Bali, often called the Island of the Gods, is a paradise for tourists and a hot spot for international investors looking to buy property. With its picturesque beaches, rich culture, and thriving real estate market, it's no surprise that many foreigners dream of owning property in Bali. However, Indonesian law does not allow foreign nationals to own freehold land outright. That said, there are ways for foreigners to invest in Bali’s real estate. This updated 2024 guide provides everything you need to know about how to buy property in Bali as a foreigner.
Can Foreigners Buy Property in Bali?
In short, foreigners cannot directly own freehold property in Indonesia. However, there are legal structures that allow foreigners to purchase property in Bali, such as leasehold agreements, the right-to-use (Hak Pakai) title, or through establishing an Indonesian legal entity (PT PMA). Each option has its pros and cons, and this guide will explain them in detail.
Legal Options for Foreigners to Own Property in Bali
1. Leasehold (Hak Sewa) Agreement
A leasehold agreement, or Hak Sewa, is the most common way for foreigners to buy property in Bali. Under a leasehold agreement, you are leasing the land or property for a specific time period, usually between 25 to 50 years, with the option to extend. While you don’t own the land, you have the right to use the property for the duration of the lease.
Duration: Lease periods generally last 25-50 years, with an option to extend the lease.
Renewal: Make sure your lease includes a renewal clause so you can extend your contract when the lease period expires.
Subleasing: Depending on the contract, you may be able to sublease the property, creating an additional revenue stream.
2. Right-to-Use (Hak Pakai) Title
The Hak Pakai title is another way for foreigners to legally own property in Bali. It’s a right-to-use title issued for residential purposes and can last up to 30 years, with the option to extend for another 20 years.
Eligible Properties: The Hak Pakai title is only applicable to certain types of properties, such as apartments or houses, and must be registered under your name.
Extension: After the initial 30 years, you can extend the title for an additional 20 years, giving you a total of 50 years.
Ownership: You have the right to use and profit from the property during the validity of the Hak Pakai title.
3. PT PMA (Indonesian Legal Entity)
If you’re a foreign investor looking to purchase property for commercial purposes, you can establish a PT PMA (Penanaman Modal Asing), which is an Indonesian legal entity that allows foreigners to own property. This method is ideal for those looking to develop commercial properties such as hotels, resorts, or rental units.
Full Ownership: Through a PT PMA, foreigners can own commercial properties outright.
Business Purposes: This option is suitable for investors looking to generate income through businesses like hotels, resorts, or apartment rentals.
Costs: Establishing a PT PMA can be expensive and involves more legal and bureaucratic procedures compared to other options.
Also read: 7 Tips to Choose The Right Property Agent in Bali