Leasing a condominium in Thailand.
The Condominium Act prohibits foreigners from owning more than 49% of all units in a condominium in Thailand. It does not specify, however, that Thai nationals must occupy the remaining 51% of the units. In practice, those condominium units can be let to foreigners on a leasehold.
Thai law describes lease as a tenancy contract with a fixed term not exceeding 30 years. It is not governed by the Condominium Act anymore, but rather falls under the management of Civil and Commercial Code.
There are a couple of important distinctions about lease and leasehold. Firstly, it doesn’t entitle lessee to obtain a title deed of the property. Secondly, it is not considered to be an asset, which means it cannot be freely sold or transferred to anyone else. Moreover, lease is terminated upon death of the lessee and is not subject to inheritance.
As such, lease is a standalone form of utilising someone else’s property for a defined period of time. Unlike freehold, leasehold comes with limited rights and is inferior to ownership. Nevertheless, leasehold is still a perfectly valid legal solution for anyone who would like to temporarily stay in a property on defined terms.
Anyone interested in leasing out a condominium need to keep the following in mind:
Voting rightsLeasehold purchaser does not generally inherit any voting rights (unless specified otherwise) – those remain in the possession of the owner.
Selling and assigning a leasehold condominiumThe primary right of a leasehold buyer of a condominium is a personal right of possession of the unit for a specified period of time. Lessees are not allowed to sell or lease the unit to anyone else during the lease term and doing so is unlawful (unless agreed otherwise). This right is exclusive to the owner (or a developer).
Inheritance of a leasehold condominiumOnly freehold owner of the condominium has the right to pass the unit in inheritance. Lease, as a contract right, is terminated upon death of the lessee and the property returns back to the owner.
Duration of the leaseMaximum duration of the lease is 30 years.
Expenses for common maintenanceThe responsibility to contribute to the condominium juristic person for management or maintenance fees is usually passed onto the lessee in the leasehold agreement. The lessee will then have to cover all maintenance-related fees without any entitlement for a future refund.
Additional feesIn addition to covering the building management fees, owners also pass onto their lessees another fee – property tax from letting a property (12.5%).