Whats the advantage – Leasehold vs Freehold

I’m considering buying an apartment in Phuket, I hear a lot of leasehold and freehold while searching.

Can someone explain me the main difference and which is better??

Asked on 6th November 2015 in Legal.
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3 Answer(s)

Leasehold
Pros:
– Foreigners can own just 49% of the condos in a development freehold. So if you want to buy a condo in a development, where the 49% foreign ownership has been reached, then through leasehold you still have the possibility to buy/lease it.
– It cost less to register the lease at the Land Department, then transfering the ownership title.

Cons:
– You have no voting right at general meetings.
– The often pre-agreed renewals, suggesting a longer term then 30 years are not enforceable by legal action under Thai law. It is possible to include such terms but having it in writing says nothing about the future enforceability of such terms.
– Every year you have to pay the rental tax at a rate of 12.5% over the yearly lease price.


Freehold
Pros:
– You own it in your name!
– Voting right at general meetings.

Cons:
– It cost more to transfer the ownership titel (fees and taxes) at the Land Department.
– Some developers charge more for units when they sell them freehold.

If you have the choice between freehold and leasehold, then freehold is probably the better choice.

Answered on 6th November 2015.
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It really depends what you’re looking for. Foreigners can own a condo freehold. As for villas, they can own the villa property/building freehold, but must lease the land. Generally people prefer freehold because it gives them peace of mind to know they hold the ownership deed/title. With leasehold property, foreigners can secure a 30-year lease, renewable twice, for up to 90 years of “leased ownership”. For many people, this is more than enough, and can help the investor avoid freehold premium fees.

Answered on 6th November 2015.

Hi Paulie,

But what about the above post mentioning the non enforce-ability of the 30 year renewals and is there also a 12.5% yearly fee based on the lease value ???

tks

on 14th August 2016.
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My personal perspective, if freehold is available and within the foreign quote, always take the freehold option. We probably expect the laws to change on ownership structures in the next few years, hopefully a more relaxed outlook, but both options serves different purposes depending if your buying a villa or condo.

Answered on 24th November 2015.
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