buying a property

Buying a Property in Bali as a Foreigner

img Adiel Ananda | January 19, 2023

As a marketer at Bukit Vista, a property manager in Bali for 130+ properties. I know firsthand that buying a property in Bali as a foreigner can be a complex process, thankfully our community experts of real estate agents and legal advisory service have taught us all we need to know to buy a property in Bali.

So with the right knowledge and preparation, it is definitely possible to buy a property in Bali. Here are some steps to help guide you through the process. 

So, can a foreigner buy a property in Bali, Indonesia?

A foreigner cannot directly own land in Indonesia, but they can own a building on land that they lease from the government or a local owner. There are generally 2 ways to acquire this:

Freehold ownership

also known as hak milik, is the most common form of property ownership in Indonesia. It grants the owner full ownership rights to the property, including the ability to sell, lease, or transfer the property. Freehold properties can be held by both Indonesian citizens and foreigners, with the latter being able to own the property through a local nominee or a local company.

One of the main advantages of freehold ownership is the ability to transfer or sell the property at any time. This makes it a good option for those who plan on living in the property for an extended period or for those who plan on renting out the property as an investment.

Leasehold ownership

also known as hak sewa, grants the owner the right to use and occupy a property for a specific period of time, usually 20 or 30 years. The property remains the property of the government or the original landowner, and the lease can be renewed at the end of the lease period. Leasehold properties are commonly held by foreigners and are a popular option for those looking to buy property in tourist areas such as Bali.

Leasehold ownership may be a better option for those who plan on using the property as a holiday home or for those who want to avoid the responsibilities and costs associated with full property ownership. However, one of the disadvantage of leasehold ownership is that the property can’t be transferred or sold during the lease period, and the lease is not inheritable. Additionally, the leasehold property owner is responsible for paying property taxes, maintenance, and other costs associated with the property.

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Bukit Vista can help you connect with our trusted real estate partners & legal service for your property investment questions

Do I need to register a PT PMA ?

No, it is not necessary for foreigners to register a PT PMA (a foreign-owned limited liability company) to acquire a property in Indonesia. However, it is one of the safest ways that a foreigner can own property in Indonesia, as PT PMA can own land and property through a local nominee or a local company.

As a foreign national, you cannot directly own land in Indonesia, but you can own a building on land that you lease from the government or a local owner. You can do this by obtaining a Hak Guna Bangunan (HGB) or Right to Build and Own. This type of ownership allows you to construct and own a building on a piece of land, but not the land itself.

PMA (Penanaman Modal Asing)

PMA stands for “Penanaman Modal Asing” in Indonesian, which translates to “Foreign Capital Investment” in English. It refers to a company that is fully owned by foreign investors and operates in Indonesia.

PMA companies are established in Indonesia to conduct business activities and are governed by the Indonesian laws and regulations for foreign capital investment companies. These companies are established under the Indonesian law No. 25/2007 on Investment, and must be registered with the Indonesian Investment Coordinating Board (BKPM) for approval.

Hak Guna Bangunan (HGB)

Hak Guna Bangunan (HGB) is a form of land ownership in Indonesia that allows the holder to construct and own a building on a piece of land, but not the land itself. It is granted by the government for a period of 25 years and it is renewable for another 25 years. It’s a popular option for foreigners looking to buy property in Indonesia, as it allows them to own a building on land that they lease from the government.

It’s important to note that HGB holder must pay property taxes and other costs associated with the building and maintenance of the property, and they can’t transfer or sell the property during the lease period.

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bali treasure property - Bukit Vista real estate agent partners

But what are the steps buy a property in Bali?

  1. Research the market: Before making any decisions, it is important to research the Bali property market to get a sense of prices, locations, and property types. This will help you to determine your budget and narrow down your search.

  2. Find a reputable real estate agent: Finding a reputable real estate agent with experience in helping foreigners buy property in Bali is crucial. They will be able to guide you through the process and help you to navigate any legal or cultural differences. Thanfully we have researched which real estate agents are reputable from our community experts to help you

  3. Get a local sponsor: As a foreigner, you are not allowed to own property outright in Bali. You will need to have a local sponsor, such as a local Indonesian citizen or a local company, to hold the property in their name. Your real estate agent should be able to assist you with this process.

  4. Get a property survey: Before making an offer on a property, it is important to get a property survey to ensure that the property is free from any legal disputes or encumbrances. This will also help to ensure that the property is structurally sound and meets any zoning requirements.

  5. Hire a lawyer: Hiring a lawyer with experience in property law in Bali is essential. They will be able to guide you through the legal process and ensure that all the necessary documents are in order. Not sure where to find one? Our advisory service partners are here to help you.

  6. Sign the purchase contract: Once all the necessary steps have been completed, you can sign the purchase contract and transfer the funds to the seller.

  7. Get your property registered: After the purchase is complete, it is important to register the property in the name of your local sponsor. Your lawyer will assist you with this process.

  8. Keep all the paperwork: Keep all the paperwork, such as the purchase contract, property survey, and registration documents, in a safe place.

By following these steps, you will be well on your way to buying a property in Bali as a foreigner. It’s important to be aware that the process can take longer than in other countries and to be prepared for unexpected costs. But with the right preparation and guidance, you can make your dream of owning a property in Bali a reality.

Heritage Bali - Legal consultation for property law in Indonesia (Bukit Vista Partners)

Hopefully, this article answers some of your questions on the process of buying a property in Indonesia for foreigners. If there are still some unclear things, don’t hesitate to contact us for a free consultation. We can offer you property investment advice in Bali to optimize your returns and manage your property hassle free.

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