Property Leasehold in Thailand

Property Leasehold in Thailand. For foreigners and many Thai investors, a leasehold is the everyday legal tool that gives long-term use and commercial control of land and houses without transferring freehold title. But not all leases are equal: the legal caps, registration formalities, lender attitudes and the reality of renewal all matter. Below is the practical, detail-rich explanation you’ll need to negotiate, document and protect a leasehold in Thailand.

The legal cap and the big myth

The general rule in the Civil & Commercial Code is blunt: a lease of immovable property may not exceed 30 years; any longer term is reduced to 30 years by operation of law. That means the oft-quoted “30 + 30 + 30 = 90 years” structure is a legal fiction and is not a reliable, enforceable way to lock in 90 years of occupancy. Recent court practice and practitioner guidance consistently confirm the 30-year ceiling and treat pre-contracted “automatic renewals” skeptically.

Exception (commercial/industrial): separate legislation allows longer terms for commercial/industrial leases in certain city-zoned areas (statutory limits and conditions apply — consult specialized counsel for those cases). But for residential and ordinary land the 30-year rule is the operative default.

When and how a lease must be registered

Practical law: any lease longer than three years (or for the life of the parties) must be in writing and registered at the local Land Office to be enforceable beyond three years. For long leases you do not rely on a private contract alone — you register at the Land Office using the official form (Tor.Dor.11) so the lease becomes an encumbrance recorded on the title deed. Registration materially increases enforceability against third-party purchasers and supports remedies against later transferees of the land.

Two operational notes:

Land Office lease registrations are prepared and recorded in Thai language and on the Land Department form (tor.dor.11); attach a private (English) lease only as an annex where useful.
Registration costs are modest but real — practitioners commonly model a registration charge (~1% of total rent) plus stamp or official fees; confirm the exact local fee with the Land Office.

What a lease gives you in practice (lessee’s rights)

A properly registered long lease commonly gives the lessee:

Exclusive possession and use for the term.
Right to build and own improvements on the leased land (ownership of the building can be separately recorded/contracted), subject to any clause requiring removal or sale on expiry. (Plan this carefully; consider a separate superficies when you want a securable, transferrable “building ownership” right.)
Ability to assign or sub-lease, if the lease expressly permits and consent conditions (and Land Office annotation) are observed. Unregistered (or badly worded) assignments risk invalidity against third parties.

Renewal and the hard truth about “options”

You can contract an option to seek renewal, but Thai law treats successive pre-agreed terms as part of the original lease for the purpose of the 30-year cap. That means a clause promising automatic renewal at fixed terms may be reduced to a single 30-year legal maximum. Practically, the only secure renewal is a fresh, signed and registered agreement at the time of renewal — and the landlord can lawfully refuse (or demand new commercial terms) on expiration. Factor that real risk into pricing and exit plans.

Banks, financing and mortgageability

Lender willingness varies sharply:

Commercial/industrial registered long leases can be accepted by banks as security (mortgage or equivalent security under the Lease Act), and project financiers commonly lend on that basis.
Residential leaseholds are much harder to mortgage — Thai banks are conservative about lending to non-Thai individuals on leasehold collateral unless special conditions apply (company structure, local guarantor, or large developer programs). Expect stricter LTVs and additional covenants if finance is involved.

If you need leverage, confirm lender policy before finalizing the price or execution mechanics.

What to negotiate and what to document (practical drafting checklist)

Successful lease drafting focuses on certainty and enforcement:

Term & registration: state the exact lease term; require the lessor to register Tor.Dor.11 at the Land Office as a condition precedent to full payment.
Rent formula & review: fix initial rent, set an objective review mechanism (CPI, agreed formula, or capped %), and specify when review notices must be served.
Renewal mechanics: if you want renewal security, require (a) a binding renewal negotiation protocol with a pre-agreed pricing formula and (b) an obligation on the lessor to re-register a renewal if agreed — but accept that absolute certainty is impossible under current law.
Improvements & removal/buy-out: define ownership of buildings, the lessee’s right to mortgage or assign improvements, and what happens at expiry (removal, buy-out at market value, or abandonment). Consider a separate superficies if you need stronger protection for structures.
Assignment & sublease: permit assignment with Land Office annotation and specify consent thresholds and timing.
Default remedies & interim relief: include forfeiture mechanics, grace periods, cure steps, and an express right to apply to Thai courts for preservation (freezing, caveats) pending remedy.
Tax & registration costs: assign responsibility for registration fees, withholding and any municipality taxes (land tax/land & building tax), and list who pays transfer costs for a registered renewal.

Due diligence for the lessee (immediately)

Before signing or paying a deposit:

Obtain a certified Land Office extract and check title type, encumbrances, mortgages and caveats.
Confirm the lessor’s identity and capacity (company affidavit, authorized signatory, board resolution).
Check zoning/city-planning, building permits, utilities and restrictions (condo quotas if adjacent to development).
Ask whether the lease can be registered (Land Office practice and the documentary package will differ by province). If registration is refused, re-assess risk.

Exit, resale and market realities

Leasehold resale is a real market, but values fall as the term shortens; buyers price the remaining term, renewal uncertainty and transfer friction into offers. That’s why lease length, registration and bankability are the three commercial attributes most buyers and investors watch.

Bottom line — the risk/return trade

Leaseholds give practical, lawful long-term control of Thai real estate for non-owners — they are the default path for many foreign users. But do not treat a 30-year registered lease as equivalent to freehold: renewals are not guaranteed, lender acceptance varies, and Land Office formality matters. Negotiate clear registration obligations, build renewal negotiation mechanics that are realistically enforceable, and test lender appetite if you need finance.