revenue Department, and take advice on your own facts before acting.