Should You Buy a Freehold or Leasehold Condo in Bangkok?
Buying a condo in Bangkok is a serious undertaking. Potential buyers need to be aware of all their options to ensure they make the soundest decision, regardless of whether the purchase is for investment or for a home residence. One factor that you should consider is what type of holding or ownership would best suit you.
In Thailand, there are two main types of condominium projects: freehold and leasehold. Each has its own benefits and drawbacks that you should weigh against what your specific requirements are. Asher Property wants you to be as informed as possible about your choices as you search for your ideal residence in Bangkok.
Freehold Condominiums in Thailand
What is a freehold condo?
As the name suggests, buying a freehold condo means you would own the apartment fully. So, you would have an ownership title registered at the Land Department with all the rights and obligations that entails. Nevertheless, if you are a foreigner interested in purchasing a condo in Thailand, you would have to make sure that the current foreign ownership of the project in question is less than 49%. This is because under Thai law, total foreign ownership in a condominium development cannot exceed 49%.
What are the advantages / disadvantages of a freehold condo?
- Because you own your unit, you can refurbish and renovate your unit as you want, as long as you follow the by-laws.
- A freehold condo does set a time limit on your ownership, such as with a leasehold.
- You can resell your unit or mortgage it to draw out equity.
- You can bequeath your condo to an heir in your last will and testament.
- Freehold owners have voting rights regarding any decisions that impact the project.
- Freehold condos tend to have a higher resale value in Thailand.
- If you are a foreigner who bought a condo that is part of a new development for over 10 million baht, you may qualify for a renewable one-year investment visa.
- Freehold units often cost more than equivalent leasehold units.
- The transfer fees and taxes are higher for freehold properties.
- As a freehold owner, you are responsible for the maintenance and upkeep of your unit as well as for the sinking fund and contributions to maintaining the common areas.
- If you choose to sell your freehold condo, you have to consider the 49% foreign-ownership quota if potential buyers are not Thai nationals.
Leasehold Condominiums in Thailand
What is a leasehold condo?
A leasehold is basically a long-term lease. Usually, it is for 30 years and is registered as such with the land department. Thirty years is the longest term available for a lease in Thailand, but the leasehold contract can stipulate renewals, often for two more 30-year terms.
What are the advantages / disadvantages of a leasehold condo?
- Generally, leasehold condos cost less than equivalent freehold units.
- You have lower transfer fees and taxes to pay for leaseholds.
- With leaseholds, the 49% foreign ownership rule does not apply, so, if you are a foreigner, you do not have to worry about this quota.
- While this article is focusing on condos, leaseholds can open choices up to other types of properties such as townhouses and detached homes.
- You are not directly responsible for the unit’s maintenance or upkeep.
- Certain leasehold developments, such as Four Seasons Private Residences, do offer voting rights.
- If you decide you no longer want to live at there, you can choose not to renew the lease. You also may be able to terminate the leasehold early, if the contract allows.
- Depending on the leasehold property, you may be able to generate a profit.
- There is a risk that you may not be able to renew the agreement after the first 30 years. For example, if the underlying owner sells, the new owner is not obligated to renew lease.
- You cannot renovate the unit without permission from the owner usually.
- You will have no say in the management of the development, except in cases where a project offers voting rights to leaseholders.
- There is a significant annual rental tax for leasehold properties, usually around 12.5%.
- Since you are not the owner, you cannot leave the unit to heirs, nor can you sell or refinance the unit for yourself. So, a leasehold condo is not an investment asset as a freehold one would be.
- You may not have to pay for the unit’s maintenance and upkeep, but often the financial burden for the sinking fund and common area is passed on in the leasehold contract.
- You will have to review any leasehold agreement carefully to ensure you know what your rights and obligations are.
Let Asher Property help you decide which condo is best for you
These are the main advantages and disadvantages of freehold and leasehold condominiums in Thailand. Depending on what your Bangkok real estate needs are, you need to seriously consider your options to make the right decision. Is price more important than ownership rights? Regarding price, what will best fit your monthly and yearly financial obligations? Do you plan on passing on the property to your family? You should discuss these and other questions with a trusted real estate expert, such as the team at Asher Property.
We at Asher Property have years of knowledge and experience in Bangkok’s condominium market, especially in high-end luxury projects in the most sought-after neighborhoods across the city.
Whether you ultimately decide on a leasehold or freehold condo, we have a marvelous selection for you to choose from. If you want to be near the river, there is the leasehold Four Seasons Private Residences and freehold Magnolias Waterfront Residences or Banyan Tree Residence Riverside Bangkok. For those who prefer to be near Lumphini Park, we have the freeholds of 185 Rajdamri and Athenee Residences or leaseholds at Baan Sindhorn or Dusit Central Park. There are so many more we can show you in these and other neighborhoods, including Sukhumvit and Sathorn, with all the amenities and facilities for your luxury lifestyle in Bangkok.