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What are the pros and cons of leasehold versus freehold ownership for foreigners in Phuket?

Posted by stonepinecompany on January 24, 2025
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Property Contract Phuket

Foreigners considering property ownership in Phuket have two main options: leasehold and freehold. Each has its own advantages and disadvantages:

Leasehold Ownership

Pros:

  1. More property options: Foreigners can choose from villas, townhouses, and apartments.
  2. Lower initial costs: Leasehold properties are typically 10-15% cheaper than freehold units.
  3. Cheaper registration: It costs less to register a leasehold than to transfer freehold ownership.
  4. Flexibility: Suitable for those without long-term commitment or considering shorter-term usage.

Cons:

  1. Limited ownership duration: Typically 30 years, renewable for up to 90 years total.
  2. Additional taxes: 12.5% rental tax on yearly lease price and 1% registration fee.
  3. No voting rights: Leaseholders cannot vote at general meetings.
  4. Renewal uncertainty: Especially when leasing from individuals rather than companies.

Freehold Ownership

Pros:

  1. Full ownership rights: Complete control and indefinite ownership of the property.
  2. No expiration concerns: Ownership is for life and beyond.
  3. Investment value: Any increase in property value directly benefits the owner.
  4. Voting rights: Owners can vote at general meetings.
  5. Transferability: Can be sold, mortgaged, or passed on to heirs.

Cons:

  1. Limited to condominiums: Foreigners can only own freehold condos, not land.
  2. Higher costs: Freehold units are generally more expensive to purchase.
  3. Higher transfer fees and taxes: Compared to leasehold properties.
  4. Restricted availability: Only 49% of a condominium’s total area can be foreign-owned.

When deciding between leasehold and freehold, foreigners should consider their long-term goals, budget, and desired property type. Freehold offers more security and control but is limited to condominiums, while leasehold provides more property options at a lower cost but with time limitations. It’s crucial to seek legal advice and conduct thorough due diligence before making a decision.

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