Background

Long term land leases in Thailand are frequently used in 2 situations:

The first primary use of long term leases is by businesses who rent premises in prime commercial areas such as central business districts and popular tourist areas. Due to the premium value of real estate located in prime commercial areas, landowners often will not sell and will only lease their land or buildings in order to maintain control of the land.

The second situation where long term land leases are used in Thailand is by foreigners as a method to gain legal control of land in Thailand without violating Thailand's prohibitions on foreigners owning land. In this situation, the maximum lease term for individuals is 30 years. The advantage of using a long term lease, as opposed to other methods frequently employed by foreigners to acquire control of land in Thailand, such as using a Thai majority company, is simplicity and minimized risk. In other words, long term leases (over 3 years) need to be registered only one time and are relatively low maintenance in terms of legal and administrative up-keep. Using a company as a vehicle to control land, on the other hand, requires annual balance sheets and tax returns. A limited company also may present risks with regard to shareholder disputes and greater scrutiny and potential investigation by the Ministry of Commerce or other government departments.

The main disadvantage of a lease is that the investment value of a lease is less than for freehold (fee simple) ownership. With a long term lease, once the lease term ends, a lessee's investment may sink to zero.

There are, however, various legal and contractual mechanisms that can make a long term lease more secure and protect the value of a leasehold investment over time.

Our Experience

Chaninat and Leeds' attorneys have decades of experience in land and building in Bangkok, Phuket, Koh Samui, Koh Tao, Krabi, Chiang Mai, Pattaya, Koh Chang, Issan and other Thai provinces. We have extensive experience in structuring real estate leases to benefit our clients.