Freehold vs Leasehold Condo in Bangkok

Buying condo in Bangkok: Freehold vs Leasehold

Buy a Freehold or Leasehold Condo in Bangkok?

When investing in Bangkok real estate, buyers must understand each of their options before committing to a purchase – whether for investment or personal living. One key aspect is determining what type of ownership would be the most beneficial and advantageous. Make sure you do your research to guarantee you make an informed decision with long-term benefits!

As you search for the perfect property in Bangkok, Amazing Properties wants to ensure that you have all of the necessary information about your options. In Thailand, there are two main types of condominium ownership: freehold and leasehold. Each has its unique advantages and disadvantages, so it is essential that you carefully consider what best suits your needs before making a decision.

Freehold Condominiums in Bangkok

What is a freehold condo?

When you buy a freehold condo, the title of the property is registered in your name at the Land Department. This grants you full ownership rights and obligations as stipulated by Thai law. For foreigners looking to purchase a condo in Bangkok, it’s imperative that you confirm that foreign ownership within said condominium project does not exceed 49%, as this is strictly enforced by Thai Law.

Advantages/disadvantages of a freehold condo in Thailand?

Advantages
• As an owner of the unit, you have full authority to customize and renovate your space in any way you choose as long as it adheres to the by-laws.
• Unlike leasehold, freehold ownership of a condo provides you with indefinite rights to your property.
• You have the option to sell your unit or take out a loan against its equity.
• Through your last will and testament, you can choose to pass on your condo to an heir of your choosing.
• As a freehold owner, you will have the right to vote on any decisions that influence the project.
• Investing in freehold condos in Thailand is an attractive option since they tend to hold their value when it comes time for resale.

Disadvantages

• Compared to comparable leasehold units, freehold properties typically come with a higher price tag.
• Buying a freehold property comes with more expensive transfer fees and taxes, than buying a Leasehold property.
• As a freehold owner, you are not just responsible for the upkeep of your own unit but also for participation in the sinking fund and maintenance of common areas (CAM Fees).
• If you are selling your freehold condo, and the potential buyers are not Thai nationals, it is essential to remember that a 49% foreign ownership quota applies.

Leasehold Condominiums in Bangkok

What is a leasehold condo?

A leasehold is a prolonged rental contract, typically lasting 30 years, and officially filed with the land department. Even though it’s the maximum amount of time for a lease in Thailand, these contracts often can be renewed twice for additional thirty-year terms.

Advantages/disadvantages of a leasehold condo in Thailand?

Advantages

• Generally, leasing a condominium is cheaper than buying an equivalent freehold unit.
• When you own a leasehold, you can benefit from lower transfer fees and taxes
• If you are a foreigner, rest assured that the 49% foreign ownership rule does not apply to leaseholds.
• By exploring leaseholds, potential buyers are granted access to a larger range of property options, including townhouses and detached homes – in addition to condos.
• You are exempt from the responsibility of maintaining and taking care of the unit.
• Owners at Four Seasons Private Residences have the privilege of voting rights, an opportunity not available in all leasehold developments.
• Should you decide not to continue living at the property, you can decline to renew your lease. Additionally, depending on what is stipulated in your contract, it may be possible for you to terminate your rental agreement early.
• For certain leasehold properties, you can potentially generate a worthwhile return.

Disadvantages

• At the end of its initial 30-year term, your agreement may not be renewable depending on certain factors. For example, if the original owner sells their property during this period, it is highly unlikely that their successor will renew your lease.
• Generally, you must obtain the owner’s consent before renovating the unit.
• Unless a project provides voting rights to its leaseholders, you will not have any authority or influence over the management of the development.
• For leasehold properties, approximately 12.5% of the yearly condominium costs as rental tax is commonly expected.
• Unlike a freehold condo, owning a leasehold unit does not grant you the privilege of passing it on to heirs, nor can you sell or refinance for your own benefit. This thus makes the ownership of a leasehold condo an unsuitable investment asset compared to one that is freehold.
• Even though you may be exempt from having to pay for maintenance and upkeep of the unit itself, it is likely that the financial burden associated with a sinking fund and common area fees (CAM Fees) will be included in your leasehold contract.
• Prior to signing a leasehold agreement, it is essential that you read and understand every detail so that you are aware of your rights and responsibilities.

Conclusion

When you choose to invest in a leasehold property in Thailand, several important factors must be considered.

• Lease period
• Valuation of property
• Transfer clause
• Availability of bank finance (Mortgage Loans)
• Approval from state author and other relevant agencies
• Cost of Ownership

Key Differences between Leasehold and Freehold property in Thailand

Lease Period

When it comes to leasehold, ownership is not guaranteed beyond the expiration of a lease unless renewal takes place. Lease periods can range from 30 up to 90 years; any leases with durations less than 90 years are likely to adversely affect property valuation. Additionally, securing bank finance for a period under 30 years may be difficult. The lessee should therefore prioritize increasing and/or extending tenancy where possible to evaluate their investment opportunities more critically.

