Freehold vs Leasehold for Foreign Villa Buyers in Thailand

The most common question from prospective foreign villa buyers in Thailand: "Can I actually own this?" The answer is: yes — but not in the same way you'd own property in Europe, Australia, or North America. This guide explains the four legitimate legal structures available to foreign buyers, what each gives you in practice, and what each costs to set up and maintain.

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General guidance notice: This guide is based on our 10+ years operating villa rentals on Koh Samui — not legal or tax advice. Thai property law is complex and changes over time. Always engage a qualified Thai property lawyer before purchasing or structuring any property transaction in Thailand.

Why Foreigners Can't Own Land Directly in Thailand

The prohibition on foreign land ownership is a foundational principle of Thai property law — not a technicality or a recent development. Understanding it clearly helps you evaluate the alternatives without anxiety.

Section 86 of the Thai Land Code Act B.E. 2497 (1954) prohibits foreigners from owning land in Thailand. This is a broad prohibition that applies regardless of the amount paid, the purpose of the purchase, or any contractual arrangement — foreign nationals simply cannot hold a land title (chanote or otherwise) in their own name.

There is one important exception: foreigners can own the building or structure on Thai land. The land and the building are treated as separate legal assets in Thai law. This is the principle that underpins the leasehold structure — a foreign buyer holds the building freehold and the land under a registered long-term lease.

The prohibition is enforced at the Land Department registration stage — a foreigner presenting themselves for land title registration would simply be refused. This means there are no workarounds in the transaction itself; the legal structure must be built into the ownership arrangement from the start.

The Four Legal Structures for Foreign Buyers

Each structure gives the foreign buyer a different form of effective control over the villa. None of them is perfect — each involves trade-offs between cost, legal certainty, succession planning, and practicality on resale.

Structure 1: Long-Term Leasehold (30+30+30 Years)

How it works: A registered lease of up to 30 years is entered into between the Thai landowner (lessor) and the foreign buyer (lessee). The lease is registered at the Land Department, creating a legally recognised property right. The building on the leased land is typically owned freehold by the lessee as a separate asset. The lease is commonly drafted with two optional renewal periods of 30 years each — giving a headline "90-year" term — though only the initial 30-year registered period has full legal enforceability.

Setup cost: Primarily legal fees (฿50,000–120,000) and Land Department lease registration fee (typically 1% of total lease value). Lower setup cost than a Thai company.

Succession: The lease can be passed to heirs and is transferable by the lessee. The remaining lease term passes with the estate. Renewal rights for heirs are governed by the same contractual protections as for the original lessee — no additional rights are created on inheritance.

Resale: The lease is assigned to the buyer on sale. The landowner's consent to assignment is typically addressed in the original lease. A strong lease will include the landowner's pre-consent to assignment to any qualifying buyer.

Risk: Renewal beyond 30 years is not legally guaranteed. The landowner's heirs are bound by the original lease but not required to enter a new one on renewal. The quality of the leasehold depends heavily on the quality of the original lease drafting and the reliability of the landowner.

Structure 2: Thai Company with Majority Thai Shareholders

How it works: A Thai Limited Company (Borisat Jamgad) can own land freehold. Foreign nationals can hold up to 49% of the company's shares; Thai nationals must hold at least 51%. The company purchases the land and villa in its own name. The foreign buyer controls the company through their shareholding, directorship, and management rights — but does not directly own the land.

Setup cost: Company registration fees, legal fees, and memorandum of association preparation — typically THB 25,000–60,000. Annual ongoing costs (accounting, audit, tax filing) of approximately THB 20,000–50,000 per year.

Succession: Company shares are transferable by will or inheritance. The foreign heir can inherit the foreign-held shares; Thai shares must be held by qualifying Thai nationals. On the death of a Thai shareholder, succession of their shares may require restructuring.

Resale: The villa can be sold either by transferring the land at the Land Department (a normal property sale from the company) or by selling the company itself (a share transfer). Selling the company avoids Land Department transfer fees but requires proper corporate due diligence by the buyer.

Risk: Thai authorities have periodically scrutinised Thai companies used by foreigners as a mechanism to circumvent land ownership rules. Companies with nominee shareholders — Thai nationals who hold shares as pure placeholders without genuine economic interest — are particularly vulnerable. The structure is most defensible where Thai shareholders have a genuine business rationale for their shareholding.

Structure 3: BOI Promotion

How it works: Thailand's Board of Investment (BOI) offers land ownership privileges to qualifying foreign investors under certain promotion categories. A foreign national with BOI-promoted company status and a qualifying minimum investment can apply for a right to own land for the promoted business purpose.

Setup cost: Varies significantly depending on the BOI category and minimum investment requirements (typically THB 40–200M+). Legal and application fees on top.

Practical relevance: Most individual villa buyers do not qualify. BOI is primarily relevant for developers or resort operators building a project at scale. If you are purchasing within a BOI-promoted development, the developer will have pre-secured the approval — verify independently with your lawyer.

Structure 4: Thai Spouse

How it works: A Thai national — including a Thai spouse of a foreign buyer — can hold land freehold. The Land Department may require the Thai spouse to sign a declaration that the purchase funds are their own and not contributed by their foreign spouse, which complicates the arrangement for buyers using their own capital.

Setup cost: No additional company or lease setup costs — just legal fees for the transaction itself. But the cost is in risk, not cash.

