“Foreigners cannot own land in Thailand” — if you are considering expanding your business to Thailand, you have almost certainly heard this. The principle derives from the Land Code B.E. 2497 (1954) and remains largely intact today. So how do you secure factory sites, offices, and warehouses? The primary answer is leasing. But Thai lease law contains rules that may surprise those accustomed to Japan’s strongly tenant-protective Lease Act (借地借家法): a hard 30-year cap, a requirement to register any lease over 3 years, and a 2025 Supreme Court ruling that invalidates automatic renewal clauses beyond the initial term.
In Part 4 of the “Thai Contract Essentials” series, we cover the basic structure of Thai leases, the 30-year rule, the 50-year commercial/industrial lease, foreign land ownership restrictions and exceptions, BOI land ownership privileges, superficies and usufruct, and lease-related taxes. Please also see Part 1 (fundamental rules), Part 2 (sale and distribution agreements), and Part 3 (employment vs. service contracts).
Thai Lease Law — The 30-Year Rule and Registration
Definition of a Lease
A lease of property (เช่าทรัพย์สิน / Hire of Property) is defined in Section 537 of the Civil and Commercial Code (CCC): a contract whereby the lessor agrees to let the lessee use or benefit from a property for a limited period, in return for rent. This is structurally equivalent to Japan’s Civil Code Article 601.
The “3-Year Wall” — Why Registration Matters
Section 538 of the CCC provides that a lease of immovable property for more than 3 years must be made in writing and registered at the Land Department; otherwise, it is enforceable only for 3 years.
This is critically important. If you sign a 5-year lease but do not register it, only 3 years are legally enforceable. The lessor can refuse to honor the remaining 2 years, and you have no legal recourse.
Comparison with Japanese law is instructive here. Japan’s Act on Land and Building Leases provides extremely strong tenant protection: a tenant who has taken delivery of a building can assert rights against third parties (Article 31), and landlords cannot refuse renewal without “justifiable reasons.” Thailand has no equivalent tenant-protection regime. Registration is the tenant’s lifeline.
The 30-Year Cap (Section 540)
Section 540 states that the maximum duration of any lease of immovable property is 30 years. Any agreement for a longer period is automatically reduced to 30 years. This is a mandatory provision — it cannot be overridden by contract. Renewal is permitted, but the renewed term is also capped at 30 years.
Lease Survives Ownership Transfer (Section 569)
Section 569 provides that a lease of immovable property is not extinguished by transfer of ownership. The new owner succeeds to the lessor’s position.
However, there is an important limitation: renewal clauses, rights of first refusal, rent-freeze agreements, and similar “personal” contractual terms are generally understood not to bind the new owner automatically. If the property is sold, the tenant may need to renegotiate these terms with the new landlord.
2025 Supreme Court Ruling — Automatic Renewal Clauses Are Void
The Thai Supreme Court ruling of March 18, 2025 (Case No. 4655/2566) delivered an important holding for foreign investors relying on long-term leases.
The Court held that automatic renewal clauses extending beyond the initial 30-year term are invalid and unenforceable. The ruling aims to prevent circumvention of the statutory 30-year cap. Even pre-agreed renewal clauses written into the original lease are unenforceable for periods beyond 30 years.
Renewal requires a fresh agreement after the initial term expires.
This ruling carries significant risk for investors who relied on “30+30” or “30+30+30” lease structures. Automatic renewal clauses offer no legal protection, and at the 30-year mark, lessors have every incentive to renegotiate at market rates. Japanese companies should understand that long-term lease strategies built solely on automatic renewal clauses are legally fragile.
The 50-Year Commercial/Industrial Lease
Lease of Immovable Property for Commercial and Industrial Purposes Act B.E. 2542 (1999)
To address cases where 30 years is insufficient for commercial or industrial purposes, the Lease of Immovable Property for Commercial and Industrial Purposes Act B.E. 2542 (1999) extends the maximum lease term to 50 years. Renewal is also permitted for up to 50 years with mutual agreement.
Qualifying Criteria
The property must fall into at least one of the following categories:
- Located in an area designated for commercial or industrial use under the Town and Country Planning Act
- Located within an IEAT (Industrial Estate Authority of Thailand) industrial estate
- Used for commercial activities with an investment of at least 20 million THB
- Used for industrial activities holding a BOI investment promotion certificate
For foreign lessees (individuals or juristic persons), an additional requirement applies: an investment of at least 100 million THB (excluding the lease cost), brought into Thailand as foreign currency.
