You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

October 16, 2017

Inheritance of Leasehold Property in Thailand

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

With its beautiful beaches, scenic mountains, and bustling cities, Thailand has long enjoyed a reputation as a popular tourist destination. At the same time, the country has also become an attractive hotspot for foreign nationals wishing to buy property

With a plethora of options—from convenient condominiums in downtown Bangkok, to lodges high up in the serene mountains of northern Thailand, to luxurious villas and apartments situated idyllically beside the Andaman Sea—more and more foreigners are clamoring to either settle down in Thailand or invest in the burgeoning property market.

But foreign investors face a well-known obstacle to making their dreams come true: the Thai Land Code forbids for foreigners, whether individuals or companies, to buy or hold land in Thailand, unless they obtain permission from certain governmental authorities (e.g., the Board of Investment or the Industrial Estate Authority of Thailand).

Despite these land ownership restrictions, the Condominium Act does permit foreigners to own units in condominium projects, provided such foreign ownership does not exceed 49% of the total area of all the units in the project.

There are also no regulations prohibiting foreigners from leasing property. Therefore, leasehold is the most popular type of legal structure for foreigners who wish to own other types of real estate, such as a plot of land with a house or a villa.

Under Thai law, all leases for immovable property must be made in writing, and agreements exceeding three years must be registered with the Land Office where the property is located; otherwise, the agreement will only be enforceable for three years. Under the Civil and Commercial Code, the maximum duration for a lease of property is 30 years, with an option to renew for another 30 years. However, the option to renew is treated as a private agreement between the respective parties.

Another issue to consider is that, as a general principle, one of the material elements of a lease agreement is that it must be specific to the lessee who is named in the lease agreement, and thus the lessee’s qualifications are a material consideration for obtaining a lease.

Previous Supreme Court judgments have noted that the lessor generally focuses their consideration on the qualifications of the lessee, and whether such lessee has the right to use and maintain the leased property. As the lessee’s rights are exclusive to each lessee, the lease will therefore automatically be terminated upon the death of the lessee.

For this reason, the current trend for some investors is to consider investing in a leasehold property through a company, as it is convenient to transfer the company’s shares to the investor’s heir(s), without the need to proceed with a new lease registration.

However, a recent Supreme Court Judgment No. 11058/2559, which has been approved by the general assembly of the Supreme Court, raised an important issue. The Court held that if parties intend to obtain the exclusive rights of a lessee or a lessor, and they wish to terminate the lease agreement upon the death of the lessee or lessor, such agreement must specify the duration of the lease to enable it to be effective throughout the life of the lessee or lessor.

If the duration of the lease is not for the entire life of the lessee or lessor, it will be deemed that the parties agree to waive their exclusive rights, and thus the lease will not be terminated upon the death of either party.

The Supreme Court also noted that some clauses specified in a lease agreement can be interpreted to mean that the lessor has waived their exclusive rights. For example, this may occur when the lease duration is for a 30-year period, and the lessor has received a one-time rental fee for the entire duration of the lease upon commencement of the lease, or the lessor allowed the lessee to sub-lease the property to a third party without prior consent of the lessor.

The Supreme Court viewed that the inclusion of these clauses was indicative of the fact that the lessor did not consider the lessee’s qualifications to be the material elements of the lease agreement. The Court further stated that the terms and conditions agreed upon by the parties, such as the duration of a lease, will be enforceable upon entering into a lease agreement and will persist in accordance with the terms stipulated in the agreement, which means that the lease will not be automatically terminated upon the death of the lessee, and can also be inherited by the lessee’s heir(s).

The Supreme Court’s decision on these issues appears to differ in some ways from previous judgments, and it will be important to monitor how the particular facts and circumstances of other upcoming cases will be interpreted. When entering into a new lease, all parties involved will want to ensure that the lease agreement has been correctly drafted to enable them to retain full legal rights and protection over the property.

