Why Leasehold Is the Standard Foreign Structure
Since foreigners cannot own land in Thailand (see Land Code Section 86), the registered leasehold has become the practical alternative used by most expats, retirees, and foreign investors. A properly structured and registered lease provides enforceable rights that survive the sale of the underlying property to a new owner.
The lease does not give you ownership of the land - the landowner retains title. What you acquire is a "real right" to use and occupy the land for the lease term, registered on the title deed (Chanote) at the Land Office.
The 30-Year Maximum: CCC Section 540
Thai law imposes a maximum lease term for immovable property (land and buildings) of 30 years. This is not negotiable or avoidable - any lease written for longer than 30 years will be automatically reduced to 30 years by operation of law.
Civil and Commercial Code Section 540
"The aforesaid duration may be renewed, but it must not exceed thirty years from the time of renewal."
Paragraph 1: No lease of land or buildings can be for more than 30 years.
If you sign a 50-year or 99-year lease, it is automatically treated as a 30-year lease.
Paragraph 2: After the initial term ends, you can renew for another
period - but again, no more than 30 years. The statute allows renewal but provides no
mechanism to guarantee it. Renewal requires a new agreement with the landowner.
Registration Requirements: CCC Section 538
For a lease to be enforceable against third parties (such as a new owner if the property is sold), it must be registered at the Land Office if the term exceeds 3 years.
Civil and Commercial Code Section 538
"A hire of immovable property for more than three years, or for the life of the lessor or of the lessee, is not enforceable by action unless it is made in writing and registered by the competent official."
Paragraph 1: Any lease must be in writing and signed to be enforceable
in court.
Paragraph 2: If the lease is for more than 3 years (or for the lifetime
of either party), it must be both in writing AND registered at the Land Office. An
unregistered long-term lease is essentially worthless - you cannot enforce it in court
and it will not bind a future owner.
Critical: Always Register Your Lease
An unregistered 30-year lease is effectively unenforceable for most of its term. If the lessor sells the land, the new owner is not bound by an unregistered lease. Always register at the Land Office where the property is located. Registration fees are typically 1.1% of the stated rent (or assessed rental value, whichever is higher).
Renewal Clause Myths vs. Reality
One of the most common misunderstandings in Thai property involves lease renewal clauses. Many contracts include provisions stating the lease will be renewed for additional 30-year terms (often "30+30+30" or similar). Here is the truth:
"My lease says 30+30+30 years, so I have 90 years of guaranteed occupancy."
Future renewals are promises, not enforceable real rights. Only the current 30-year term is registered and protected.
"The renewal clause is legally binding on the landowner's heirs and successors."
Renewal promises are personal contractual obligations. If the landowner dies or sells, the new owner is generally not bound by unregistered renewal promises.
"I can sue for specific performance to force renewal."
Thai courts have historically been reluctant to order specific performance for lease renewals. Damages may be available for breach, but getting the actual renewal may be difficult.
What Renewal Clauses Actually Provide
A well-drafted renewal clause creates a contractual obligation for the current landowner to renew at the end of the term. If they refuse, you may have a breach of contract claim for damages. However, you cannot register future renewals now - each renewal must be executed and registered separately when the time comes. The practical protection is that a reputable developer or lessor is likely to honor the promise, but the legal guarantee is limited.
Land Office Registration Process
Registration happens at the Land Office (Samnak Ngan Ti Din) in the district where the property is located. Both the lessor (landowner) and lessee (foreigner) must appear in person or by authorized representative.
Documents Required for Lease Registration
Registration Fees and Taxes
| Fee Type | Rate | Basis |
|---|---|---|
| Registration Fee | 1.1% | Total rent for the entire lease term |
| Stamp Duty | 0.1% | Total rent (may overlap with registration) |
| Withholding Tax | 5-35% | Paid by lessor on rental income (if individual) |
The registration fee is calculated on the total rent stated in the lease. If you prepay 30 years of rent (a common structure), the fee is 1.1% of that prepaid amount. For a 10 million THB prepaid lease, expect approximately 110,000 THB in registration fees.
