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When you buying property abroad, for example in Thailand, it is crucial to understand the types of ownership available and what they mean in practice. The terms "leasehold" and "freehold" often raise questions among buyers, especially those encountering them for the first time. These two approaches differ fundamentally in terms of rights, obligations, and the level of control an owner has. To make the right choice and avoid unpleasant surprises in the future, it’s important to clearly understand how each type of ownership works and what potential pitfalls exist.
What is Freehold?
Freehold is a type of property ownership where the buyer receives full and unlimited rights to the property and the land it sits on. The owner can freely manage the property: sell it, rent it out, gift it, or pass it on to heirs.
Advantages of Freehold
- Full ownership rights
You can manage the property freely without restrictions from the government or developer. - Inheritance
The property can be passed on to your heirs without needing to renew any agreements. - Participation in meetings
Freehold owners can take part in condominium meetings and influence management decisions.
Disadvantages of Freehold
- Higher purchase price
Freehold properties usually cost more than leasehold ones. - High taxes on purchase and sale
Taxes and registration fees are around 6.3%.
What is Leasehold?
Leasehold is a form of long-term rental. Typically, the lease period is 30 years, with the option to renew for another 30 + 30 years (commonly called 30+30+30). Under leasehold, the land remains owned by the landlord (most often the developer), and the buyer only receives the right to use the property.
Advantages of Leasehold
- Lower transaction cost
The price and taxes during registration are significantly lower (about 1.1%). - No strict money transfer requirements
The transaction can be registered regardless of the source of funds. - Flexibility to resell
You can resell the lease rights with the landlord’s consent.
Disadvantages of Leasehold
- Limited ownership term
Once the lease period ends, it must be renewed or a new lease signed. - Limited control rights
For example, participation in co-owner meetings is not always possible. - Inheritance concerns
The right to pass the property to heirs must be explicitly stated in the contract.
Freehold or Leasehold: What to choose?
The choice depends on your goals and budget.
If you value full ownership rights, the ability to pass the property on to heirs, and active participation in management, then freehold is the best option. It is ideal for long-term investments and offers maximum security.
If your priority is a lower price, easier paperwork, and flexibility for resale, then leasehold is a good choice. This option works well for temporary ownership, such as vacation use or rental income.
The most important thing is to define your plans in advance and carefully check all contract terms.
Want to get a personalized consultation and choose a property that fits your goals? Message us, and we will find the best real estate options in Phuket for you, along with a customized investment strategy.
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