When you arrive in the Land of Smiles and set foot on hospitable Thai soil, you might recall the cherished phrase, “all land in Thailand belongs to the King.”
Where, when, or how you heard this information, you might not remember offhand, but somehow you became firmly convinced it’s true. Did we guess correctly?
What if we told you it’s a myth and we can prove it?
Let’s briefly delve into history, specifically the early 20th century, during the reign of King Chulalongkorn, known as Rama V. The Great Beloved King (พระปิยมหาราช), as he was called by the local people at the time.
During the reign of His Majesty King Chulalongkorn, land disputes were common. At that time, there was no land legislation, and no legal documents confirming land ownership existed, so determining who owned a particular plot was no easy task.
King Rama V was determined to resolve these age-old disputes fairly. Therefore, on February 17, 1901, the Department of Land Holdings was established under the Ministry of Agriculture. Then, on September 20, 1901, the first document confirming ownership rights was issued. This document is still called the Chanote and remains the sole document confirming your ownership rights today.
Over 40 years, the Department of Land Holdings changed names several times and even operated under the Ministry of Finance. In 1941, it was finally placed under the Ministry of Interior and became known as the Land Department.
Based on the above, you don’t need to be a King to own land in Thailand :)
How to obtain a Chanote to confirm ownership or how to become a property owner in Thailand?
First, you need to understand: in the Kingdom, there are two forms of ownership – Freehold and Leasehold.
The good news – you receive a Chanote in either case.
Freehold (from English, literally “free holding”) – This is an absolute form of ownership that transfers all rights of possession and disposal of the property without time limitation. You gain the right to manage your property as you wish: sell, rent, gift, or bequeath.
The Chanote, the document confirming ownership rights, is issued at the Kingdom’s Land Department.
Leasehold (from English, literally “long-term lease right”) – This is a form of ownership limited in time (term – 90 years).
It’s important not to confuse leasehold with ordinary rental. A leasehold property can also be resold, gifted, rented out, inherited, and used for the remaining years. Upon registration, you also receive a Chanote, which specifies the contract’s duration.
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Interesting fact: Buying property under leasehold might be unusual for some, but leasehold as an acquisition method is common in many countries, including the United Kingdom or, for example, the UAE (though in the UAE, this method is typically available only to citizens of Arab countries).
In China, leasehold with a 70-year term is the only form of property ownership for both foreigners and local residents, and owning more than one property is prohibited.
Why Do Experienced Investors Choose Leasehold?
What is the decisive factor for you when buying property?
Most likely, the property’s cost and its return on investment.
Leasehold and freehold have a fundamental difference in price and the period during which you can be the full owner of your apartment or villa.
Imagine you are buying an apartment for 3,500,000 THB.
You have a choice: leasehold or freehold.
Option One – Freehold: The cost of any property when purchased as freehold increases by an average of 10%.
So, your apartment’s price rises to approximately 3,850,000 THB.
Add the taxes and government fees for registration at the Land Department, which can reach up to 6.3% for a freehold purchase (typically split 50/50 with the seller/developer). We’ll account for this: you pay half, i.e., 3.1% for registration. Total price of your apartment becomes nearly 4,000,000 THB; to be precise, 3,969,350 THB.
“Alright, but what if I buy the apartment for 3,500,000 THB under leasehold?”
Let’s calculate? Although there’s not much to calculate :) Unlike freehold, the apartment’s cost does not change and remains 3,500,000 THB. For registration at the Land Department, a fee of only 1.1% is charged, which, like with freehold, is split 50/50 with the seller/developer. So, for registration, you pay 0.55% = 19,250 THB.
Total cost of your apartment with registration under leasehold: 3,519,250 THB, compared to nearly 4,000,000 THB under freehold.*
Agree, the choice seems obvious :)
Leasehold is cheaper and more suitable for investors, as the return on invested capital will be higher. You have the right to manage your property and are legally protected.
Freehold is more expensive, but it becomes your full, perpetual ownership without any time restrictions.
We won’t surprise you by saying that not only investors choose leasehold, but it’s also not uncommon to find clients for whom freehold is the most suitable option. It all depends on priorities.
About Land, or How to Buy a Villa with Full Ownership
When purchasing a villa, the house and land are considered separately:
• The building itself can be registered under the name of a non-resident of Thailand as either freehold or leasehold.
• However, the land beneath and around it can only be registered as leasehold.
Exception: The land plot can be acquired with full ownership, but the transaction must be registered under a legal entity – a company in which at least 51% of the shares are owned by a Thai citizen. This is a well-established and safe legal procedure, typically facilitated directly by the developer or an agent when buying on the secondary market.
For apartments, such conditions do not exist – you can purchase them as either freehold or leasehold.
Conclusion
You can buy property in Thailand as full ownership (freehold) or purchase ownership rights (leasehold) for up to 90 years. If desired, you can also acquire land as freehold, but only under a legal entity, for which you need to open a company in Thailand.
What suits you best is an individual question, depending on your goals and priorities. In any case, whether you buy under leasehold or freehold, your ownership rights are regulated and guaranteed by the legislation of the Kingdom.
What will you choose?
*the cost calculation presented in the article is for illustrative purposes only. For a detailed calculation of a specific apartment or villa for purchase under freehold or leasehold, please contact us by any convenient method.
