Buying property in Bali can be confusing between all the different articles you can read. This article sheds light on how to buy a property in Bali and Indonesia and how to proceed.

Key Takeaways

  • Foreigners can securely invest in Bali real estate through leasehold, Hak Pakai, and HGB titles, with each option offering unique benefits.
  • Investors must navigate legal aspects diligently, such as setting up a PT PMA company for legal entity status, performing due diligence, understanding taxes and fees, and working with real estate professionals to ensure a secure and profitable purchase.

Understanding Property Ownership Options in Bali

villa for property investment in Bali

It can be challenging to understand how property ownership works in Bali when buying property in Bali, but being aware of the options set up for you as an investor is crucial. Leasehold, Hak Pakai (right to use), or HGB (right to build) are options available for foreign buyers depending on their price and income level as well as their needs. Only Indonesian citizens can hold land under Hak Milik when buying property in Bali. This knowledge also aids investors in making smart decisions about buying property in Bali.

1. Leasehold Properties for Foreigners

Leasehold properties provide foreigners with a reliable and stable option for investment. Individuals, Foreigners or companies can lease a property. The party selling the leasehold is called Lessor while the buyer is called Lessee.

  • A leasehold has no maximum duration as a court in Jakarta has recognized a leasehold for 100 years. Historically, buyers have been looking to buy a leasehold for a period of 25 to 30 years, although some can request a shorter or longer duration.
  • A leasehold can be signed in front of a notary or between 2 parties without a notary
  • A leasehold is a private contract between two parties. The clauses have to respect the Indonesian regulation.
  • A leasehold contract should be reviewed by a legal or lawyer to make sure all clauses are protecting your rights.

On a leasehold, the buyer doesn’t become the owner. The owner is still responsible for the land and building tax. The buyer has to make sure each clause on the contract cannot be used to cancel the agreement.

2. Hak Pakai: Right of Use for Foreigners

Hak Pakai is a property ownership structure that permits foreign nationals holding a KITAS or KITAP to acquire property in Bali, but only on the condition that the property already has an existing building. This certificate does not allow you to buy bare land, and the property must meet a minimum value that varies from province to province. The first piece is a 30-year term, with 80 years of…

3. HGB Title for Commercial Use

Foreign-owned companies (PT PMA) are permitted to hold the Hak Guna Bangunan (HGB), which is the highest property title for them. HGB is different from a leasehold agreement in that it gives the development right, including the right to resell, transfer, or mortgage the property. It is for a 30-year term, extendable to 80 years, making it ideal for those buying commercial properties or an apartment as part of a Second Home Visa.

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Legal Aspects of Buying Property in Bali

Real Estate

Navigating through the legal intricacies of acquiring property in Bali requires adherence to crucial procedures for people looking to secure their property purchase in Bali.

  • Secure a proper offer with a proper contract
  • Undertaking thorough due diligence
  • Establishing a PT PMA enterprise if you want to do business with your property and apply for a Vila license to list your property on Airbnb
  • Sign a leasehold or purchase agreement and review your contract with a third party to ensure the contract does not favour one side. It is a crucial step, especially on a leasehold.

Secure your contract

Most issues result from a wrong contract or misunderstanding. The initial offer is the basis of the relationship and the rest of the process. Reviewing a leasehold contract is crucial. The language barrier, even with a notary, can lead to unpleasant situations.

Optimize your tax exposure

Creating a PT PMA (Perseroan Terbatas Penanaman Modal Asing) helps you to acquire a leasehold or HGB but it also helps you to optimize your tax exposure and make your business and investment legal.

  • The inclusion of no less than two shareholders
  • An allowance for entirely foreign-owned enterprises in the domain of real estate
  • A director and a commissioner

Setting a PT PMA company helps you to optimize your taxation and get a better Return on Investment (ROI) and secure your property.

Due Diligence and Property Verification

Conducting due diligence and confirming the validity of property are essential components in acquiring real estate. This includes:

  • Verifying that the seller is legally allowed to sell the property
  • Verifying liens or encumbrances on land title
  • Confirming that there are no active legal disputes regarding the land
  • Verified the clear and legal owning of the property
  • Verifying that the size of the land corresponds to what’s mentioned on the title
  • Soil test being made to make sure land can be constructed
  • Getting a proper road access agreement
  • Prevent future conflicts over land boundaries or ownership

Indonesia classified the land and properties on different zoning. Checking the zoning can influence how you can build and licenses you can get, specially if you are willing to have a license for Airbnb or a restaurant, Hotel etc.

Taxes and Fees Involved

Freehold

Under license property regulations, in freehold property transactions, sellers are subject to the PPH tax of 2,5%, whereas buyers should pay a 5% BPHTB tax according to the government valuation. Owners also pay a yearly 0.5% Property Tax (PBB).

Leasehold

Non-resident lessors must pay a lease tax of 20%, while those with a KITAS only have to pay 10%. Other costs such as notary (0.5% – 0.75% of the transaction value) and legal costs to prepare documentation.

Working with Real Estate Professionals

Working with real estate experts significantly eases the process of buying property within the Bali real estate market. These professionals, including agents and property management firms, can help you find and secure properties in Bali, offer informed advice, and help you optimize your investment outcomes.

How to Pick a Good Real Estate Agent?

