Investment Insights

Is Leasehold or Freehold Ownership Right for Me?

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Purchasing a condo, house or other property is a decision that takes time and careful planning, especially when looking at properties in a foreign country. Each destination has its own set of rules and regulations, which is why it is so important to have an understanding of your options as an owner. In Thailand, there are two main ways for foreigners to obtain a condo outright – Freehold Ownership and Leasehold Ownership. We will give you a basic overview of these two options to help you make a more informed buying decision.

Leasehold Ownership vs. Freehold Ownership
Purchasing a property leasehold means you agree to buy a property for a fixed amount of time. During this time, you are the owner of the house or condo, but you do not own the land on which the property is built. At the end of the contract, the property is returned to its original owner.

Buying freehold, on the other hand, means the property is entirely yours. This usually means higher taxes and premium fees, but you have the benefit of owning the property and selling it at any time if you should choose to do so.

When deciding between leasehold and freehold, it is important to consider why you want to own this property. Is it an investment that you plan to sell in the future or a home you plan to stay in for the long term?

Leasehold vs. Freehold in Thailand
In Thailand, leasehold properties allow an owner to lease a property in his or her own name for an initial period of up to 30 years. In turn, this lease can be renewed twice in separate contracts for up to 90 years total of ownership. Many buyers see this as a sufficient amount of time to own the property and are happy with the lower overall fees associated with leasehold ownership. For example, the registration fees for a leasehold property are only 1.1% of the total amount of the lease rental fee, with .5% being paid by the lessor. This is compared to a 2% transfer fee for freehold properties, whereby both the buyer and seller are each responsible for paying 1% of the purchase price.

While the fees may be higher for freehold ownership, you have the benefit of owning your property outright for an unlimited amount of time. This means you have the right to vote at your condo’s general meetings, as well as the right to sell your property at any time – both of which do not fall under the umbrella of leasehold ownership rights.

However, it is important to note that Thai law states that only up to 49% of the units in a development can be owned freehold by foreigners. Therefore, if a development has reached this quota, the only other option for a foreigner to own is through leasehold.

The Next Step
As you can see, there are pros and cons to both leasehold and freehold ownership in Thailand. While this has been a brief overview of the two, we encourage you to speak in more detail with one of our agents to ensure you have a complete understanding of your options when purchasing a property.

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