What is freehold ownership and can foreigners own property in this way?
Freehold ownership allows a person or entity to own a property outright. In this case you hold the title deeds for the property but these deeds come in different forms depending on the type of property. For example you might hold the certificate of ownership (Thor Or 5) which proves you own a structure (building, house, villa), a title deed to a condominium unit known as a Chor 2 or freehold ownership on a piece of land called a Chanote Title.
In Thailand foreigners are not permitted to own land freehold however a foreigner can own a condominium unit freehold. This is more commonly known as ‘foreign freehold’ ownership and is particularly popular with foreigners looking to buy real estate in Thailand. We will discuss buying a condo in Phuket in more detail later.
What is leasehold ownership and can foreigners own property in this way?
Leasehold ownership allows foreigners to have rights over a property for a set period of time. The longest lease that can be legally registered is for a period of 30 years. However it is worth mentioning here that lease contracts can have further renewals written in allowing for additional 30 years periods to be granted by the lessor.
Leasehold ownership is very common for those buying property in Thailand as a foreigner if they want to own a villa. This is because it’s the most straightforward way to have legal rights over the land the villa is built on.
Just as there are different types of property ownership in Thailand, there are also different types of property that foreigners can buy in Thailand. In the following sections we will go into the most popular types of property in more detail.
Buying a Condo
The laws for buying property in Thailand as a foreigner are heavily tilted in the favour of buying a condominium. This is because Thailand passed the Condominium Act in 1979, and allows foreigners to own condo units freehold. However the ownership of all foreigners in one condominium can not exceed 49% share of the total sellable area of all the units in that one building. As we mentioned before this type of ownership is called ‘Foreign Freehold’.
In the case that a foreigner wishes to buy a condo unit in a building that has already reached the foreign freehold ownership quota of 49% then the foreigner may buy the unit under leasehold ownership.
How about apartments and is this just a different name for a condominium? Apartment buildings and condominium buildings in Thailand are not classed the same and are registered differently at the Land Department Office. This means the only form of ownership available on an apartment unit is through a long term lease (leasehold) and this also applies to Thai Nationals.
So to summarize, condos are particularly attractive to those curious enough to search “can foreigners buy real estate in Thailand”. Why? Because of the ability to have “foreign freehold” ownership that only comes exclusively to condos.
Buying a House or Villa
Many foreigners dream about owning their own villa especially in such a location as Phuket due to its great weather and the relaxed way of life. So can foreigners actually own houses in Thailand? The answer is not totally straight forward and needs some explanation but yes many foreigners are buying houses for lifestyle and investment reasons.
Basically the issue is that foreigners are not allowed to own the land the property is built on. So this means foreigners mostly buy under leasehold terms. Many developers will sell new homes with long term leases of 30 years with built-in renewals of up to 90 years. Meaning 30 years + 30 years + 30 years.
Additionally foreigners are permitted to own a structure (building) so it may be the case that the developer will allow the foreigner freehold ownership of the building and leasehold ownership of the land to provide further security for the foreigner. However not all developments are structured in the same way and it still may be the case that the ownership of the villa and land is sold under leasehold ownership.
If you choose to sell your home after buying a villa in Phuket, you should always make sure the lease can be transferred to the new buyer. This is a normal clause written into leasehold agreements and permissible under Thai law.
Can foreigners buy land in Thailand? As we have mentioned several times foreigners can not own land freehold in their own name. The options available are a long term lease with added renewals, or another option is freehold ownership through a ‘Thai Company’ if you are able to do so, meaning you have a Thai partner or partners. In the case of using a Thai Company the land remains under Thai ownership but the foreigner becomes a director who has control over that company. However this type of ownership needs some consideration and should always be discussed with a competent Thai lawyer or law firm.