When it comes to leasehold properties in Bali, the good news is that you can lease a property with any kind of Visa, including a tourist Visa. Unlike other forms of property ownership, leasehold doesn't require foreign nationals to register a company or obtain a residence permit in Indonesia. This makes the process much more accessible and straightforward for those looking for leasehold properties in Bali.

Leasehold villa in Canggu.

Photo by Bali Home Immo

In Bali, leasehold ownership grants you full control over the property for a specified amount of time, typically 25 years, although contracts for up to 30 years are not unusual, as well as negotiated extensions of 10-20 years. This flexibility, attractive price, and ease of acquiring a leasehold property have made it a popular choice for foreigners looking to invest in Bali's vibrant property market.

Right to Build (Hak Guna Bangunan/HGB)

On the other hand, if you are considering acquiring a freehold property in Bali through a foreign-owned company, known as a PT. PMA (Perseroan Terbatas Penanaman Modal Asing), a specific visa is required. The title you will get through PT PMA is an HGB (Hak Guna Bangunan) title, which will allow you to fully own property for up to 70 years. The 70 years comprises 30 years of initial validity + 20 years of extension + 20 years of renewal. 

And the great thing about this title is you can pass the HGB title to another company or sell it to Indonesian nationals and convert the HGB title to the Hak Milik title, which makes the property remains highly valuable to Indonesian nationals. You can also buy several properties under the name of the company and use them to operate as a business.

HGB title is excellent to build a villa or apartment complex.

Photo by Bali Home Immo

To acquire a freehold property through a PT. PMA, first, you’ll have to register a new PT PMA or acquire an existing one, you can set up a 100% foreign-owned PT PMA in the Hospitality Management Consulting category for a short-term villa rental or the Real Estate category for a long-term villa rental. You can acquire property in the name of your PT PMA immediately after the company’s Articles of Association have been approved and the company’s tax card has been issued which usually takes around 2-3 weeks.

Second, you must obtain a specific visa called a "KITAS" (Kartu Izin Tinggal Terbatas), which is a limited stay permit. It is important to note that the process of obtaining a KITAS can be more complex and time-consuming compared to leasehold properties. Working with a reputable legal and consulting firm specializing in foreign investments can greatly assist you in navigating through the necessary procedures and requirements.

Right to Use (Hak Pakai)

The Hak Pakai title has some similarities to HGB. Those similarities include:

1. Foreigners need to have a residence permit/KITAS.
2. Ownership validity of up to 70 years, comprises 30 years of initial validity + 20 years of extension + 20 years of renewal.
3. Family can inherit the title
4. Can be sold to Indonesian nationals and converted to Right to Own title (Hak Milik)

Besides those similarities, the Hak Pakai title doesn’t require you to own a PT PMA and can be bought individually. However, several limitations made many foreigners not choose this title:

1. Hak Pakai title only let you own land that has a building on it.
2. Limitations to operating as a business
3. A minimum property value of 5 billion rupiahs for a building built on land, and 2 billion rupiahs for an apartment.
4. Can only buy a single property.

Right to Own (Hak Milik)

Hak Milik title is hereditary, permanent, and valid for a lifetime. Basically, the Right to Own is the strongest property title that people can have over land in Indonesia.

A Hak Milik title can be transferred to another party through inheritance or purchase. However, Hak Milik is only owned by Indonesian citizens and legal entities that have met the requirements.

Only Indonesian citizens can own Hak Milik title.

Photo by dashu83 on Freepik

Foreigners who acquire property rights by inheritance without a will or by marital property mixing, as well as Indonesian citizens who have property rights but lose their citizenship, must relinquish their property rights within one year of acquiring the rights or losing their citizenship.

In summary, if you are interested in leasehold properties in Bali, you can proceed without needing a specific visa. The leasehold agreement, which grants you temporary ownership, can be established without the complexities associated with obtaining a residence permit or registering a company. However, if you have your sights set on acquiring a property through a PT. PMA, it is crucial to ensure that you meet the necessary visa requirements and comply with Indonesian regulations.

If you’re inspecting land that has no road access to it, then you should ensure that you have adequate space to build your own road or you might have to enter an arrangement with your neighbor to get shared access to an existing road. Consulting with a local real estate agent can help ensure that you are aware of any potential issues and can take the necessary steps to secure access to your property. Our team of consultants is available to assist with any concerns you may have regarding road access and other property-related issues in Bali.

