The property committee of the Joint Foreign Chambers of Commerce in Thailand (JFCCT) has submitted a white paper to Dr. Nalinee Taveesin, the Thailand Trade Representative, on the benefits of revising existing Land Department regulations to clearly allow for 60-year leases of real property.
The concern expressed by the JFCCT is that although existing regulations allow for two leases covering consecutive lease terms to be registered at the same time over the same property, the Land Department generally will not register such leases if they each have a term of 30 years. Instead, the lessee would need to wait until the first 30-year lease term has ended before registering the second 30-year lease agreement. This creates uncertainty for investors, as the obligation to register a second 30-year lease may not be legally binding on successors to title. The JFCCT thus recommends revising the Land Department regulations to clearly allow for 60-year leases by permitting the registration of two consecutive 30-year leases at the same time instead of requiring the lessee to wait for the initial 30-year lease term to expire. The JFCCT argues that these revised regulations would encourage foreign investment, assist in the development of Thailand's property market and increase the attractiveness of Thailand's real estate market compared to that of neighboring countries.
In addition to its main proposal to clarifying existing Land Department regulations, the JFCCT also suggests that Thailand's property market could benefit by (i) amending existing laws to allow for 90-year lease terms, (ii) empowering the Minister of the Interior to grant a 100-year lease term for certain residential projects, (iii) allowing for "horizontal" condominiums and increase the foreign ownership limit of condominium projects from 49% to 70%, and (iv) easing the requirements for foreigners seeking permanent residency in Thailand.
Proposals to extend or modify regulations with respect to the maximum lease term for real property have been made before but have not met with much success. The JFCCT's proposal will next be forwarded by Dr. Nalinee to the Thai Cabinet for consideration and we will continue to monitor any developments.