Freehold vs Leasehold in Thailand: Which Should You Choose?

Introduction

When a foreigner decides to acquire property in Thailand, two primary legal structures are available: freehold and leasehold. The difference between them is not merely technical; it determines what you actually own, how long you own it, and what you can do with it.

Choosing the wrong structure can cost you your investment. Choosing the right one gives you security and peace of mind. For tailored guidance, explore our real estate and condo advisory services. This guide explains both options in detail, compares them across every meaningful criterion, and introduces a third, lesser-known alternative that may be relevant to your situation.

Freehold: Full Ownership

Freehold is the strongest form of property ownership available to foreigners in Thailand. When you buy a condominium unit in freehold, you are the outright owner of that unit, with your name recorded on the Chanote title deed at the Land Department.

What Freehold Means in Practice

• Perpetual ownership: there is no expiry date. You own the unit indefinitely.
• Full legal rights: you can sell, transfer, mortgage, or bequeath the property at any time.
• Inheritance: your heirs (including foreign heirs) can inherit the unit through Thai probate proceedings, subject to the 49% foreign quota rule.
• Registered at the Land Department: your ownership is recorded in the official land register, providing the highest level of legal protection.

The Limitation

Freehold ownership for foreigners is restricted to condominium units only, under the Condominium Act B.E. 2522 (1979). You cannot hold freehold title to land, houses, or villas. Furthermore, the building must not have exceeded the 49% foreign ownership quota (calculated by total sellable area in square meters).

Despite this limitation, freehold remains the gold standard for foreign property ownership in Thailand. If a condo meets your needs and the quota is available, freehold should be your first choice. For a step-by-step walkthrough of the purchase process, see our complete guide to buying a condo in Thailand.

Leasehold: Right of Use

A leasehold does not make you the owner of the property. Instead, it grants you the right to use and occupy the property for a defined period, as stipulated in a lease agreement registered at the Land Department.

Legal Framework

Under Section 540 of the Thai Civil and Commercial Code, a lease of immovable property cannot be registered for a period exceeding 30 years. At the expiry of that term, the lease may be renewed, but for no more than 30 years at a time.

The Critical Point About Renewals

Many developers and agents promote "30+30+30" lease structures, suggesting that the buyer is effectively guaranteed 90 years of use. This is misleading. Under Thai law, a lease renewal clause in the original contract is not legally enforceable against a future owner of the property. If the lessor (landowner) sells the land, the new owner is not bound by any renewal promise.

In practice, this means:

• Your initial 30-year lease is legally protected and registered at the Land Department
• Any renewal beyond the first 30 years depends entirely on the goodwill and willingness of the lessor at that future date
• If the lessor refuses to renew, sells the property, or passes away, you may have no legal recourse

This uncertainty is the fundamental weakness of leasehold. It is a right of use, not ownership, and that distinction becomes painfully clear when the lease approaches its expiry.

Detailed Comparison Table

When should you choose freehold?

Freehold is the right choice when all of the following conditions are met:

• A condominium unit suits your needs (you do not require a house or villa with land)
• The 49% foreign quota in the building is not saturated
• You are thinking long-term: you plan to hold the property for many years, or you want the flexibility to sell at market value whenever you choose
• Inheritance matters: you want your heirs to inherit the property without complications
• You can transfer funds internationally: you are able to wire the full purchase amount from abroad in foreign currency and obtain a Foreign Exchange Transaction Form (FET / Thor Thor 3)
• Your budget allows it: freehold units sometimes carry a premium over leasehold in the same building

If these conditions are met, there is no compelling reason to choose leasehold over freehold. The legal certainty and financial security of freehold are unmatched.

When is leasehold the only option?

There are legitimate situations where leasehold becomes necessary:

• You want a villa or a house with land: since foreigners cannot own land in Thailand, a long-term lease on the land (with ownership of the structure, or a lease on both) is the standard approach for standalone homes.
• The foreign quota is saturated: if the 49% quota in your desired building is already full, freehold is not available, and leasehold is the only way to acquire a unit in that specific building.
• Budget constraints: in some developments, leasehold units are priced significantly lower than freehold units, making them accessible at a lower entry point. However, keep in mind that the resale value of a leasehold unit decreases as the remaining lease term shortens.

If you go the leasehold route, hire a qualified lawyer to draft or review the lease agreement. Pay particular attention to:

• Renewal clauses and what protections (if any) they offer
• The right to sublease or assign the lease
• Conditions for early termination
• Obligations regarding maintenance and improvements
• What happens to any structures you build on leased land at the end of the lease

Usufruct: The Lesser-Known Third Option

Beyond freehold and leasehold, Thai law recognizes a third form of property right that is particularly relevant to foreigners in mixed-nationality couples: usufruct (สิทธิเก็บกิน).

What Is Usufruct?

A usufruct is a legal right to use and enjoy the benefits of another person's property, including the right to live in it and collect income from it (such as rental income). The usufruct holder does not own the property, but their right to use it is registered at the Land Department and is enforceable against third parties, including future owners.

Key Characteristics

• Duration: a usufruct can be granted for the lifetime of the usufruct holder or for a fixed period of up to 30 years
• Registrable: the usufruct is registered on the title deed at the Land Department, providing strong legal protection
• Survives sale: if the property owner sells the land or property, the usufruct remains in effect. The new owner must respect it.
• Non-inheritable: a usufruct granted for the holder's lifetime ends upon their death. It cannot be passed to heirs.
• Rights included: the right to occupy, use, manage, and collect income from the property

Common Use Case: Mixed Couples

Usufruct is most commonly used by foreign-Thai couples. A typical arrangement involves the Thai spouse owning the land and house, while the foreign spouse holds a registered lifetime usufruct. This gives the foreign spouse:

• The legal right to live in the property for life
• Protection against being forced to leave if the relationship ends or the Thai spouse passes away
• Protection if the property is sold (the usufruct survives the sale)

While usufruct does not provide ownership, it offers meaningful security for foreigners who cannot hold freehold title to land-based properties. It is a practical complement to the Thai spouse's ownership, not a replacement for it.

Frequently Asked Questions

Can I convert a leasehold into a freehold?

Only if the property is a condominium unit, the 49% foreign quota is available, and the current owner (or developer) agrees to sell you the freehold title. In practice, converting an existing leasehold to freehold on the same unit requires a new transaction (purchase of the freehold interest) and is not simply an administrative change. For houses or land, conversion to freehold is not possible for foreigners.

Does a leasehold unit lose value over time?

Yes. As the remaining lease term shortens, the market value of a leasehold unit typically decreases. A unit with 25 years remaining on its lease is worth less than the same unit with a full 30-year lease. This depreciation accelerates in the final years of the lease and makes leasehold units harder to sell as the term expires. Freehold units do not have this structural depreciation.

Can a foreigner register a usufruct on a condo?

Yes, in principle, a usufruct can be registered on a condominium unit. However, if the foreigner is eligible for freehold ownership of a condo (and the quota is available), freehold is almost always the better option, since it provides full ownership rather than a right of use. Usufruct on condos is more relevant in situations where the quota is full and the foreigner wants stronger protection than a standard lease.

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Thai laws and regulations may change. Consult a qualified lawyer before any real estate purchase decision.