Documentation and Procedure
Registration of a 50-year lease requires submission of a business plan covering land utilization, capital amount and sources, number of employees, operational period, and an environmental impact report (where applicable). The lease must be in writing and registered at the Land Department.
For Japanese manufacturers, leases within IEAT industrial estates are typically the most accessible option. These estates offer regulatory clarity and established infrastructure, and they satisfy the qualifying criteria for the 50-year lease.
Foreign Land Ownership Restrictions — The Land Code
The General Restriction (Section 86)
Land Code Section 86 provides that foreigners may acquire land only by virtue of treaty provisions. No such treaty is currently in force. As a result, foreigners (including foreign juristic persons) cannot own land in Thailand as a general rule.
A “foreign juristic person” includes any entity in which foreigners hold more than 49% of shares.
For comparison, Japan imposes virtually no restrictions on foreign land acquisition (the 2021 Act on Important Land Survey introduces only a limited prior-notification system). Thailand’s restriction is often unfamiliar to Japanese companies and easily overlooked.
Nominee Prohibition (Section 96)
Section 96 prohibits acquiring land in another person’s name for the benefit of a foreigner. If discovered, the Director-General of the Land Department has authority to dispose of the land. Using a Thai nominee to hold land for a foreign beneficial owner is illegal, and enforcement has intensified in recent years. For more on this topic, see our articles on nominee crackdown and the April 2026 FBA reform.
Investment Exception (Section 96 bis)
A foreigner investing 40 million THB or more may, with ministerial approval, acquire residential land up to 1 rai (1,600 sqm). The land must be used for residential purposes within 2 years — it cannot be used for business operations.
The Condominium 49% Rule
Condominium Act B.E. 2522 (1979), Section 19, allows foreigners to own condominium units, but only up to 49% of the total saleable area of the entire building. At least 51% must be Thai-owned.
Foreign purchasers must prove that the full purchase price was remitted into Thailand in foreign currency and converted to Thai baht at a Thai bank (evidenced by a foreign exchange transaction form). The 49% cap is calculated by floor area, not by number of units.
BOI Land Ownership Privileges
Investment Promotion Act Section 27
The Investment Promotion Act B.E. 2520 (1977), Section 27, grants BOI-promoted companies the privilege of owning land beyond the restrictions of other laws (including the Land Code), within the scope the BOI Committee deems appropriate for the promoted activity. For an overview of the BOI framework, see our BOI new rules article.
Limits and Requirements
- Office use: up to 5 rai (8,000 sqm)
- Employee housing: up to 20 rai (32,000 sqm), within 10 km of the business premises
- Paid-up capital requirement: at least 50 million THB, maintained throughout the period of land ownership
Land must be used solely for the purpose stated in the promotion certificate. Within 1 year of promotion cancellation or expiry, the land must be sold.
2024 Revision
BOI Announcements 16/2567 and Por. 8/2567 (November 2024) clarified that BOI-promoted foreign companies can directly purchase land in the company’s name, and revised certain land-use conditions. An e-Land online application system was introduced in July 2025.
Sector-specific restrictions also apply: companies in the metals, chemicals, and plastics sectors may only own land if they hold 3 or more promoted projects with a combined investment of at least 5 billion THB.
Superficies and Usufruct — Alternatives to Ownership
Given that foreigners cannot own Thai land, it is important to know the alternatives beyond leasing.
Superficies (สิทธิเหนือพื้นดิน)
Governed by CCC Sections 1410–1416. The landowner grants another person the right to own buildings, structures, or plantations on or under the land. The superficiary acquires ownership of the buildings and can use, dispose of, and profit from them. Maximum duration: 30 years or the lifetime of the superficiary. Registration at the Land Department is required.
This mechanism is used by foreigners who need to own buildings on land they cannot own.
Usufruct (สิทธิเก็บกิน)
Governed by CCC Sections 1417–1428. The right to possess, use, and enjoy the benefits of another person’s immovable property. The usufructuary can use the entire property (land and buildings) but does not acquire ownership. Maximum duration: 30 years or the lifetime of the usufructuary. Registration required. A usufruct terminates on the death of the usufructuary and is not inheritable.
