Property rights in Bali

There are two main types of ownership in Indonesia: Freehold and Leasehold.

Le Freehold (freehold)

Hak Milik” for Indonesians only

To fully own your own property in Indonesia, you need a title called “Hak Milik”. However, this is reserved for citizens of Indonesian nationality. It is therefore not possible for a foreigner in Bali to own a Freehold property in his or her own name. If you still want full ownership, there’s an alternative: buy via a foreign-owned company: PT PMA.

Purchasing in “PT PMA” accessible to foreigners

If you’re interested in buying freehold property in Bali, one option you may want to consider is setting up a PT PMA. It is a limited liability company open to foreign investment, legally entitled to own property in Freehold.

However, there are a number of steps involved in setting up a PMA PT. The first is to determine the type of business you want to set up, as there are different requirements for different types of business.

Once you’ve determined this, you’ll need to obtain the necessary licenses and permits from the Indonesian Board for the Coordination of Investments (BKPM), then open a bank account in Indonesia and deposit the minimum capital required for your business (IDR 10,000,000,000 or around €610,000).

You’ll also need to obtain a tax number and register with the Ministry of Manpower.

Once your PT PMA is up and running, you’ll be able to buy property in Bali in your company’s name. This can be a useful way of avoiding some of the legal restrictions on foreign ownership of property in Indonesia. However, it’s important to note that there are still some limits to foreign ownership, and you’ll need to ensure that you comply with all relevant regulations.

When buying a villa in Bali, it’s important to work with a reputable real estate agent and lawyer who know the local laws and regulations. They can guide you through the process and ensure that everything is done correctly, especially in the case of a corporate purchase, which is a complex and regulated process.

Click here to read our detailed article on the implementation and benefits of PT PMA in Bali.

Leasehold (equivalent to an emphyteutic lease)

The “Hak Sewa”: a long-term lease

Known as “Hak Sewa”, this long-term lease is usually concluded for a renewable term of 25 years. For the purchase of real estate in Bali by a foreigner, this type of property is a good alternative to Freehold, as it does not require the creation of a company with a minimum capital contribution. What’s more, the Leasehold is accessible with any type of visa, including the Tourist visa. The only requirement is that you have a valid visa when you go to sign the deeds.

For the duration of the lease, the buyer can resell the property to whomever he wishes, with the remaining lease term. If, for example, the property is resold 6 years after the Leasehold contract is signed, the new buyer will have only 19 years of enjoyment left (if the Leasehold is for 25 years without renewal). So if you’re buying a leasing contract, it’s essential to check that you still have enough years left to be able to take full advantage of the asset. Similarly, when it comes to resale, the more years left on the lease, the greater the value of the property.

The lease can be renewed after 25 years if the contract includes a renewal clause. Beware, however, of the way clauses are worded… which is why it’s a good idea to be accompanied by someone who knows the law, can read contracts in Indonesian and speaks the local language.

Intermediate status for living in Bali: the “Hak Pakai”.

The Hak Pakai is a title deed recognized under Indonesian law, which can be issued in the name of a foreign buyer. The advantage is that you don’t need to buy PT PMA, and it’s transferable to your family/heirs, or to an Indonesian citizen who can then convert it into Hak Milik.

This title, however, is reserved for people wishing to buy to live in Bali all or most of the year, and you will also need a resident visa. You are not allowed to rent out your property with a Hak Pakai. Its initial validity is 30 years, extendable by 20 years, then 30 years, for a total of 80 years.

In summary, if you wish to buy real estate in Bali as a foreigner, you will have access to the following types of property: Leasehold, Freehold purchase via a PT PMA, or Hak Pakai if you only wish to live in Bali without renting.

In most cases, Leasehold will be the simplest and most accessible option. PT PMA can be an alternative if you have sufficient capital, one or more trusted partners and a local expert to support you.

Please do not hesitate to contact us for further information. Our experts are present in both France and Bali to support investors throughout the purchasing process.