How to buy property on Bali as a foreigner

Buying property on Bali as a foreigner

Bali hits top – 10 of most popular islands of the world several years, which attracts more foreign investors. Since 2008 the number of foreign investors buying property on Bali increase instantly 5% – 10% every year. The property prices also show constant growth despite on all world economic crises for the last 10 years.

The most common practice for foreign investors to acquire property using a local individual nominee, which gives the foreigner essentially no protection over their investment and it is illegal.

As stated in the regulation of foreign property ownership, Government Regulation (PP) No. 103 issued late December 2015, there are several conditions that must be met, and listed below are some requirements that foreigners must fulfill to be able to buy property in Indonesia.

In this article we will show how to buy property on Bali safe and legal.

Buying property under local company

The foreigner can set up the 100% foreign-owned company (PT PMA) and acquire the ‘Right to Build’ (Hak Guna Bangunan) license. The right to build or construct on land is valid for 30 years. This can be extended for an additional 20 years, and even for another 30 years after that, totally 80 years.

If you wish to learn more about PT PMA companies, read our article – setting up a foreign company in Indonesia. The process usually takes 6 – 10 weeks in Bali and our consultants will handle the process completely.

Buying property on Bali under Hak Pakai or “Right to use”

Foreigners eligible to own houses in Indonesia for the designated period are those non-Indonesians who live or work in Indonesia or in other ways bring advantage to the country (for example investors). The foreigners must be a resident or domiciled in Indonesia and therefore must hold a limited stay permit (KITAS) or a permanent stay permit (KITAP) to acquire a Hak Pakai title.

Hak Pakai title is the only registered form of entitlement over land that can be granted to a foreign individual that can be evidenced by a land certificate reflecting the name of the foreigner and the term on the certificate which serves as formal evidence of this form of ownership right. This title can be sold, gifted, exchanged and/or bequeathed, unless the deed of conveyance specifies otherwise, but under a Hak Milik title, it cannot be used in the form of a mortgage.

On 28 December 2015 this new regulation came into effect according to the statement on the website of Indonesia’s Cabinet Secretary: the expats can now buy either a landed house or an apartment in Indonesia. However, there are certain requirements and conditions that are important to take into consideration. Based on the new regulation an expat can buy a landed house under the right-of-use category for an initial period of 30 years. After this period, the foreigner can extend the ownership twice, once by 20 years and then extend it by a further 30 years (hence ownership can reach a total of 80 years). Moreover, ownership of the house is inherited by the foreigner’s offspring.

Leasehold (Hak Sewa)

The leasehold (Hak Sewa) – the easiest and the cheapest way to own Bali property safe, and it will be under your name. If the property owner wishes to sell the property during the leasehold period or if he dies, the leasing contract last until the expiration date and nobody have the right to terminate it. But please make sure to write down these sentences in the leasing contract and register it at Notary.

Buying property on Bali: Summary

Whichever method you choose for buying a property on Bali, Your Villa Management can guide you through the process from beginning to end to help make the transaction as easy as possible for you.

Foreigners should also thoroughly understand and carefully select the choice of property title they are buying into. Is it a Freehold, Right of Use or Leasehold? Our professional team can help guide investors through every detail, making their dream of owning a property on Bali become a reality.

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