When it comes to property purchase in Bali, you have to choose a Real estate agent you can count on. Check for a property broker certificate and AREBI membership to verify their credentials, which ensures professionalism and legitimacy.

Knowledgeable and experienced agents guide you through the buying process, helping you make an educated decision on every step of the way. Always verify their legitimacy by viewing their

Property Management Services

Property Management Services

For investors who are not permanent residents in Bali, professional property management is a vital service to maintain their property in the best condition. A Bali property management company provides comprehensive services like:

  1. 24/7 guest support
  2. Training, recruiting, and supervising staff
  3. Managing property expenses
  4. Services such as web development and media production

To maintain transparency, these companies send monthly profit and loss statements to villa owners. Good management enhances satisfaction among guests, increases occupancy rates, and increases rental revenue, making it an intelligent option for property owners.

The Most Attractive Places To Invest in Bali (Recommended by Local Real Estate Experts)

Seminyak – Legian

Seminyak and Legian are still highly requested places in Bali, recognized for their high illumination & nightlife. Its variety of restaurants, hotels and entertainment attracts travelers of all ages. It is a regular stop for short stays, and its closeness to the airport keeps demand for renting and property tenure high;

Canggu – Pererenan

A hotspot for digital nomads, influencers, and expats, Canggu is the hottest spot in Bali. Seminyak has little land left for sale and so Canggu remains an area where you can still see investment with strong occupancies. Development is pushing north, making Pererenan and surrounding areas such as Seseh and Cemagi increasingly desirable. Traffic or not, Canggu is still the hottest place to invest in property.

Bukit Peninsula (Uluwatu – Bingin – Balangan)

The Bukit Peninsula is growing quickly, with Uluwatu, Bingin, and Balangan vying for prime real estate. Fabulous beaches, a burgeoning tourism industry, and high occupancy rates make this area prime for investment. Bingin is serene with little traffic, while Balangan is up-and-coming as an area for development.

Ubud

(Ubud is Bali’s cultural and wellness center and has a steady stream of tourists, including honeymooners and wellness travelers.) Property investment is stable here, but buyers should be mindful of green zone restrictions that stop construction. This is likely to result in a strong occupancy rate for Ubud as Indian tourism continues to increase ahead of FDI — providing a solid long-term investment to be leveraged.

Risks and Precautions When Buying Property in Bali

luxury villa in Bali investment opportunities. Optimize property tax

Read also: Things to Know Before Investing In a Property In Bali

Avoiding Nominee Systems

Property ownership for foreign investors in Bali can be attractive when using nominee systems, but such arrangements come with substantial legal hazards. The actual legal owner — the nominee — may impede sales or exert control over the property, potentially resulting in the investor losing their property and savings if complications arise from the nominee arrangement.

Nominee agreement is illegal in Indonesia

The involvement of a nominee system adds complexity to property dealings due to the necessary cancellation of these agreements. This introduces extra layers of difficulty and expense. The nominee system is totally illegal in Indonesia and can conduct criminal and civil sanctions.

Buying a Pre-owned Property Vs Buying Off Plan

In Bali, there are two options for investors: either buy second-hand or enter into off-plan new projects. They are cheaper initially and allow customization, and if they are being completed in upcoming years, potentially appreciate in value. Conversely, old properties can produce faster rental returns and represent a more predictable investment; however, they may also be more difficult to sell, particularly because they often come with only restricted leases.

Read also: Top 5 Investment Opportunities in 2025 in Bali

SnC : Cultural and Environmental Considerations

In addition to the financial side, investors need to take into account Bali’s cultural and environmental laws. New developments are limited near temples or holy sites, and local customs must be observed. Following Building Codes: An establishment in Bali’s estate market.ID: Following building codes will also ensure that a new establishment is executed responsibly.Retaining lifelong and ultimately profitable investments in Bali.ID: Following building codes will guarantee responsible and ultimately profitable investments in Bali.

Summary

Investing in Bali’s property market offers exciting opportunities for foreign investors. From understanding the various property ownership options and navigating the vibrant property market to dealing with legal aspects and working with real estate professionals, informed decisions are the key to success. Being mindful of cultural and environmental aspects and understanding the risks and precautions can lead to a harmonious and sustainable investment experience. With the right planning and guidance, your dream of owning a slice of paradise can become a reality.

Frequently Asked Questions

Can a foreigner buy property in Bali?

Indeed, a foreign-owned company known as PT PMA is required to be established by foreigners for the purpose of owning property in Bali prior to making any purchase.

It is feasible for individuals to own property via leasehold or secure it through freehold ownership (HGB)

How much does it cost to buy a house in Bali?

House prices in Bali fluctuate considerably, with the cost being dependent on the specific village where one is looking to purchase.

Is buying property in Bali a good idea?

Indeed, acquiring property in Bali may be considered a wise choice owing to its affordability relative to other sought-after locales. This position it as an excellent spot for investors operating on a modest budget when looking into purchasing property.

What are the popular areas for property investment in Bali?

Seminyak, Canggu, Ubud, Sanur, Nusa Penida, Cemagi, Kedungu, and Munduk are sought-after regions for property investment in Bali due to their promising prospects for investors.

Contact us if you are looking to invest in a property in Bali or book an online meeting with us.