The leaseholds draft bill, which maintains maximum lease terms of 50 years for commercial purposes and 30 years for other purposes, would also allow lease rights to be transferable and inheritable, a move intended to entice lessees and give a boost to the property market.
The bill would allow those who hold lease rights to sublet, inherit or renovate the building without getting consent from the lessors, said a source at the Finance Ministry who requested anonymity.
Lessees would also be allowed to place the lease rights as loan collateral without the lessors' permission to comply with the Commercial Collateral Act, which helps borrowers, especially small and medium-sized enterprises (SMEs), get better access to funding from financial institutions.
Under the current law, the lease rights are exclusive to each lessee named in the lease agreement, with the lease automatically terminated upon the death of the lessee.
The bill is aimed at providing more flexibility in using property to drive the country's economy and build investor confidence, the source said.
The new law is expected to attract lessees, particularly foreigners, as they are prohibited from acquiring land in Thailand unless they obtain permission from the relevant government authorities, such as the Board of Investment or the Industrial Estate Authority of Thailand. Leasing property is thus the most popular method for them to hold land.
Foreigners are allowed to own units in condominium projects, though foreign ownership must not exceed 49% of the total area of all the units.
The law, if it comes into force, will replace the Lease of Immovable Property for Commercial and Industrial Purposes Act of 1999. The draft bill, which recently received cabinet approval, will be vetted by the Council of State after the public hearing, which runs June 12-16, concludes.
The new law will extend coverage to leasing of buildings located on land that has land title deeds, in addition to vacant land and condos under the current law, the source said.
According to the draft, all leases for land and buildings with title deeds and condominiums must be made in writing. Agreements must be registered with the Land Office or they will be voided.