Connect with us


Phuket Property Legal: Collective Leasehold Structures – Overview

Legacy Phuket Gazette



PHUKET: PHUKET and neighboring provinces contain some of the finest villa developments in Thailand. However, under Thai law, foreigners are generally prohibited from owning land. However, they are, as many are aware, allowed to own buildings. Therefore, a common method for foreigners to purchase a villa is to lease a land plot (or plots) from a Thai landowner, and purchase (or construct) the villa.

Thai law permits a maximum registrable lease term of 30 years. At the end of the 30-year term, the lease may be renewed together by the lessor (the landowner) and lessee (the buyer) but such a renewal agreement is by contract only, not pre-registration at the land office. Most land lease agreements for the leasing of land in Phuket’s villa developments contain provisions stating that the lease will be renewed for two additional 30-year terms. As such, a common lease arrangement is 30 years + 30 years + 30 years, for a total of 90 years, thus providing a time period that can be considered “near-freehold”. However, many potential buyers and their international legal counsel question the validity and enforceability of the renewal term.

Challenges of leasehold arrangements

As stated above, a significant drawback with such leasehold arrangements is that there is no legal guarantee that a landowner will actually renew the lease. Thai law does not require such lease renewals. A lessor’s “obligation” to renew a lease is merely a contractual promise. Therefore, if the lessor chooses not to renew the lease, it is a breach of contract, and not a violation of the law per se. The likelihood of a lessor breaking a contractual promise to renew a lease increases when the land is transferred to a third party, as is likely during a 30-year term, since such a third party may (incorrectly) conclude that it is not under the same obligations as its predecessor.

What is more, a lessee’s remedies are limited in the event of a lessor’s breach of a contractual obligation to renew a lease term. To compel renewal, a court action must be initiated. However, the damages that are available regarding a breach of a renewal clause are restricted to damages, and a lessee cannot “force” a renewal.

Collective Leasehold

However, despite the challenges outlined above, a structure is available that can provide greater security for villa owners. The structure is known as “collective leasehold”, where owners, as a group, take a minority shareholding in the landowning company via a corporate entity. Through corporate and legal structuring, the owners would be able to provide their opinions on issues regarding the landowning company. Importantly, this would include renewal of leases.

This structure works by all the owners in a development each owning shares in an offshore (non-Thai) company. Usually, such shareholding corresponds with the land plots leased. In other words, if an owner leases two plots, they would own two shares in the “owners’ company”. This offshore company would then purchase a minority stake in the landowning company.

As such, the owners have a say in the landowning company’s corporate decision-making, especially regarding the development’s land. The end result of the collective leasehold structure is that owners have more control over their own villa investments.

The primary drawback of the collective leasehold structure is that it requires the full consent of the landowner to be implemented. For example, the lessor must agree to allow the lessees to own a stake (even if a minority portion). However, the structure can ultimately be beneficial to landowners, who are often the villa project’s developer, in that greater owner security means a more attractive project to potential investors.


Collective leasehold structures provide owners in villa developments the legal means to have a greater say in their villa projects. Importantly, this means that owners have increased control over the renewal of their leases, thus mitigating a major risk associated with long-term leases in villa developments. For the structure to be successfully implemented, owners must work with the project’s developer or landowner. While such a proposition may seem daunting to many owners, if correctly implemented, a collective leasehold structure has benefits for both owners and landowners. Projects, which do not have collective leasehold structures now, but contain multiple stand alone lease agreements, could be converted to this safer system.

This article was co-written by Desmond Hughes, Deputy CEO, and John Frangos, Senior Associate, of the law firm of Limcharoen Hughes and Glanville.

— Desmond Hughes & John Frangos


Want more from the Thaiger family?

📱 Download our app on Android or iOS for instant updates on your mobile
📝️ Join the conversation on Thaiger Talk - discuss news & life in our Thailand forums
📧 Subscribe to our daily email newsletter
👍 Like/Follow us on Facebook
🔔 Subscribe to or Join our YouTube channel for daily video updates


Join the conversation and have your say on Thailand news published on The Thaiger.

Thaiger Talk is our new Thaiger Community where you can join the discussion on everything happening in Thailand right now.

Please note that articles are not posted to the forum instantly and can take up to 20 min before being visible. Click for more information and the Thaiger Talk Guidelines.

Interested in more property news or buying property in Thailand - check out FazWaz today!

Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Follow Thaiger by email:

Myanmar6 hours ago

Burmese military media outlets say ethnic army killed 25 workers

Thailand8 hours ago

PM Prayut Chan-o-cha says drug suppression should to be a national priority

Thailand9 hours ago

Purchases of fancy street lamps being investigated for possible corruption

Phuket Sandbox July 1st


Thaiger is getting behind local businesses for the restart of tourism in July - up to 50% discounts across all advertising packages in June!

Sponsored by image

Thailand9 hours ago

Thailand News Today | BKK parks re-open… nearly, tropical storm, airport security upgrade | June 14

Thailand10 hours ago

Missing fisherman’s body found in sea off Nakhon Si Thammarat

Coronavirus (Covid-19)10 hours ago

CCSA: We’re out of vaccines

Coronavirus (Covid-19)11 hours ago

Ayutthaya hospital to test all staff for Covid after 18 test positive

Thailand11 hours ago

13 teenagers arrested in Chon Buri for partying, gathering

Crime11 hours ago

Crime Suppression Division seizes dozens of illegal firearms in a series of raids

Crime12 hours ago

Marijuana valued at 10 million baht seized in Nakhon Phanom, 2 arrested

Coronavirus (Covid-19)13 hours ago

Monday Covid Update: 3,355 new cases, provincial totals

Coronavirus (Covid-19)13 hours ago

Almost 100% of teachers and staff vaccinated in Bangkok

Thailand13 hours ago

Almost 8 million register for stimulus scheme, app briefly goes down

Best of14 hours ago

Top 5 best temples in Bangkok

Thailand14 hours ago

Good Morning Thailand | What’s happening in Pattaya, Phuket sandbox, reopening for tourism

Thailand3 months ago

Thailand News Today | Thai Airways in rehab, All go for Songkran | March 4

Tourism3 months ago

Phuket’s nightlife. Yes, bars and clubs are still open | VIDEO

Phuket3 months ago

Thailand News Today | Covid passport talks, Thai Airways heads to court | March 2

Tourism4 months ago

Phuket Thai food treats you need to try | VIDEO

Thailand4 months ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

Tourism4 months ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand5 months ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand5 months ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand5 months ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand5 months ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand5 months ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand5 months ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand5 months ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand5 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand5 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8