Comparison of Property-Use Options
| Option | Max Duration | Registration | Ownership | Foreign Use | Legal Basis |
|---|---|---|---|---|---|
| Standard lease | 30 years | Required if >3 years | None | Yes | CCC §537–571 |
| Commercial/industrial lease | 50 years | Required | None | Yes (investment threshold) | B.E. 2542 |
| Superficies | 30 years / lifetime | Required | Buildings only | Yes | CCC §1410–1416 |
| Usufruct | 30 years / lifetime | Required | None | Yes | CCC §1417–1428 |
| Land ownership (BOI) | During promotion | — | Full | BOI companies only | IPA §27 |
| Condominium | Indefinite | — | Full | Up to 49% | Condo Act §19 |
Lease-Related Taxes
Stamp Duty, Registration Fees, and Withholding Tax
| Item | Rate | Applies To | Basis |
|---|---|---|---|
| Stamp duty | 0.1% of total rental | All lease agreements | Revenue Code stamp duty schedule |
| Registration fee | 1% of total rental | Leases over 3 years (Land Dept.) | Land Department regulations |
| Withholding tax | 5% of monthly rent | Payments to corporate lessors | Revenue Code |
Calculation Example
For a lease at 100,000 THB/month for 5 years:
- Total rental: 100,000 × 12 × 5 = 6,000,000 THB
- Stamp duty: 6,000,000 × 0.1% = 6,000 THB
- Registration fee: 6,000,000 × 1% = 60,000 THB
- Total (stamp duty + registration): 66,000 THB (1.1% of total rental)
- Monthly withholding: 100,000 × 5% = 5,000 THB
Stamp duty is generally borne by the lessee at the time of contract execution. For total rentals of 1 million THB or more, stamp duty must be paid in cash rather than by affixing stamps. See also the stamp duty overview in Part 1.
Practical Points for Japanese Companies
Choosing the Right Structure
- Short-term (3 years or less) → An unregistered lease is sufficient
- Medium to long-term (3–30 years) → A registered lease is the standard; skipping registration is risky
- Factory (over 30 years) → Explore the 50-year commercial/industrial lease; IEAT estates are the easiest route
- Need to own buildings → Consider superficies
- BOI-promoted business → Explore land ownership under Section 27
Do Not Rely on Automatic Renewal
In light of the 2025 Supreme Court ruling, lease strategies built solely on automatic renewal clauses need to be reconsidered. Renewal requires a fresh agreement, so relationship management with the lessor and contingency planning for non-renewal are essential.
Key Money
Key money (non-refundable upfront payments) is a widespread practice in Thailand, similar to Japan’s reikin (礼金). Disputes often arise when the amount and refund conditions are not documented. Record these clearly in the contract.
Legislative Outlook — 99-Year Leasehold Bill
A bill to extend the maximum lease period to 99 years has been reported as under consideration. As of April 2026, it has not passed the National Assembly, and its timing and final form remain uncertain. While worth monitoring, it is premature to incorporate into current planning.
For dispute resolution clauses in lease agreements — choice of Thai courts vs. international arbitration — see Part 5 of this series.
Key Takeaways — Five Points on Real Estate Contracts
- The 30-year rule and registration — Leases are capped at 30 years (mandatory). Leases over 3 years without registration are enforceable for only 3 years. Thailand has no tenant-protection law like Japan’s — registration is essential
- 50-year commercial/industrial lease — Available for properties in IEAT zones, designated commercial/industrial areas, or with investments of 20M THB+
- Foreign land ownership restrictions — Land ownership is generally prohibited for foreigners. Nominees are illegal. BOI privileges and the condominium 49% rule are the main exceptions
- Superficies and usufruct — Alternatives when land ownership is unavailable. Both capped at 30 years and require registration
- Tax planning — Budget for stamp duty (0.1% of total rental) + registration fee (1%) + withholding tax (5% on payments to corporate lessors)
In Part 5, we will examine jurisdiction and arbitration clauses — the choice between Thai courts and international arbitration, and how to draft effective dispute resolution provisions.
For drafting and reviewing factory, office, and land lease agreements in Thailand, as well as BOI land ownership applications, we provide advice covering both Japanese and Thai law. We work in collaboration with JTJB International Lawyers’ Thai-qualified attorneys. Please feel free to contact us.
This article is for general informational purposes about Thailand’s legal system and does not constitute legal advice under Thai law. For specific matters, please consult a Thai-qualified legal professional. Our firm works in collaboration with JTJB International Lawyers’ Thai-qualified attorneys.