Leasehold - Freehold Question

[Trollster]

I just put down a deposit on a condo and have a question. Most of the building looks to be sold on Leasehold. I have purchased a condo as Freehold. Is it possible to have both in the same buiding? If so, what happens after 30 years when most people's lease are up? I would appreciate to hear back from anyone who knows if this is possible. If not, I will need to talk to a lawyer.

Thanks

[ProThaiExpat]

More information please. When you speak of leasehold, is the owner of the leased condo the developer or an investor?

I suspect the owners of the condos that are leased are investors. Yes, in the West, lenders are leery of condo buildings in which there are too many renters, they love homeowners for obvious reasons, however, if you know the leaseholds are for 30 years the same dynamic doesn't apply as it would for shorter term renters.

[quiksilva]

Without knowing for sure its difficult to say, but one scenarios is that they could have had trouble selling the Thai portion of the building so sold that off as leasehold to foreigners.

[Trollster]

You can buy condos as freehold or leasehold. Most investors have bought as Leasehold - i have gone the freehold route. I spoke with the owner developer and he said both can co-exist in the same project but I wanted a second opinion. I will speak with a trusted lawyer and ask him to confirm. Thanks for the replies.

[BL4u]

I just put down a deposit on a condo and have a question. Most of the building looks to be sold on Leasehold. I have purchased a condo as Freehold. Is it possible to have both in the same buiding? If so, what happens after 30 years when most people's lease are up? I would appreciate to hear back from anyone who knows if this is possible. If not, I will need to talk to a lawyer.

Thanks

If it is a registered condominium out of the 100 equal units 49 can be sold freehold to foreigners. The rest 51 must be owned and registered in the name of Thai nationals or Thai juristic persons.

You can of course lease one of the 51 from a Thai entity.

The drawback of leasehold is that

1 - you do not own freehold,

2 - it could be difficult to re-sell your leasehold condo in the future (you are not the owner)

3 - leasehold has different tax liabilities,

4 - the limited term of 30 years making it in fact a wasting asset, despite what your contract says different about the term or the so called renewal guarantees.

It is merely a 30 year lease you get for your money.

Typically new condominium projects in tourist property resort areas are aimed at foreigners and the purchasers are foreigners. To sell the 49 freehold in the project is not a problem, more difficult is it to sell the remaining 51 condos under a leasehold structure to foreigners, but the developer has no choice, he has to.

What you see sometimes in off plan condos is that the developer offers sale and purchase agreements for freehold ownership beyond the 49 %, and when it comes to transferring the unit to your name you will be offered a leasehold 'ownership' with a promise it can be transferred in a later stage to freehold. In this case you can of course in this case try to get you money back, but mostly in this stage after deposit payment etc. the foreigner accepts the leasehold despite the drawbacks. That is how it works. Make it very clear you buy freehold.

From purchasers and investment point of view leasehold is not preferred.

Edited February 1, 2008 by BL4u

[Irene]

I just put down a deposit on a condo and have a question. Most of the building looks to be sold on Leasehold. I have purchased a condo as Freehold. Is it possible to have both in the same buiding? If so, what happens after 30 years when most people's lease are up? I would appreciate to hear back from anyone who knows if this is possible. If not, I will need to talk to a lawyer.

Thanks

You can buy condos as freehold or leasehold. Most investors have bought as Leasehold - i have gone the freehold route. I spoke with the owner developer and he said both can co-exist in the same project but I wanted a second opinion. I will speak with a trusted lawyer and ask him to confirm. Thanks for the replies.

**************************************************

This is really a mystery. Thais dislike leasehold, so no market for the Thais. While foreigners can buy freehold, so why bother to buy leasehold. There could be a big price differentiations. Is the location in a prime area like Rajprasong or Rajdamri? I cannot understand why any developers would market their products with such differentiation. Normally, they like to build and sell and say goodbye to you and move on to a new project with fresh cash fund.

[pkrv]

I just put down a deposit on a condo and have a question. Most of the building looks to be sold on Leasehold. I have purchased a condo as Freehold. Is it possible to have both in the same buiding? If so, what happens after 30 years when most people's lease are up? I would appreciate to hear back from anyone who knows if this is possible. If not, I will need to talk to a lawyer.

Thanks

You can buy condos as freehold or leasehold. Most investors have bought as Leasehold - i have gone the freehold route. I spoke with the owner developer and he said both can co-exist in the same project but I wanted a second opinion. I will speak with a trusted lawyer and ask him to confirm. Thanks for the replies.

**************************************************

This is really a mystery. Thais dislike leasehold, so no market for the Thais. While foreigners can buy freehold, so why bother to buy leasehold. There could be a big price differentiations. Is the location in a prime area like Rajprasong or Rajdamri? I cannot understand why any developers would market their products with such differentiation. Normally, they like to build and sell and say goodbye to you and move on to a new project with fresh cash fund.

In the west crown, state religion, universities etc can own the freehold, marketing potential/stanglehold is strong but net worth weak (to the buyer). I think thats why docklands in London came about.

[ProThaiExpat]

Quite right, Hawaii has much land held by Royal Trusts and other trusts as leasholds. Palm Springs, Califonria has much Indian land held in trust by the U.S. Government and administered by them as leaseholds.

These leaseholds are hundreds of years old and the leashold estates granted by them have almost the same value as freehold and are bought and sold with no difficulty. Normally the trust renews the leaseholds ten or more years before the leaseholds reach full term and the pattern of renewal is so long standing that there is little doubt it will be renewed near the end of the term.

When the trusts desire to terminate the leasehold, the freeholds are always offered for sale at fair market value to the leaseholder first.

Since Thai law doesn't recognize trusts, I can't think of a decent vehicle where land could be established in such a fashion so falang can enjoy the property for longer than 30 years with the assurance that the leasehold would be renewed.