Download Full Article
Related Professionals

Practices

Real Estate

Location

RELATED INSIGHTS​ 

September 19, 2025
Over the past two years—particularly since Thailand announced incentives for EVs, including tax exemptions and reductions—there has been a clear trend of manufacturers relocating their facilities to Thailand. This shift is reshaping the country’s industrial landscape and creating significant opportunities in the real estate sector for companies looking to establish or expand EV manufacturing operations in Southeast Asia. Incentive-Driven Market Transformation The government’s tax exemptions and reductions have proven effective in attracting foreign investment, with Chinese manufacturers currently dominating the market. Most EV parts and car manufacturers operating in Thailand are from China, reflecting the prominence of Chinese EV brands that have already established a presence in the country. The sector encompasses manufacturers of electrical equipment as well as companies seeking to establish facilities for producing electric vehicle components, parts, and accessories. The surge in activity is evident across Thailand’s EV manufacturing sector, with legal practices handling these transactions experiencing unprecedented demand. Industrial Real Estate Framework and Market Dynamics Thailand’s industrial real estate framework provides compelling advantages for foreign manufacturers, who typically face restrictions on foreign land ownership under the Land Code. However, foreign investors can benefit from exemptions to these restrictions if the land is located within industrial real estate zones designated by the Industrial Estate Authority of Thailand (IEAT) or they obtain investment promotion from the Board of Investment (BOI) if the land is located outside an industrial estate area governed by the IEAT. Both the IEAT and BOI provide special tax and nontax incentives, including foreign land ownership, with even greater incentives available for land situated within the country’s Eastern Economic Corridor (EEC). This regulatory advantage has sparked a parallel trend in land development. Industrial real estate developers in the EEC are actively consolidating land into large plots to develop new industrial estate projects, recognizing that
Read More
August 26, 2025
Thailand’s consumer protection authorities have strengthened oversight of residential leasing businesses following numerous complaints about unfair lease terms, including unjustified deposit forfeitures and excessive utility charges. The Contract Committee of Thailand’s Office of the Consumer Protection Board issued the Notification of the Contract Committee Re: The Stipulation of Residential Property Leasing as a Contract-Controlled Business B.E. 2568 (2025), published in the Government Gazette on June 6, 2025. The notification becomes effective on September 4, 2025, and repeals the prior notification issued in 2019. The notification prescribes two types of standard residential lease contracts: short-term residential lease contracts (for leases of not more than three years) and long-term residential lease contracts (for leases of more than three years up to 30 years or for the lessee’s lifetime). However, use of these standard contract forms is not compulsory, and parties may use any form as long as the terms do not contradict the notification’s requirements. Expanded Scope The notification expands the scope of enforcement to include any lessor with at least three residential units, while the 2019 notification applies only to businesses leasing five or more residential units. Hotels and dormitory operators are excluded, as they are regulated under other specific laws. Residential lease contracts entered into under the 2019 notification will remain valid and enforceable until the expiration of the contract. Any residential lease contract executed from September 4, 2025, onward must comply with the new notification. The notification also expressly extends its applicability to lease contracts made through online platforms. Electronically executed lease contracts must comply with the required and prohibited terms specified in the notification as well as applicable laws governing electronic transactions in Thailand. Mandatory Terms and Conditions Residential lease contracts must contain clearly legible Thai text no smaller than two millimeters in size and no more
Read More
August 22, 2025
On August 12, 2025, Vietnam’s Ministry of Agriculture and Environment submitted a draft law amending several provisions of the Land Law 2024 (“Draft Amended Land Law” or “Draft”) for government consultation and public comment. The Draft primarily aims to address three controversial issues in Vietnam’s land regime concerning (i) land pricing, (ii) land clearance, and (iii) the allocation of land outside auctions, following policy set out by Resolution 18-NQ/TW and the newly adopted Resolution 69-NQ/TW on land governance modernization. Land pricing is potentially one of the most important areas among the proposed reforms. The Draft, however, has notably not addressed a major concern recently raised by the public: When a project has been allocated or leased land, but the relevant authority has not yet issued the land-price decision, a “supplemental charge” continues to accrue for the entire waiting period. Under current rules, this charge is calculated at 5.4% per year on the ultimately determined land-use fee or land rent, materially shifting project economics and pricing risks to developers or end-buyers. Core Reforms on Land Pricing The Draft Amended Land Law sets out a number of reforms on land pricing, including the following: Land price tables: The Draft maintains provincial land price tables but clarifies the scope of application: They are used to determine land-related financial obligations of land users and compensation when the state recovers land; the government will detail the adjustment coefficient regime, ratios for land-use fee calculation by land type/user/form, and deductible infrastructure costs. Provincial people’s committees will continue to issue land price tables every five years, effective from January 1 of the first year in the cycle, with authority to supplement within the cycle as necessary. In provinces with cadastral maps and digital land price databases, the tables may be established down to the land-parcel level,
Read More
July 23, 2025
On June 26, 2025, the National Assembly of Vietnam adopted Resolution No. 216/2025/QH15 to extend the duration of agricultural land use tax exemption through December 31, 2030. This policy extension reaffirms the government’s ongoing efforts to support the agricultural sector, ensure national food security, and promote rural development. Key Takeaways Tax Exemption Period Extended: The new resolution continues the full exemption from agricultural land use tax as stipulated under Resolution No. 55/2010/QH12, as amended in 2016 and 2020. The tax exemption, which was originally set to expire at the end of 2025, will now remain in effect until December 31, 2030. Scope of Exemption: The exemption applies to all types of land currently eligible under the existing legal framework for agricultural land use tax relief. This typically includes land used by households, cooperatives, and non-commercial organizations for agricultural production, aquaculture, salt-making, and reforestation. Effective Date: Resolution 216 will take effect on January 1, 2026. During the interim period, tax exemption remains valid under existing laws and resolutions until the end of 2025. Implementation Guidance to Follow: The government is tasked with issuing detailed guidance to ensure effective implementation of this extended exemption. Businesses, cooperatives, and individuals engaged in agricultural activities should monitor upcoming regulations and instructions from relevant ministries. Outlook Vietnam’s extension of agricultural land use tax exemption demonstrates a strong policy commitment to rural economic stability and environmental sustainability. For land users, the exemption represents meaningful financial relief that can be reinvested into modernizing farming techniques, improving land efficiency, or transitioning to sustainable practices. While the extension itself is automatic, it is recommended that agricultural land users and stakeholders review their land use documentation and tax profiles to ensure alignment with eligibility requirements. Future implementation regulations may also introduce new compliance obligations that should be tracked closely.
Read More