LEGAL ASPECTS | SWISSDREAMLAND

CHOOSING BETWEEN A LEASEHOLD OR FREEHOLD UNIT
We offer you two options when purchasing a condominium unit. One is the “Foreign Freehold” which is the simplest and usually sold at a premium price, while the other is the “Leasehold”, where you can get the better deals but also requires greater understanding of its rules. In both cases, you’ll have different advantages and limitations, which suit different kinds of individual’s needs. Depending on the purpose of your purchase, you may prefer Leasehold over Freehold or the other way around. Here we explain the different aspects of each ownership type, so you can make the right decision when you’ve decided to purchase your preferred condominium unit.

WHAT IS FOREIGN FREEHOLD?

While the ownership of property in Thailand is known to be restrictive, the latest law issued to regulate the condominium construction and sales in Thailand (2008 Condominium Act) offers the possibility for foreign owners to purchase the apartments in their own name, as long as the total area of the foreign-owned units does not exceed the proportion of 49% of the area of all the units. This allows for a very straightforward and simple purchase process, which is very easy to understand and therefore has become the preferred ownership type for condominiums. By purchasing the unit as a “Foreign Freehold” you will enjoy full ownership rights over it for an unlimited amount of time.

WHAT IS LEASEHOLD?

Since the Thai property laws allow foreign individuals to lease property in their own name, it becomes an interesting option for securing long-term occupation rights on a condominium unit. By officially registering a lease over the condominium unit of your choice, you will enjoy the same occupation rights over the unit, but with the main condition being that the maximum lease term that can be officially registered is 30 years at a time. This period can however be renewed with the seller for further 30 years lease terms (usually two), which are secured in a separate agreement at the time of purchase. It’s worth noting that you will have your name inscribed at the back of the condominium unit title deed, and during the registered lease period your rights become part of the unit, so it can’t be sold, mortgaged or any submitted to any other legal act without your consent. This makes it practically equivalent to the freehold ownership for the registered period, with the difference that it’s limited in time and therefore will require to be renewed in due course, and also that the purchase contract will require more attention to make sure the seller also gives you all the rights related to ownership such as the voting rights in the owners meetings as well.

CHOOSING THE PURCHASE TYPE THAT IS MOST SUITED TO YOUR NEEDS

As you can see, although both purchase types result in the same practical occupation of the condominium unit, the legal structure behind each of them is substantially different, and therefore holds both advantages and limitations on both sides. Since the Foreign Freehold is more simple to understand and has no time limitation, it’s the most suitable when you are purchasing the property as a “long-term asset”, that you may keep for your own enjoyment until your retirement, or that you may want to pass on to your heirs. The foreign freehold units also tend to be sold much easier since the new buyers understand it much better. It does however also have its drawbacks such as higher prices and tax rates. On the other hand, the Leasehold purchase is the preferred kind for investors, who wish to cash-in the rental guarantees and programs offering outstanding returns, while taking advantage of much better prices and a very low transfer fee (only 1.1% of the sale price). This makes leasehold property an excellent deal for those who understand its legal structure, and can still be re-sold just as easily when the property enjoys a good location and rental revenues.

KEEPING YOUR OPTIONS AVAILABLE WITH LEASEHOLD

Finally, even if you purchase your property on a Leasehold contract, the purchase agreement will usually provide you with the possibility to change it to a freehold ownership in the future, or allowing you to register an even longer lease period if the law allows it later, for a reasonable contract fee paid to the Seller. This makes the leasehold purchase even more interesting, as you are then allow you to switch ownership types later on if further foreign freehold quota becomes available, or if you have decided to setup a Thai company. By carefully checking the contract, and with the help of a good attorney, the Leasehold property can become an excellent deal.

INVESTMENT VISA OR RETIREMENT VISA

INVESTMENT OF THB 10 MILLION

According to Royal Thai Police Bureau Order No.327/2557, dated June 30, 2014 and effective Aug 29, foreign owners of condominium units in Thailand are eligible to extend their stay in the country for a period of one year, renewable each year, through means of a one-year visa. The one-year visa is granted by reason of necessity for the purpose of investing at least THB 10 million in Thailand.

In order to be granted a renewable one-year stay under a one-year visa, foreign owners of condominium units in the country must demonstrate:

possession of a non-immigrant visa, granted to them by a Thai embassy or consulate;
evidence of remitting at least THB 10 million in funds from abroad into Thailand by presenting a copy of such proof, issued by a commercial bank in Thailand; and
evidence of investing in the purchase of a condominium unit at a purchase price of not less than THB 10 million by showing a copy of the official sale agreement and condominium unit title deed, registered with the relevant land office.

There are several other categories of investment through which foreigners can apply for a one-year visa. These are available to foreigners who:

rent a condominium unit for a period of at least three years, providing a copy of the lease agreement registered with the relevant land office;
deposited money in a fixed-deposit bank account with a majority-owned Thai bank and present a certificate issued by the bank confirming the fixed-deposit amount and a copy of the deposit slip; and
purchased government or state enterprise bonds and show a copy of the bond certificates.

In order to qualify for the one-year visa, foreigners can invest in more than one of the aforementioned categories, provided that the total investment is at least THB 10 million.

ADVICE FOR FOREIGNERS

Bearing in mind all of the above, foreign owners of condominium units seeking to obtain a one-year visa are advised to contact and engage an immigration lawyer to get an opinion on their eligibility for the extended stay, review their qualifications and supporting documents, ensure the documents to be submitted to the Immigration Bureau are in order, and prepare an application for submission to the Immigration Bureau.

This way, foreign condominium owners will be more likely to secure a renewable one-year visa and stay in Thailand for much longer periods than those granted by a tourist visa.

RETIREMENT IN THAILAND

Thailand offers foreigners many benefits including beautiful beaches, tasty food, friendly people, world class health care and inexpensive property. Many foreigners come here to retire, others for vacation to enjoy what Thailand has to offer. For those to desire to stay long in Thailand, the ability to acquire property, like Grand Marina Club & Residences, and visa is an important issue. The below requirement would be the first step to take.

REQUIREMENT TO OBTAIN A ONE-YEAR RETIREMENT VISA

Must be 50 years old and above
Passport (signed copies of each page)
Non-Immigrant Visa
Departure Card TM.6
Proof of meeting Financial Requirements
Thai Bank Book (original)
Letter from your Thai Bank
Three (3) 4×5 cm photos, with full face taken

MEETING THE FINANCIAL REQUIREMENTS FOR A RETIREMENT VISA:

Financial Requirements are as follows:

Bank Account showing THB 800,000
Monthly income of at least THB 65,000
Combination (Bank Account + Income x 12 = THB 800,000)