Investment: Government Advances 99-Year Property Lease Law to Boost Investment
The Thai government is accelerating efforts to amend the Right-Based Property Act B.E. 2562 (2019), aiming to extend the lease term for real estate from 30 years to 99 years. This legislative push is designed to attract foreign investment, stimulate economic growth, and support key national policies such as the “Housing for Thais” initiative, the Land Bridge project, and land reclamation efforts. The proposed law introduces a novel legal concept known as “right-based property”, which offers a framework for long-term property leases while ensuring assets revert to state ownership after the lease term expires. This article explores the objectives of the law, the significance of right-based property, and its anticipated economic impact.
Understanding Right-Based Property:
Right-based property, as defined under the Right-Based Property Act B.E. 2562 (2019), is a new category of property introduced to enhance the economic utility of real estate in Thailand. According to the Civil and Commercial Code, “property” refers to tangible objects, while “assets” encompass both tangible and intangible items that hold economic value and can be legally possessed. Real estate, or immovable property, includes land, structures permanently affixed to it, and associated property rights. Movable property covers all other assets, including related rights.
Right-based property, however, is a distinct legal construct that refers to the right to use and benefit from immovable property for a specified period, as stipulated in the Right-Based Property Act B.E. 2562 (2019). Unlike traditional leases under the Civil and Commercial Code, which are limited to contractual rights between parties, right-based property can be transferred, inherited, or used as collateral for debt through mortgaging. This makes it a more flexible and economically viable instrument for long-term investment.
To establish right-based property, the owner of immovable property, such as titled land, land with buildings, or condominium units, must apply to the relevant authority, typically the Land Department. The application requires the submission of documents specifying the lease term, which is currently capped at 30 years but proposed to be extended to 99 years. Once registered, a certificate of right-based property is issued, and the property cannot be subdivided or merged with other parcels during the lease term. Any modifications, such as new constructions, revert to the original property owner upon the lease’s expiration, unless otherwise agreed.
Government’s Push for 99-Year Leases:
The Thai government is prioritizing the amendment of the Right-Based Property Act B.E. 2562 (2019) to extend the maximum lease term to 99 years. The amendment aims to remove legal barriers to foreign investment, encourage large-scale real estate projects, and attract high-income individuals and skilled professionals to Thailand.
The government anticipates that the extended lease term will support transformative projects, including:
1. Land Bridge Project: A mega-infrastructure initiative to connect the Gulf of Thailand and the Andaman Sea, fostering trade and logistics.
2. Land Reclamation: Private-sector-led coastal reclamation projects to create new investment zones, with long-term leases incentivizing participation.
3. Housing for Thais: Affordable urban housing schemes integrated with reduced public transport costs (e.g., 20-baht flat-rate fares) to lower living expenses for middle-income Thais.
4. Green Energy Initiatives: Long-term land leases for projects like solar farms, particularly in the Northeast, to produce affordable electricity (estimated at 3 baht per unit) for economic hubs like Bangkok and data centers.
5. Talent Hub Development: Attracting high-skilled global professionals by offering long-term property rights, enhancing Thailand’s appeal as a destination for talent.
Economic and Legal Implications:
The proposed law is expected to yield significant economic benefits while addressing legal loopholes. Key advantages include:
• Increased Foreign Investment: The 99-year lease term aligns Thailand with countries like the United Kingdom, where leases can extend up to 99 years. This makes Thailand more competitive in attracting foreign investors for high-end real estate projects, such as luxury hotels, office buildings, and residential complexes. The influx of capital is expected to stimulate economic activity without funds leaving the country.
• Enhanced Transparency: The law aims to curb illegal practices, such as the use of Thai nominees to bypass foreign ownership restrictions. By requiring assets under the right-based property scheme to be managed by the Treasury Department and revert to state ownership after 99 years, the government ensures national control over land resources, refuting claims of “selling out” the country.
• Support for Diverse Industries: Beyond real estate, the law facilitates long-term investments in sectors like international education (e.g., foreign ownership of international schools) and financial hubs, fostering economic diversification.
• Addressing Demographic Challenges: With Thailand’s population projected to decline to 37 million within 50 years, the law seeks to attract high-skilled foreign workers to bolster economic growth. The extended lease term provides the stability needed to encourage long-term residency.
Safeguards and Conditions:
To address concerns about national sovereignty, the government has incorporated safeguards into the proposed law. Notably, assets under the right-based property scheme will transfer to the Treasury Department upon lease expiration, becoming part of the nation’s sovereign wealth. Agricultural land is explicitly excluded from the program to protect food security and rural livelihoods. Additionally, any property encumbered by mortgages or other rights requires consent from relevant parties before entering the right-based property scheme.
Legislative Timeline:
The government is fast-tracking the amendment process, aiming for parliamentary approval and enactment by 2025.
Conclusion:
Thailand’s push to extend property lease terms to 99 years through the Right-Based Property Law represents a strategic effort to unlock economic potential, attract global investment, and support transformative national projects. By introducing the concept of right-based property, the government offers a flexible, legally robust mechanism to enhance the economic utility of real estate while safeguarding national interests. If enacted as planned in 2025, this law could position Thailand as a leading destination for foreign capital and talent, driving sustainable economic growth in the face of demographic and global challenges.
Author: Panisa Suwanmatajarn, Managing Partner.
Other Articles
- Proposed Amendments to Anti-Corruption Legislation to Align with OECD Standards
- Notification of the Competent Officer on Exchange Control (No. 38) — Draft Amendment
- Thailand’s Proposed Updates to the Non-Preferential Certificate of Origin Framework for Exports to the United States and the European Union
- Thailand’s Expanding Trade Network: Key Updates on FTAs with Partner Countries
- Thailand FDA — Proposed Food Labelling Rules for Prepackaged Foods
- U.S. Tariff Developments Post Supreme Court Ruling