The lease agreements in Thailand
A land lease agreement in Thailand is one of the most used methods for foreigners when it comes to investing in the Thai property market. This is partly because it is also one of the easiest to qualify for. Here we look at some of the benefits of using leases and the laws governing them.
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What is a property lease in Thailand?
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How to lease land with the Land Office?
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FAQ about land lease agreements in Thailand
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What is the maximum lease term available?
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What are the rules regarding renewing the land lease agreement?
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Is it possible to lease land with a limited company?
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What are the property taxes when leasing land?
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What is a property lease in Thailand?
Foreigners are not permitted to own land in Thailand, asides from very few exceptions.
This is to help prevent wealthy foreigners buying up land, thus pushing up the land prices to levels that Thais cannot afford to pay but also to keep rents down to within affordable levels.
There are very legal ways for a foreigner to have rights to land in Thailand, through the leasing, and they can also own buildings the land is built on. Perhaps the most popular way of doing this is by a land lease in the long term rather than owning it outright.
It is possible for a foreigner to purchase a leasehold on land, which is basically a form of long-term rent for 30-year, and the leasehold can be renewed once it has expired.
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How to lease land with the Land Office?
A lease agreement will need to be drawn up, and while pre-made agreements are quite common in Thailand, it is always advised to have a lawyer check any lease agreement to ensure everything is as it should be. The lease will usually be in Thai, but English versions are acceptable if necessary.
There is no law in Thailand regarding leases that cover foreigners specifically. In the Thailand Civil and Commercial Code, section 538 states that if a land lease agreement in Thailand exceeds 3 years then it must be registered with the land office. The fee for registering a lease will be just 1.1% of the rental value of the agreement.
The land office will have your name and particulars added to the title deeds of the property, and the lease contract will be attached to the deeds. A copy of these will be held at the land office.
The process is not necessarily a complicated one, but it can still be daunting and confusing for people not familiar with the laws, especially when they are in a foreign language.
FAQ about land lease agreements in Thailand
Thailand uses land measurements that are unique to Thailand. You are most likely to encounter Wah and Rai.
These are used for land specifically, and meters are used when it comes to buildings.
Thai to Metric:
- 1 Rai = 0.16 hectare
- 1 Rai = 0.40 acre (approx.)
- 1 Rai = 400 Talang Wah
- 1 Rai = 1600 m2
- 1 Ngan = 100 Talang Wah
- 1 Wah = 2 m
- 1 Talang Wah = 4 m2
Metric to Thai:
- 1 hectare = 6.25 Rai
- 1 acre = 2.53 Rai
- 1 m2 = 0.25 Talang Wah
- 1 m = 0.5 Wah
What is the maximum lease term available?
The maximum is a 30-year lease in Thailand.
What are the rules regarding renewing the land lease agreement?
A lease can be renewed for another 30 years. However, there is no obligation on the landowner to grant an extension.
Some landowners will grant a promise in a contract to grant another 30 years once the initial lease has expired. However, such a promise is not legally standing and there’s nothing you could do if the landowner renege on the promise.
Is it possible to lease land with a limited company?
It is possible for a foreign company to own a land lease in Thailand, although the company must meet certain criteria in order to do so. If granted, the land can be leased for up to 50 years if it is for commercial or industrial purposes.
It is possible to extend the lease further, but there is no obligation on the landowner to do so.
What are the property taxes when leasing land?
The cost of leasing land in Thailand is fairly low. Property taxes on leased land are 12.5% of the rental amount. Other fees include a registration fee of 1% of the lease amount, and 0.1% stamp duty.