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 services have taught us all we need to know to buy a property in Bali.
So with the right knowledge and preparation, it is possible to buy a property in Bali. Here are some steps to help guide you through the process.
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Is buying property in Bali a good investment
Investing in property in Bali is a great way to diversify your portfolio. Bali is a popular tourist destination that offers various real estate options like villas, apartments, and land. The tourism industry in Bali is strong, and it attracts millions of tourists each year due to its beautiful beaches, rich culture, and stunning natural landscapes. This creates a high demand for accommodation and can provide property investors with a steady stream of rental income.
Bali’s property market is also advantageous because of its lower cost compared to other popular destinations like Sydney, London, and New York. Bali’s affordable options make it an ideal location for investors who may not have a large capital to invest in more expensive locations.
In addition, the government in Bali has implemented policies aimed at attracting foreign investment, which has resulted in increased interest from foreign investors. Bali’s property market has seen a growing number of property developments, especially in the luxury segment.
What you need to know before buying a property in Bali
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, 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 disadvantages 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.
Do I need to register a PT PMA ?
No, foreigners don’t need 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 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 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 holders 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.
Things you need to know if you want to register a PT PMA
The requirements for establishing a PT PMA in Indonesia are governed by the Peraturan Badan Koordinasi Penanaman Modal Republik Indonesia Nomor 5 Tahun 2019.
Article 6 paragraph (3) of this regulation states that for the establishment of a PT PMA, foreign investors must meet the minimum capital requirements for foreign investment. Currently, the minimum requirement is IDR 10 billion or the equivalent value in US dollars (+/- USD 700,000) of paid-up capital, which generally needs to be set at 25% of the minimum capital requirement (i.e., IDR 2.5 billion or +/- USD 175,000).
The regulation also specifies that at least two shareholders, one of whom must be a foreign individual or entity, are required for the establishment of a PT PMA. The director must be based in Indonesia, and the company must comply with the activities allowed under the Indonesia Investment Negative List.
How to Find The Right Property
Of course, patience is required when looking for the right property. But don’t worry, there are several things you can do to make it easier to find the right property. Here are some ideas to get you started in your search:
Online
You can start your search through Real estate agencies, classifieds websites, social media groups, and online platforms that list properties for sale in Bali. You can use keywords like “villa for sale Bali” or “land for sale Bali” to find listings that meet your requirements.
Local agents
Many real estate agencies in Bali can help you find a property. These agents typically have a wide range of listings and can provide you with guidance on the local property market.
There are several benefits and costs to consider when working with a real estate agent:
Benefits:
- Expertise: Real estate agents are trained professionals with extensive knowledge of the local property market. They can provide you with valuable insights and guidance when it comes to buying or selling a property.
- Network: Real estate agents have a wide network of contacts and resources that can help you find the right property or buyer for your needs.
- Efficiency: Working with an agent can save you time and effort, as they can handle much of the work involved in buying or selling a property, such as scheduling viewings, negotiating deals, and preparing paperwork.
- Legal protection: An agent can help you navigate the legal aspects of a real estate transaction, such as reviewing contracts and ensuring that all necessary documentation is in order.
Networking
If you know people who have already owned property in Bali, they may be able to provide you with leads or recommendations for available properties. Our network of community experts allows us to network with real estate companies that you can contact.
On-site
If you are already in Bali, you can search for properties by driving around and looking for “for sale” signs, or by directly contacting local agents or property developers. This way must be exhausting but you could find a hidden gem property that you couldn’t search through online platforms.
How Much is Property in Bali?
The government has also set a minimum property price limit for foreigners to purchase. This is done to ensure that the property market remains stable and affordable to foreigners. It is possible to obtain a property in Bali for as little as IDR 2 billion for an apartment.
Once you’ve found your dream home, keep in mind that real estate transactions in Indonesia must be conducted transparently and under the supervision of the appropriate authorities. You must also pay for the property in full or your transaction will fail.
What documents are needed?
Once you’ve found your dream home, you must check the property ownership background documents.
This step is critical for ensuring legal ownership of the property you are about to purchase. It will also detail disagreements, debt payments, current property status, and ownership.
The following are important documents that you must verify with the property owner:
- Kartu Tanda Penduduk (Indonesian Identity Card) of the owner/seller
- Kartu Keluarga (Family Card)
- Marriage Certificate or Death Certificate (depending on the circumstances of the couple)
- Original certificate of land ownership
- PBB tax payment, called SPPT PBB
- Owner/seller’s tax number (NPWP)
What are the steps buy a property in Bali?
- 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.
- 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 navigate any legal or cultural differences. Thankfully we have researched which real estate agents are reputable from our community experts to help you
- Get a local sponsor: As a foreigner, you are not allowed to own the 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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.