Property Leasehold in Thailand. In Thailand, foreigners cannot own land outright under the Land Code Act B.E. 2497 (1954), with very limited exceptions. As such, leasehold arrangements have become a vital legal mechanism for securing long-term use of immovable property, particularly for residential and commercial purposes.
A leasehold is not a proprietary interest but a contractual right of use, enforceable against the landowner and third parties only if properly registered.
II. Governing Law and Leasehold Structure
Leasehold rights are governed by the Thai Civil and Commercial Code (CCC), Book III, Title V, Sections 537–571.
Legal Nature:
-
A lease grants the lessee the right to possess and use immovable property for a fixed term in exchange for consideration.
-
It is a personal right (not a real right or title interest).
-
A lease is not transferable or inheritable unless explicitly stated and registered.
III. Duration and Registration Requirements
| Criteria | Legal Requirement |
|---|---|
| Maximum lease term | 30 years (per CCC § 540) |
| Extension allowed? | One renewal of up to 30 years is contractually permissible but not enforceable in rem |
| Registration requirement | All leases exceeding 3 years must be registered at the Land Office to be enforceable against third parties |
Registration must be annotated on the back of the title deed (Chanote or Nor Sor 3 Gor) and recorded in the official land registry.
IV. Foreigners and Leasehold Rights
Foreign nationals may legally lease land and condominiums in Thailand, subject to the following:
-
Foreigners may lease residential or commercial land but cannot own the land itself.
-
Lease of condominium units is permitted under the Condominium Act B.E. 2522, provided that the foreign ownership quota (49%) has not been exceeded.
-
Leases by foreigners must comply with the Foreign Business Act (FBA) if used for commercial purposes.
Important: Foreigners may not lease land solely as a pretext to gain control or effective ownership — such arrangements can be considered nominee structures, which are illegal.
V. Essential Lease Agreement Components
A valid lease agreement under Thai law should include:
-
Full legal description of the property (including land title number)
-
Lease term, commencement and expiration dates
-
Rental amount and payment terms
-
Use restrictions (residential, commercial, agricultural, etc.)
-
Maintenance and repair obligations
-
Rights to sublease or assign (must be explicitly stated)
-
Succession rights (subject to Thai inheritance law and registration)
-
Termination and renewal clauses
-
Dispute resolution mechanism
Warning: Template lease agreements without proper legal tailoring often lead to unenforceable terms.
VI. Leasehold vs. Superficies and Usufruct
| Feature | Leasehold | Superficies | Usufruct |
|---|---|---|---|
| Ownership rights | None | Right to own structures on leased land | Right to use and derive benefit from property |
| Max duration | 30 years | 30 years (or lifetime) | For life or max 30 years |
| Registration required | Yes (if over 3 years) | Yes | Yes |
| Transferable? | Not unless specified | Yes (if permitted) | No |
| Inheritable? | No, unless explicitly registered | Yes | No |
Often, leasehold arrangements are combined with a right of superficies, especially where a foreigner builds a villa on leased land.
VII. Termination and Renewal
-
Leases automatically terminate at the end of the contract term.
-
Renewal rights must be explicitly stated but are not binding in rem (against successors or third-party buyers).
-
Early termination by either party is allowed only if contractually agreed or in cases of breach.
-
If the lessor sells the land during the lease term:
-
A registered lease is binding on the new owner.
-
An unregistered lease may be unenforceable.
-
VIII. Enforcement and Dispute Resolution
Disputes over leasehold rights are generally adjudicated in the Civil Court under contractual law. Common issues include:
-
Failure to register lease
-
Inadequate or ambiguous renewal clauses
-
Improper succession planning
-
Claims of invalid lease due to nominee structuring
-
Forfeiture or default clauses
Lessee protections are limited unless the lease is registered and drafted with enforceable terms.
IX. Taxation and Fees
| Cost Element | Responsibility |
|---|---|
| Lease registration fee | 1% of total lease value (land office) |
| Stamp duty | 0.1% of total lease value |
| Withholding tax | 5% (on rental income, borne by lessee if landlord is an individual) |
| VAT (if lessor is VAT-registered entity) | 7% applicable to rent |
Leases over 3 years may also trigger obligations under the Revenue Code, especially for corporate lessors.
X. Conclusion: Leasehold as a Limited But Functional Mechanism
Leasehold remains the most practical legal mechanism for foreigners to secure long-term use of immovable property in Thailand. However, the rights conferred are contractual, limited in term, and non-ownership in nature. To protect their interests, foreign lessees must:
-
Register all leasehold rights properly
-
Avoid informal or nominee-based arrangements
-
Draft contracts that are detailed, compliant with Thai law, and reviewed by competent legal counsel
-
Consider combining leasehold with superficies or long-term usufruct for added security