What does Freehold mean on Homes for Sale in Thailand?
What does Freehold mean in Thailand?
In Thailand, freehold is the most complete and absolute ownership interest that can be held in property. Freehold property belongs to the owner indefinitely and therefore represents absolute ownership of real property.
In Phuket, with the exception of "condominium freehold", the most common forms of freehold generally relate to the purchase of land or structures built on the land.
While it is true that foreigners can own "condominium freehold" and structures on the land (homes, townhomes, villas), Thai law contains no provision for foreign individuals to own a direct freehold interest in the land on which it sits.
The question then becomes: what is the best ownership structure for a particular property?
This is a commonly used ownership option for foreign buyers. The buyer signs a long-term leasehold contract on the land with the developer. As a foreigner, the structure (villa) can be owned separately as freehold, either in your personal name or in an offshore company name. Foreigners can own structures sitting on the land, which could, in some respects, be considered a form of freehold ownership.
The freehold structure is then registered on the back of the land title deed during the long-term lease period. Land title documents serve as evidence rights to land. Buildings are a form of immovable property that can be owned separately from the land.
For homes for sale in Thailand, more and more buyers are comfortable with leasing the land with protection granted in the contract. Different structures can be recommended by your property law firm.
Thai company structures are used by foreigners to indirectly own land in Thailand whereby the company owns the land and the foreigner controls the company.
The Foreign Business Act (FBA) is the main legislation regulating the scope of foreign business activities in Thailand. There have been proposed amendments to the FBA aimed at addressing the use of nominee shareholders and foreigners using preferred voting rights to control Thai companies. It is important to note that at the time of writing, the proposed amendments have not become law.
Thai Condominium Act
Made possible by the Thailand Condominium Act of 1979, buying a "condominium freehold" unit is one of the easiest ways for foreigners to acquire direct property ownership in Thailand. This is a special legal type of freehold that foreigners can directly and legally own in Thailand, just as they would own a freehold property in their own country. Hence the term "condominium freehold" title.
Buying a condominium registered property provides a degree of consumer protection for buyers. For instance, purchase contracts for the sale of a condominium unit by the developer are standardized and are required to be in the form established by the Ministry of the Interior. Marketing materials from the developer must not fail to deliver on such promises as to avoid misrepresentation to buyers.
There are other significant benefits for purchasing Condominium registered property. Condominium units receive a five-year structural guarantee and a two-year non-structural defects warranty. The condominium act also provides provisions relating to the management of condominiums, together with penalties for violations.
Taxes on freehold property differ from leasehold property.
There are many considerations to take into account before the most suitable property ownership structure can be determined.
Most condominium buyers who plan to hold their unit for a long period of time (over 10 years) will choose a foreign freehold structure over a leasehold structure.
Taxes for freehold and leasehold property can be seen in the chart below:
For more information about freehold ownership or to learn more about homes for sale in Thailand, call us today at +66 93 606 0906.