Maintenance & Costs

The freeholder is accountable for keeping communal spaces in good condition, which includes anything from the building’s structure to its shared sections and infrastructure. As for leaseholders, they may be expected to pay yearly payments such as ground rent or assist with maintenance fees. All of these expenses are encompassed by the responsibility of being a leaseholder.

Flexibility

With freehold ownership, the freedom for modifications and renovations is entirely in the hands of the owner. When it comes to leasehold properties, however, although a lessee may be able to make changes within their flat, certain conditions can apply which makes such freedoms less flexible than with freeholding. For instance, when keeping pets on her premises; depending on what’s stipulated in their agreement – they might require permission or not even be allowed at all!

Transfer of Property

When it comes to leasehold ownership, transferring property can be a daunting task as the lessee must first obtain permission from the state or other relevant authorities. Furthermore, conveying leasehold rights is made possible through the Power of Attorney which makes this process much more difficult than in freehold ownership where owners have full legal authority to sell, gift, or transfer their property without any restrictions.

Mortgage Loans

Banks and Financial Institutions find it much less complicated to provide mortgage loans for freehold properties than leasehold ones.

Cost of Ownership

If you’re on a tight budget, leasehold properties are ideal for your housing needs. This is because the land associated with them has been arranged via lease and thus require much less capital than freehold property which involves buying the land permanently at significantly higher prices.

Leasehold vs. Freehold Comparative Table

Frequently Asked Questions about Leasehold or Freehold properties

• Is it better to buy leasehold or freehold?

Answer: When deciding between leasehold or freehold, it’s important to think about your personal circumstances and needs. If you’re looking for a more secure investment that offers greater longevity, then freehold ownership is probably the better option. Conversely, if you’re looking for a shorter-term commitment or can’t afford the higher up-front costs associated with freehold properties, then leasehold may be the better choice.

It’s also worth noting that ground rent and/or service charges may apply with leasehold properties, which should be taken into consideration.

Ultimately, it comes down to a personal preference and understanding what best meets your individual needs.

• Can you buy a freehold in Thailand?

Answer: Yes, it is possible to purchase a freehold property in Thailand. For international investors looking for a straightforward way to own freehold property in Thailand, purchasing a condominium is the best option. Thai law mandates that 51% of all units must be reserved exclusively for Thai nationals; however, this leaves 49% open to foreign buyers with full and unrestricted access under freehold terms.

• Can you sell leasehold property in Thailand?

Answer: According to Thai law, a lease is essentially an agreement of tenancy for no more than 30 years with payment in advance. Even though the lessee does not acquire ownership rights and cannot sell their lease freely (it’s not considered an asset), they can assign it through mutual consent from the condo unit owner in Thailand.

• Do leasehold properties lose value?

Answer: As leasehold properties come closer to their expiration, they tend to lose value making them more difficult and costly to sell. Thus, it is essential that extending the lease be taken into consideration when planning any investment strategy as this can end up being a considerable expense.

• Is it harder to sell a leasehold property?

Answer: When selling a leasehold property, there are usually more complexities to contend with than when selling a freehold one; however, if the necessary steps have been taken beforehand – such as having an experienced estate agent and reliable solicitor on board – then this will minimize potential issues and help ensure that the process runs without any hitches.

Let Amazing Properties assist you.
Before choosing whether to buy a freehold or leasehold condominium in Bangkok, you must take into careful consideration your individual real estate needs.

What matters more– the price tag or ownership rights? Is it possible for you to honor your monthly and yearly financial commitments? Are there any plans of passing on the property to other family members down the line?

We suggest seeking advice from an experienced real estate agency like us before making this decision. Amazing Properties has extensive experience and expertise in the Bangkok condominium market, particularly when it comes to luxury condominiums located in some of the city’s most desirable neighborhoods.

We have an amazing selection of leasehold and freehold condos to suit your needs! Please check some of our luxury building below:

Leasehold Condos in Bangkok

Baan Sindhorn
Sindhorn Residence
Sindhorn Tonson
The Residences at Sindhorn Kempinksi
Dusit Central Park
Four Seasons Private Residences

You can explore even more luxurious condos in Sukhumvit and Sathorn, which boast exceptional amenities and facilities to elevate your lifestyle in Bangkok.

CONTACT US

Amazing Properties is a registered Real estate agency in Bangkok with an extensive selection of condos, apartments, and houses in the Sukhumvit and Sathorn area.

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