Property Leasehold in Thailand. In Thailand, leasehold is the principal legal mechanism by which foreigners gain long-term access to immovable property, especially land and landed residences. While Thai law prohibits foreign individuals from owning freehold land outright (with limited exceptions), leasehold arrangements provide a structured, though limited, right to possess and use land or property under the Civil and Commercial Code (CCC).
However, leasehold is not equivalent to ownership. It is a personal right, subject to expiration, transfer restrictions, and conditions that may vary depending on whether the lease is over land, buildings, or condominium units. Understanding the legal nuances of leasehold in Thailand is critical for both foreign nationals and Thai lessors seeking to enter secure, enforceable, and compliant contracts.
1. Legal Basis for Leasehold in Thailand
The law governing lease agreements in Thailand is found primarily in the Civil and Commercial Code, Book III, Title V: “Hire of Property” (Sections 537–571). Lease agreements involving immovable property—such as land or buildings—must also comply with land laws, particularly the Land Code Act B.E. 2497 (1954) and regulations of the Land Department.
A lease (or hire) is defined as a contract where one party (the lessor) grants the other (the lessee) the right to possess and use property for a specified period in exchange for payment or rent.
2. Maximum Lease Term for Immovable Property
Under Section 540 of the CCC, the maximum lease term permitted for immovable property is 30 years. This applies equally to Thai and foreign lessees. Any lease exceeding this term is automatically reduced to 30 years by operation of law.
A further renewal of 30 years is possible, but not automatic—it requires the express agreement of both parties at the time of renewal and must be registered anew.
Importantly, Thai law does not recognize perpetual leasehold or 30+30+30 contracts as binding beyond the original 30 years.
3. Registration Requirements
For a lease of land or building exceeding 3 years, the lease must be registered with the Land Office to be legally enforceable (Section 538 CCC). Failure to register results in a lease that is only enforceable for up to 3 years, regardless of the contractual term.
Registration Process:
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Executed at the provincial or district Land Office where the property is located
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Both lessor and lessee must be present (or represented by a power of attorney)
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Lease agreement must be in writing
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Registration fee: typically 1.1% of the total lease value (1% fee + 0.1% stamp duty)
Leases registered with the Land Office are annotated on the title deed (Chanote) or land right document, providing public notice and legal traceability.
4. Leasehold of Land vs. Leasehold of Buildings
The legal treatment differs based on the subject of the lease:
A. Lease of Land
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Foreign individuals may lease land for residential or commercial use for up to 30 years
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Lessor must have full ownership (Chanote title) or lawful land rights
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Lessee cannot sublease, sell, or transfer the lease unless expressly allowed
B. Lease of Buildings (e.g., Villas, Townhouses)
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A building may be leased separately from the land it sits on, but this requires the building to be owned separately, which can be complex under Thai law
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In some cases, a foreigner may own the building (as movable property) and lease the land underneath—a structure often seen in villa developments
Legal caution: Ownership of a building constructed on leased land must be documented properly through building permits and construction declarations, or the structure may legally belong to the landowner.
5. Leasehold for Condominium Units
Under the Condominium Act B.E. 2522, foreigners may own up to 49% of the total area of a condominium project. For units outside that quota, leasehold is an alternative.
Lease of Condominium Units:
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Registered lease up to 30 years
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May include rights to use common property (e.g., pool, gym), but must be stated explicitly
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Leased units may face challenges with resale or transfer, particularly if the lease term has substantially elapsed
Unlike freehold unit owners, leaseholders have no voting rights in the condominium juristic person unless authorized by proxy.
6. Renewal Clauses and Their Legal Status
The concept of “30+30+30” lease agreements, where a lease contract includes two optional extensions, is not enforceable in advance under Thai law.
The second and third terms are considered promises to renew, but they:
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Are not binding on successors or third-party purchasers
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Cannot be registered until the renewal occurs
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Are voidable if the lessor refuses to register the extension later
Thai courts have consistently held that only the current 30-year term is enforceable, and future extensions do not run with the land unless new registration occurs.
7. Inheritance and Transfer of Leasehold Rights
Leasehold is considered a personal contractual right, not a real right. Therefore, unless the lease contract explicitly allows inheritance or assignment, the right does not automatically pass to heirs.
Best practice:
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Include succession clauses in the lease agreement
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Register the right of transfer, assignment, or sublease with the Land Office
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Maintain a separate testamentary will specifying the lease rights as part of the estate
8. Termination, Breach, and Remedies
Under Sections 548 and 569 of the CCC, lease agreements may be terminated:
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Upon expiration of term
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By mutual agreement
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For breach of contract (e.g., non-payment of rent)
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For destruction or uninhabitability of the property
In case of dispute, either party may file a civil action in the Thai courts. Eviction or possession claims must follow proper legal procedures; self-help measures (e.g., changing locks) are unlawful.
9. Commercial Leasehold and BOI Projects
Foreign companies with Board of Investment (BOI) privileges or operating within Industrial Estates may be granted land leases up to 50 years, with a one-time 49-year renewal (total 99 years), under special provisions of the Investment Promotion Act.
These leases:
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Require BOI certification
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Are only for approved business operations
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Do not apply to individuals or non-business use
This exception underscores the policy-driven flexibility in leasehold tenure for investment-related purposes.
10. Practical Risks and Legal Considerations
While leasehold arrangements are common and legal, they come with practical challenges:
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No equity: The lessee does not gain ownership or appreciation of land value
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Marketability: Reselling a lease is difficult, especially as term diminishes
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Third-party sales: A sale of the land does not automatically transfer the lease unless it is registered
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Breach risk: Lessees are vulnerable to landlord default, especially if promises are not registered
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Bank financing: Leaseholds are generally not acceptable as collateral for mortgage financing in Thailand
11. Conclusion
Leasehold property in Thailand offers a legal, accessible method for foreigners to enjoy long-term use of land and buildings. While the system is well-established, it is bounded by fixed term limits, lack of proprietary rights, and weak enforceability of renewal promises. Success in leasehold investment depends on careful contract drafting, proper registration, and understanding of Thai legal principles governing immovable property.
For high-value transactions, it is imperative to consult with a licensed Thai property lawyer to structure the lease, ensure proper filings, and mitigate risks across generations. Though leasehold is not ownership, with proper safeguards, it can provide a stable and secure framework for long-term residence or property use in Thailand.
