Thai Leases

Leases can be for a maximum registered term of 30 years with further 30 year terms allowed within the contract, generally at no cost. Thus most lease contracts are set up with either two renewal terms taking them to 90 years or an ad infinitum number of renewals.

Whilst land cannot be owned directly, building can, and many lawyers advise clients to lease the land and own the property, which creates a stronger ownership structure, as the land owner would have to pay the lessee for the building if the lease were not renewed, however this structure has some negative tax consequences and we believe that the best tax position is for a buyer to have a lease over the land and building.

Lessee’s rights under registered leases are incredibly strong in Thailand so leases are a very secure form of ownership. The only drawback is that because the renewals under a lease are contractual there is a small risk that if the land holding company were to go bankrupt the new land owner may not honour the renewal terms. For this reason the following terms are often built into the contract.