Condo Leasehold VS Freehold, what are the differences? Which type is suitable for us?

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Have you ever heard of Freehold and Leasehold condos? How are the two buildings different? And which type of condo is more worthwhile to buy, including investing and buying to live in? This article has the answer.

Let's understand the properties of each type first.

- Ownership Immediately upon purchase, you can view it for the first time. 100% can resell and change hands.

- Leasehold rights

It is necessary to have a place to rent for a long time with the right to rent for no more than 30 years (the contract may be extended depending on the project) and must be complete and the room must be returned to the owner.

Most condominium projects in Thailand are freehold, with the buyer being the owner of the property. Got the correct title deed Can be resold and exchanged hands. But leasehold condominium projects are found in only 1% in Bangkok. Most of them are located in the heart of the city, Prime Area such as Chidlom, Ploenchit, Witthayu, Lang Suan, Ratchadamri, Siam, Yaowarat, etc.

First, let's understand the meaning of each type of real estate.

- Freehold refers to real estate that is purchased outright. The owner has 100% ownership of the asset and can resell it in the long term.

- Leasehold means real estate that is leased for a long term. You will have the right to rent for no more than 30 years (the contract may be extended). Depending on the project) When the rental contract is complete, the room must be returned to the owner.

who owns land in the center of these towns is a government agency such as the Crown Property Bureau. State Railway of Thailand including other government agencies With the price level of such land being very valuable. Some locations cannot be valued. causing landowners to rent out to private entities The private sector may use such land to develop a residential project. Department stores, hotels, mixed-use projects, etc., and then rent them out for long-term rentals to retail customers.

Who are Leasehold and Freehold projects suitable for?

Leasehold and freehold projects are suitable for different groups of buyers. It is true that most Thai people are more familiar with freehold projects. Buy and then become the owner of the property. Suitable for people who want to buy for their own living or investment, they can do so. This is because the value of land in the city center will increase further in the long run. The room owner can benefit from the investment in many forms. Whether it's for rent or resale. It can also be passed on as an inheritance to future generations. You can get a bank loan with a maximum credit limit of 100% and if the condominium is damaged by various disasters. The owner will receive compensation for the building and land according to law.

However, the price level of Freehold condominiums in the city center zone, for example, the CBD zone, business center. which is in great demand Nowadays, it's starting to be hard to find. and has a very high price, such as Ploenchit or Chidlom The appraised price of land per square wa is 1 million baht, or the actual purchase price may jump to 3.6 million baht per square wa.

Therefore, Freehold condominiums in such zones The project owner must therefore develop it in the Ultra Luxury Segment level, with room prices of tens of millions of baht or more. Some locations may go up to 5-6 hundred thousand baht per square meter, up to millions of baht per square meter. Due to the high costs, it is necessary to develop projects that have potential consistent with the location.

If compared to a leasehold project, even the person who purchases the room will not own the property. Had to rent long term according to contract for 30 years, but found that the selling price of the Leasehold condominium project was 30-40% cheaper than the Freehold project in the same location if you borrowed money from the bank to purchase it. The monthly installment burden will be cheaper. who lived in the same convenient location

The Leasehold project is suitable for those who wish to purchase a home for a certain period of time. Do not want to own the asset forever or pass it on to children, such as the Expat group (Foreigners can purchase Leasehold with no limit on the number of quotas. Unlike the Freehold project, foreigners can only purchase 49%), including investor groups that focus on making profits.

Control section of the project Leasing has a lower average selling price, but without actually owning the room for a long time, the cost of the project is often reduced by following the expiration of the period in which the room must be returned and rented out. or can be resold any longer There is no need to renew the contract. But the new round of commentary may mean that the price level may be even more expensive according to the value of the land. A little has to pay a higher price for the case of concentration and new projects with new powers. The purchase will not be financed in terms of land and buildings like a freehold project.

Each type of project is unique and most importantly, sometimes we only look at the price and value factors of the project. It may not depend on the demands and other conditions of each brand.

Article by: Mr. Pat Panunan Content Creator - Real Estate

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