Rent Prepayment Strategies
Many foreigners prepay the entire lease rent upfront. This is both common and strategically sensible, though it comes with considerations:
Benefits of Prepaying Rent
1. Inflation Protection: Your housing cost is locked in for 30 years, regardless
of future price increases.
2. Reduced Counterparty Risk: You do not depend on the lessor accepting
monthly payments over decades.
3. Negotiating Leverage: Prepayment often yields significant discounts
compared to the cumulative monthly rate.
4. Simpler Administration: No ongoing payment tracking or currency exchange
issues over 30 years.
Risks of Prepaying Rent
1. Capital at Risk: If the lessor becomes insolvent or the property has
issues, recovering prepaid rent can be difficult.
2. No Refund on Early Termination: If you leave Thailand or want to exit
the lease early, prepaid rent is typically not refundable.
3. Currency Risk: If you prepay in THB and the Baht strengthens significantly
against your home currency, your effective cost increases.
Combining Leasehold with Superficies
For foreigners building a house on leased land, the optimal structure often combines a registered leasehold (for the land) with registered superficies rights (for the building). Superficies, governed by Civil and Commercial Code Sections 1410-1416, grants the right to own buildings or structures on another person's land.
Superficies Rights Explained
Under Thai law, buildings generally belong to the landowner (the principle of "superficies solo cedit" - buildings follow the land). Superficies is the exception that allows you to own a building on land you do not own. Combined with a leasehold, you own the building and lease the land - a robust structure for villa ownership.
A detailed guide to superficies rights is coming soon to the Thai Legal Hub.
What Happens at the End of 30 Years?
This is the critical question every leaseholder must consider. At the end of the 30-year term:
- Your registered lease expires. You no longer have a legal right to occupy the property.
- Buildings may revert to the landowner. Unless you have registered superficies or a specific contractual arrangement, any structures on the land typically become the landowner's property.
- Renewal requires new agreement. The landowner must agree to renew. Even with a renewal clause, you must negotiate and register a new lease.
- New registration fees apply. Renewal means paying registration fees again on the new lease term.
Planning for End-of-Lease
Prudent leaseholders should start planning for renewal at least 2-3 years before the lease expires. Considerations include:
- Is the current landowner still alive and competent to enter into a new lease?
- Has the property been inherited or sold to new owners?
- Is the renewal clause in your original lease enforceable against current owners?
- What are current market rates for lease renewals in the area?
- Do you have alternative exit strategies if renewal is not possible?
Leasehold vs. Other Structures
| Factor | Registered Leasehold | Condo Freehold | Company Ownership |
|---|---|---|---|
| What You Get | Right to use land/building | Full unit ownership | Shares in company that owns land |
| Duration | 30 years maximum | Permanent | As long as company exists |
| Legal Risk | Low (if registered) | Low | High (nominee risk) |
| Transfer | If lease permits | Freely transferable | Share transfer |
| Financing | Very difficult | Possible (some banks) | Very difficult |
| Suitable For | Houses, villas, land | Apartments only | Not recommended |
Nominee Company Structures Are Illegal
Forming a Thai company with "nominee" Thai shareholders to hold land for a foreigner's benefit is illegal under both the Land Code and Foreign Business Act. The 2024-2025 enforcement actions have resulted in criminal prosecutions, asset seizures, and company dissolutions. Do not use this structure. See our Land Ownership Guide for penalty details.
Related Guides
Can Foreigners Own Land?
The fundamental prohibition and why leasehold exists
Section 96 bis Exception
The 40M THB investment path to land ownership
Nominee Structure Risks
Why using Thai nominees is illegal and prosecuted
Enforcement Tracker
2024-2025 nominee crackdown updates
Thai Legal Hub
Complete guide to Thai law for foreigners