Risk: Significant. If the marriage ends, the Thai spouse has full legal ownership of the land and villa. The foreign spouse has no direct legal claim. Additionally, this structure effectively requires the declaration that foreign funds were not used for the purchase, which may not be honest if the foreign buyer is funding the acquisition.

Not recommended as the primary structure without additional legal protections (prenuptial agreement, separate building ownership, usufruct registration). Consult a specialist Thai property lawyer if this structure is under consideration.

Structure Comparison Table

Factor Leasehold (30+30+30) Thai Company BOI Thai Spouse
Land Ownership Type Leasehold Freehold (in company) Freehold Freehold (in spouse)
Setup Cost Low–Medium Medium High Low
Annual Maintenance Cost Nil ฿20,000–50,000 Variable Nil
Succession Transferable by will Share inheritance Variable High risk on divorce
Resale Ease Good (lease assignment) Good (land or share sale) Good Complicated
Regulatory Risk Low Medium (if nominee shareholders) Low Medium–High
Common Use on Samui Very common Common Rare Uncommon

Practical Considerations

Which structure is most common on Koh Samui?

The long-term leasehold (30+30+30) is by far the most widely used structure for foreign villa buyers on Samui. It is straightforward, widely understood by buyers, sellers, and banks, and gives the foreign buyer registered legal rights at the Land Department. Most of Koh Samui's established foreign villa ownership base — across hundreds of properties — operates under leasehold. The Thai company structure is also common, particularly among buyers who prioritise the perception of freehold security or who have existing Thai company structures for other business reasons.

Is leasehold as good as freehold in practice?

For most villa investors on a 5–15 year investment horizon, the practical difference between a well-structured leasehold and Thai company freehold is small. The initial 30-year lease gives full, registered security for the entire typical investment period. The value of the villa on resale within the lease period is primarily driven by rental performance and condition — not by title structure. Where the difference matters most is on very long-term holds (25+ years) and in succession planning, where the renewal risk on a leasehold becomes more relevant.

Will my structure affect my ability to sell?

Both leasehold and Thai company structures are routinely sold on Koh Samui. Most buyers understand both structures. However, some buyers — particularly from jurisdictions with strong freehold traditions — feel more comfortable with the Thai company structure. Leasehold properties with longer remaining terms (25+ years) resell more easily than those with shorter terms. Disclose your ownership structure clearly in any sale marketing and ensure your lawyer prepares the necessary documentation for either a land transfer or company sale.

What should I include in a leasehold agreement?

A well-drafted long-term lease should include: registered 30-year initial term; renewal clauses for two additional 30-year periods; pre-consented assignment rights to any qualifying buyer; sublease and mortgage rights; protections in the event of the landowner's death (binding on their heirs); the leaseholder's right to renovate and develop the building; and clear dispute resolution provisions. This is not an exhaustive list — always have a specialist Thai property lawyer draft or review the lease before signing.

Frequently Asked Questions

Can foreigners own freehold property in Thailand?

Foreigners cannot directly own land in Thailand under the Land Code Act B.E. 2497 (1954). However, foreigners can own the building/structure on Thai land under separate legal arrangements. The four main routes for foreigners to gain effective control over a Thai villa are: a registered long-term leasehold (30+30+30 years), a Thai company with majority Thai shareholders, a BOI-promoted land ownership privilege, or ownership through a Thai spouse. Each has different costs, risks, and practical implications.

Is a 30-year lease sufficient for a villa investment?

The initial 30-year lease is the only period legally enforceable under Thai law. The renewal periods (commonly drafted as 30+30, totalling 90 years with the initial term) are contractual obligations but courts have historically not enforced renewal clauses beyond the initial registered 30-year period. In practice, well-drafted leases with reputable landowners are routinely renewed. For most investors with a 5–15 year horizon, 30 years provides ample security.

What is the difference between leasehold and freehold in Thailand?

In the Thai context, 'freehold' means the land title is owned outright — only Thai nationals or qualifying entities can hold this. 'Leasehold' means a registered long-term right to use the land for a fixed period. Freehold land in a Thai company is effectively controlled by the foreign majority shareholder, but the company — not the individual — holds the freehold. In practice, the distinction between well-structured leasehold and Thai company ownership is often smaller than it appears on paper.

What does it cost to set up a Thai company to hold a villa?

Setting up a Thai Limited Company typically costs THB 25,000–60,000 in legal and registration fees. Annual maintenance costs — accounting, company returns, auditing — run approximately THB 20,000–50,000 per year. These ongoing costs should be factored into your annual cost of ownership under this structure and included in any yield calculation.

What happens to a leasehold villa when the leaseholder dies?

A registered 30-year lease can be passed to heirs as part of an estate — it is a transferable legal right registered at the Land Department. The heir inherits the remaining lease term. The lease cannot be extended by heirs beyond its original expiry without negotiating a new lease with the landowner. Have a valid will registered in Thailand and consult a Thai property lawyer on succession planning for your specific structure.

Which structure is most commonly used by foreign villa buyers on Koh Samui?

The long-term leasehold (30+30+30) is by far the most common structure for foreign villa buyers on Koh Samui. It is straightforward to set up, widely understood by buyers, sellers, and financiers, and gives the foreign buyer registered legal rights. The Thai company structure is also common, particularly for buyers who want the perceived security of a freehold title, but involves higher setup and maintenance costs and greater regulatory risk if nominees are not properly structured.

Book a 30-Min Strategy Call with Adam

Adam Tokar, our Portfolio Manager, can help you understand what structure is most commonly used on specific Samui properties and introduce you to the legal specialists we work with for a second opinion.

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