Foreigners frequently misunderstand the significance of a lease agreement in Thailand. Owing to this reason, we will be presenting an in-depth analysis of the land leasing agreement in Thailand. The lessee can utilise such an arrangement to hire or rent a property from the lessor.
It’s important to understand that a property lease agreement does not transfer ownership of the property from one person to another. However, it transfers possession of the property from the lender to the lessee for a set amount of time as specified in the agreement Thailand.
The question now is whether a lease agreement signed by a foreigner can be registered under Thai law. Yes, foreigners can lease land in Thailand for up to thirty years in the same way Thai nationals can. We’ll move on to knowing more about leasing agreements now.
Leasehold Legislation in Thailand
Despite the fact that Thailand has no special leasehold legislation, all rental arrangements in Thailand are “lease” agreements. In Thailand, a lessee is referred to as a tenant. There has been some debate as to whether or not tenants have the same safeguards.
Lease Agreement Registration
A lease or rental arrangement that lasts more than three years should be recorded at the local land office. A leasing agreement for less than three years, on the other hand, does not need to be registered.
Furthermore, within three years of becoming enforceable, a lease contract should have registration with the Thailand Land Department. This will aid the parties in bringing a claim in court in the future regarding the property in the lease agreement. It’s also worth noting that in Thailand, a pre-signed lease isn’t accepted. Only after the lease’s expiration date may it be renewed.
You’re probably wondering what goes into a registered lease agreement now. There is a division of the parties’ rights in a leasing agreement registration. A lease agreement is a conventional contract and property law concept. The enforcement of the contractual duties between the parties to the agreement is aided by a registered lease agreement.
Lease Registration Fee in Thailand
If you want to register your lease agreement but aren’t sure how much the registration fee will be, don’t worry; you’ve come to the correct place. In Thailand, a lease registration fee of one per cent of the entire rental is payable to the local land officer during the lease term. The following items can add-on to your rental payment:
- The monetary value for the lease
- Money spent on construction
- Land survey fee
- The lessee must pay the other amounts of money to the lessor for the enjoyment of the benefits of the lease.
Furthermore, while recording the lease, a stamp duty of 0.1 per cent of the total rental of the property for the period of the lease must be paid to the Land Department.
Leasehold Purchase by a Foreigner
The most challenging component of dealing with a leasehold purchase by a foreigner in Thailand is the drafting of the agreement’s terms and conditions. Furthermore, structuring the lease agreement in such a way that provides the best possible safeguards to the foreigner becomes difficult. It is preferable to have a lease agreement drafted by an expert property lawyer in the best interests of the foreign leaseholder.
Lease and Rental in Thailand: Characteristics
The following are some of the most crucial aspects of a lease and rental in Thailand to remember:
- Only a lease agreement in document is legally enforceable.
- In Thailand, a lease agreement written in another language for up to three years does not need registration.
- When registering a lease agreement that lasts longer than three years with the land department, it must include a Thai script version.
- The only land with a proper title deed can be useful in registering a lease agreement.
- The tenure of a registered leasehold cannot exceed 30 years.
- The recorded leasehold term is extendable.
- The ability to renew the contract is not for all parties and varies from case to case.
- When a lessee dies, there is automatic cancellation of the property lease.
- A property lease does not immediately end when the owner passes away.
- In Thailand, a lease agreement has the same effect as a regular tenancy.
The Bottomline
Foreigners can benefit greatly from lease agreements in Thailand. Foreigners cannot legally own property in Thailand, so they must get into a lease arrangement in order to hold a long-term property in Thailand. In Thailand, the concept of a lease agreement is comparable to the concept of a rental agreement. The lessor agrees to lend his property to the lessee for a set amount of time under such arrangements. In exchange, the lessee has to pay the lessor the agreed-upon consideration. If the agreement is for a brief period of time, it does not need to be registered.
However, if the parties have signed a long-term leasing agreement, it is necessary for the parties to register the agreement with the Land Department in Thailand in order for it to be legally enforceable. A lease agreement outlines both parties rights and responsibilities. After the lease agreement has expired, it can be renewed by mutual agreement of the parties involved.
Konrad Legal is a full-service law firm providing a range of services aiming to safeguard the rights and interests of foreigners looking to buy or sell property in Thailand. Our organisation provides a comprehensive range of property-related services to better meet the demands of our international and Thai clients. Our team of Thailand lawyers invites you to contact us at [email protected] if you have any property-related inquiries or concerns.
