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Property Leasehold in Thailand. In Thailand, leasehold property is a vital legal mechanism, particularly for foreign nationals who are restricted from owning land. While leasehold does not confer ownership, it grants the lessee exclusive rights to possess and use the property for a defined period. Understanding the legal basis, limitations, and practical execution of leasehold rights is essential for both local developers and international investors.
This article offers a deep dive into the leasehold structure in Thailand under Thai law, focusing on formalities, strategic usage, and key risks.
Leaseholds are governed by the Civil and Commercial Code of Thailand, specifically Sections 537–571. These provisions define the rights and obligations of both lessor (landowner) and lessee (tenant).
Key points:
A lease is a personal contractual right, not a real property interest.
The maximum term for a lease of immovable property (land or building) is 30 years, as per Section 540.
Leases exceeding three years must be registered at the Land Office to be enforceable against third parties.
Renewal clauses are permitted, but not automatically binding on successors unless separately registered.
Applicable when a lessee wishes to use land for:
Residential purposes (building a villa or home)
Agriculture or farming
Commercial use (office, factory, hotel)
A foreigner may lease land for up to 30 years, and the right can be renewed by agreement—but such renewals must be re-registered upon expiration.
When the land is not owned, but the lessee seeks rights to a constructed building, such as:
A villa on leased land (often combined with a superficies)
Factory buildings on industrial zones
Foreigners unable to purchase a freehold condominium (due to foreign quota limits) may lease a unit. Leases exceeding three years must be registered to secure legal enforceability.
For leases exceeding three years to be legally effective beyond the parties:
The lease must be in writing
Signed by both parties in the presence of witnesses
Registered at the Land Department
Accompanied by title deed and ID documents
A lease registration involves:
A lease agreement specifying the term, rent, and rights
A 1.1% registration fee (1% for lease registration, 0.1% stamp duty)
Only land with proper title deeds (Chanote or Nor Sor 3 Gor) can be registered for lease.
Foreign individuals are prohibited from owning land under Thai law, but they may:
Lease land for residential or commercial use for up to 30 years
Lease condominium units not available under the 49% foreign freehold quota
Combine a lease with superficies to own structures built on the land
Foreigners often lease land in resort areas (e.g., Phuket, Samui) to build private residences. The lease may include:
The right to renew for two additional 30-year terms (non-binding)
The right to transfer or sublease, if permitted in the contract
A clause allowing the transfer of lease rights to heirs
Key terms in a Thai lease agreement include:
Term and Renewal
Maximum 30 years; options to renew are not enforceable unless separately executed and registered upon expiry.
Usage Rights
Must state if usage is residential, commercial, or agricultural. Breach of use can void the lease.
Subletting and Transfer
Not permitted unless expressly stated. Transfers require lessor's written consent.
Building Rights
Often combined with superficies if the lessee builds on leased land.
Succession
Lease rights do not automatically pass to heirs. Succession must be explicitly stated and agreed upon by the lessor.
Termination
Conditions under which the lease may be terminated prematurely (default, force majeure, mutual consent)
To allow foreigners to build and own structures on leased land, a leasehold + superficies model is common:
Lease the land (maximum 30 years)
Acquire a superficies right (right to own buildings on land)
Register both at the Land Office
This allows the foreign lessee to own the villa, while the land remains under Thai ownership. The superficies may have its own term (e.g., up to 30 years, renewable) and can survive the lease expiration if structured correctly.
Foreign-owned companies may lease land for business operations. Leaseholds are common in:
Industrial estates (often 30–50 years under special regulation)
Retail and hospitality (long-term leaseholds for hotels, malls)
Joint ventures with Thai partners
In such cases:
The lease is part of BOI (Board of Investment) promoted projects
May be extended under Industrial Estate Authority of Thailand (IEAT) rules
Corporate leases require:
Board resolutions
Notarized agreements
Tax filings and disclosure to the Department of Business Development (DBD)
Renewal clauses are not enforceable in rem, meaning that successors or purchasers of the land may not be bound by them unless a new lease is registered.
Lease rights are personal and expire upon death unless otherwise stated and accepted by the lessor.
Most leases prohibit transfers or subleasing without the lessor’s consent.
Marketing leases as “equivalent to ownership” (e.g., “90-year lease”) can be misleading and may result in disputes.
Leases over three years that are not registered are only valid between the parties, not against third parties—such as new landowners.
Lease registration fee: 1% of total rental value
Stamp duty: 0.1%
Withholding tax: 5% on rental income (if paid to a company)
VAT: 7% if the lessor is VAT-registered
Property tax (borne by the lessor or lessee depending on the agreement)
Personal income tax on rental income
Lessees should agree in writing who will be responsible for ongoing tax obligations.
| Aspect | Leasehold | Freehold |
|---|---|---|
| Ownership | Right to use | Absolute ownership |
| Duration | Max 30 years (renewable) | Indefinite |
| Transferable | Limited (with consent) | Yes |
| Inheritance | Not automatic | Yes |
| Foreign eligibility | Yes | Limited (condos only) |
In some developments, leasehold may be the only structure offered to foreign buyers due to legal or zoning constraints.
Property leasehold in Thailand offers a legally sound structure for foreigners, companies, and investors to secure long-term land or building usage. However, the system's legal boundaries—particularly around renewal, inheritance, and enforceability—require meticulous drafting, proper registration, and realistic expectations.
For those seeking to lease property in Thailand, it is crucial to engage qualified legal professionals to ensure compliance with Thai law, protect contractual rights, and structure the agreement to mitigate long-term risks.
