Coming to Thailand for a property investment, an Australian already has a bundle of experiences and insights from his home country. With respect to leasehold structures, he knows that Australian state and territory legislation protects the tenant’s interests, es-pecially when it comes to a residential lease. 

Depending on the state or territory, certain Real Property Acts, Residential Tenancies Acts, Residential Tenancies Regulations and tenant-friendly legislation are in place, providing a certain level of comfort for a long-term lease of land and a house. They typically contain covenants relating to dispute resolution, bonds, obligations for repairs, a tenant’s right to enjoy the land and termination rules.

When investing in Thailand, a “leasehold interest” seems to be a reasonable structure for real estate, taking into consideration that the direct acquisition of land ownership is not allowed for foreigners. Therefore, statements like “The preferred method of acquir-ing land is through leasehold. A foreigner can safely acquire the right to use the land and register the right for a maximum lease term of 30 years at the Land Department” seem to make perfect sense.

However, nothing could be further from the truth. Thailand simply has no leasehold leg-islation. You will not even find that term in the Civil & Commercial Code of Thailand. “Buying property under a leasehold title” is as frivolous as it is deadly wrong. Thai prop-erty law does not know the lease as a real property right, but only rental as a “hire of property” contract. The legal arrangement called “lease” is, at best, a prepaid tenancy contract.

You would not expect that Thailand’s laws provide for a comprehensive protection of a tenant’s interests. This expectation is the reality. A 30-year fully prepaid lease for a luxu-rious villa on a white sand beach in Phuket gives the Australian tenant substantially the same legal protection as a worker from Cambodia, renting his 12-square-meter flat in a ghetto tenement while he works in a sweat shop six-and-a-half days a week in a Bang-kok suburb. 

Does this mean that a “leasehold” results, in Thailand, in a substantially weaker invest-ment structure than freehold ownership? In most cases, yes. Does this mean that there are no ways and means for a reasonable leasehold investment protection structure? No. Thailand’s laws are flexible enough to efficiently secure your place in paradise, even if it is just rented.