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Phuket Real Estate Foreign Ownership Freehold vs Leasehold

Phuket Real Estate Foreign Ownership Freehold vs Leasehold

30 Mar 2023; Phuket is a stunning island in Thailand that has become a hub for foreign investment over the past few years. Its reputation as a top tourist destination has attracted investors from around the world, and with the island's exceptional properties and stunning scenery, it's easy to understand why. When purchasing a property in Phuket, it's important to understand the differences between freehold and leasehold condo ownership.


Foreign investors cannot legally own land in Thailand unless they meet specific criteria. While rules and regulations surrounding foreign ownership of land can be complicated to navigate, one way for foreigners to own a property is through condominiums. There are two types of condo ownership available in Phuket: freehold and leasehold.


Freehold condo ownership allows foreigners to own the land and the building outright. With a freehold title, the owner has complete control over the property, with no time limit or restrictions. Owning a freehold condo in Phuket can offer many benefits, such as the ability to customize the property to your liking and the peace of mind that comes with owning your own land. Furthermore, freehold condos tend to hold their value better than leasehold condos.


However, owning a freehold condo as a foreigner is not without obstacles. Since foreigners are not allowed to own land in Thailand, the freehold ownership structure requires the land to be held in a Thai company's name or by a Thai national. As a result, it is paramount to buy from a developer with a good reputation, and ideally who is a registered company.


By contrast, leasehold condo ownership allows foreigners to own the building for a guaranteed period, without ownership of the land. The lease can vary from 30 to 120 years (4 x renewable options of 30 years each), depending on the developer and the location of the condo. Leasehold ownership structures are more common for foreigners purchasing a property in Phuket since it aligns with foreign ownership restrictions. The specific terms of the lease, including any restrictions and transferability, would be detailed in the purchase agreement between the buyer and the developer.


Leasehold condos, although not as desirable as freehold properties, offer many advantages. Perhaps the most significant advantage is the lower cost of entry since the purchase price is typically lower than a freehold property. Furthermore, the cost of registering and maintaining the property is lower, as the leasehold ownership structure prevents foreigners from needing to incorporate a Thai company.


Another advantage of leasehold condo ownership is that it's less complicated than freehold. The leasehold structure is a relatively simple process that does not require foreigners to navigate the difficult legal landscape associated with freehold property ownership. Additionally, the government of Thailand is looking to relax regulations surrounding long-term leases of up to 99 years as they aim to court more foreign investors.


When deciding between freehold and leasehold condo ownership, it's essential to review the specific advantages and disadvantages of each structure. In general, freehold condo ownership has more advantages, even with the more complex ownership structure. Freehold condos tend to retain their value better than leasehold condos, especially for prime beachfront properties.


Regardless of the ownership structure you choose, it is important to have a full understanding of the transaction itself. We highly advise that you seek guidance from seasoned real estate professionals who have experience in Thailand's legal system. Experienced property professionals can offer insights, advice, and support to foreign investors to ensure that the investment is made in a way that complies with Thai law and aligns with the investor's goals.


In conclusion, Phuket remains an attractive investment destination for foreigners, thanks in part to its value, affordable living conditions, and exquisite beaches. Understanding the differences between freehold and leasehold condo ownership, plus seeking the right guidance, is essential for investing in the island property market effectively. Whether you choose a leasehold or freehold ownership structure, purchasing a property in Phuket is an excellent investment that offers stunning scenery, stable tourism industry, and considerable potential investment returns.