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Verify the tax rules applicable for Bali real estate transactions 

It's important to be aware of the tax rules when it comes to Bali real estate transactions. If you purchase freehold land, then you must pay land and building acquisition tax which amounts to 5% of the purchase price. You can read more about the tax and other necessary info about Bali property regulation here.

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Not being mindful of zoning restrictions when purchasing property in Bali 

All land in Bali is subject to zoning law which regulates the kind of activities and development that you can do on it. The zones that you will commonly encounter are Pemukiman (residential), Pariwisata (touristic), Pemerintah (governmental), and Pertanian (agriculture, commonly referred to as green zone). A reminder you might want to note, it is not possible to obtain building permits for land located in a green zone.

Keep in mind that the zoning of a given area can change from time to time, and the best way to check it is to contact the local government office of the area.

To ensure that your intended activities align with the zoning regulations, it is recommended to seek the guidance of experts. At Bali Home Immo, we can assist and introduce a legal advisor that will help navigate the zoning regulations in Bali and advise you on the appropriateness of the zoning for your planned activities.

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Not having the right real estate partner to carry out proper research

When it comes to purchasing land in Bali, you want to make sure you have a reliable and experienced real estate partner on your side. This person should be knowledgeable about the local market trend and be able to carry out proper research on your behalf to make sure you're making a profitable investment. A good real estate partner will also be able to negotiate on your behalf, with real-case experience in the same location as your intended property, all of this to make sure you get the best deal possible.

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Not choosing the right legal partner & notary 

Anything legal-related can easily become a headache without the right partner. That is why choosing a legal partner with experience is the most important for having crystal clear due diligence on your land. This includes drawing up contracts, reviewing title deeds, and making sure the transaction complies with all relevant laws and regulations, as we have mentioned in the previous list.

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Avoiding these five common mistakes will ensure your experience purchasing land in Bali is smooth and stress-free. As Canggu's first real estate agent, our team of experts has been helping property seekers for over 13 years find their ideal home and investment in Bali. We invite you to schedule a consultation with us for expert guidance and support.

Disclaimer: The information contained in this content is intended for general informational purposes only and should not be considered legal advice. Readers are strongly advised to seek professional legal counsel for any specific questions or concerns regarding the purchase of land in Bali, including but not limited to tax and zoning regulations. The author and Bali Home Immo shall not be held responsible for any consequences or damages arising from the reliance on the information provided in this content

1. Right to Use (Hak Pakai): Foreigners holding a temporary or permanent residence permit (such as KITAS or KITAP) can acquire a 'Hak Pakai' title. This grants the right to use and reside on the land for an initial term of 30 years, extendable for an additional 20+20 years, totaling up to 70 years. It's important to note that 'Hak Pakai' is only applicable to land with existing buildings and cannot exceed 2,000 square meters in size.
    
2. Right to Build (Hak Guna Bangunan - HGB): Foreign investors can establish a foreign-owned limited liability company, known as a PT PMA, to acquire the 'Hak Guna Bangunan' title. This allows the company to construct and own buildings on the land for an initial period of 30 years, also extendable for an additional 20+20 years, totaling up to 70 years. While the PT PMA holds the rights, the land remains under state ownership.
    
3. Leasehold Agreements: Foreigners can enter into lease agreements with Indonesian landowners. Depending on the agreement, lease terms typically range from 25 to 80 years. While leasehold does not confer ownership, it provides long-term usage rights, making it a popular option for foreign investors.
    

Legal Considerations and Due Diligence

Investing in property in Bali requires careful navigation of legal frameworks to ensure compliance and protect one's investment:

- Avoid Nominee Arrangements: Some foreigners attempt to bypass ownership restrictions by using Indonesian nominees to hold the 'Hak Milik' title on their behalf. This practice is illegal and offers no legal protection, posing significant risks to the foreign investor.
 

- Conduct Thorough Due Diligence: Before purchasing property, it's essential to verify the land's legal status, ensure the seller's ownership rights, and confirm that all taxes and fees are paid. Engaging legal professionals can help navigate these complexities.

While direct freehold property ownership in Bali is not accessible to foreigners, alternative legal avenues exist to invest in the island's real estate market. By understanding and adhering to Indonesian property laws, conducting thorough due diligence, and seeking professional guidance, foreign investors can securely and legally acquire property in Bali.

By leveraging these resources, prospective investors can better understand the legal landscape and make informed decisions when considering property investments in Bali.