FAQ
Property Ownership Rights for Foreigners in Bali, Indonesia
Bali, Indonesia, stands as a tropical haven, luring millions of tourists annually with its picturesque beaches, verdant jungles, and vibrant cultural scene. It’s no wonder that numerous foreigners are eyeing Bali as a potential investment destination, either for property ownership or as a second home. In this article, we’ll dive into the various ownership options available for foreign investors looking to enter Bali’s real estate market.
Before delving into property ownership in Indonesia, let’s examine the global landscape of property ownership. Worldwide, two primary forms of property ownership prevail: freehold and leasehold. Freehold ownership grants absolute and indefinite ownership of a property or land, whereas leasehold ownership entails possessing rights to a property for a fixed period, which can range from several years to several decades. Many countries offer both forms of ownership.
For instance, in the UK, leasehold ownership is prevalent, particularly for flats and apartments where the property’s freehold is held by a landlord. Under this arrangement, leaseholders typically hold rights to the property for 99 to 125 years. The US also features leasehold ownership, though it’s less common compared to the UK, and leasehold terms can vary in duration.
While freehold ownership is often expected when purchasing property, leasehold arrangements can extend over numerous decades, leading some to mistakenly assume leasehold ownership as equivalent to freehold.
Now, shifting our focus to property ownership in Indonesia, both freehold and leasehold ownership are common, along with a third form of ownership resembling leasehold. However, restrictions exist concerning which ownership rights foreigners can obtain. Below, we’ll explore these three ownership options in Indonesia:
Freehold (Hak Milik)
Freehold ownership rights in Indonesia are exclusively reserved for Indonesian citizens. Some foreigners have circumvented this restriction by utilizing Indonesian nominees to secure freehold properties on their behalf. However, this approach is legally precarious, as the nominee holds full ownership rights and can assert ownership at any time.
Leasehold (Hak Sewa)
Leasehold ownership is available to both Indonesian citizens and foreigners, even those lacking residency status in Indonesia. This arrangement involves an Indonesian freehold landowner leasing their property to a buyer for an initial period, renewable upon expiration. Leasehold rights offer substantial legal protection to the leaseholder, allowing them to sell or bequeath their rights.
In Bali, leasehold agreements typically span 25 to 30 years, extendable through purchasing additional years from the freehold owner. While leasehold durations aren’t legally restricted, it’s customary to maintain them at 25 years. The affordability of leaseholds—often a fraction of freehold costs—makes them an appealing option for investors seeking robust returns.
Right to Use (Hak Pakai)
Hak Pakai, akin to Right to Build (Hak Guna Bangunan or HGB), grants ownership rights to foreigners. When a freehold property is sold to a foreigner, it’s converted to Hak Pakai ownership, reverting to freehold if sold back to an Indonesian. This ownership entails an initial 30-year term, extendable for 20 years, with a maximum total ownership period of 80 years.
However, acquiring property under Hak Pakai ownership involves challenges for foreigners. Establishing an Indonesian limited liability company (PTPMA), a prerequisite for Hak Pakai ownership, demands substantial investment and ongoing administrative obligations. Additionally, Hak Pakai property tends to be significantly costlier than leasehold property, lengthening the payback period.
Despite these hurdles, some foreigners opt for Hak Pakai ownership due to its predictable extension process.
Regardless of the chosen ownership method, seeking professional guidance throughout the process is imperative. Many foreign buyers encounter pitfalls when purchasing property in Indonesia without proper due diligence. Beyond ownership rights, factors such as land zoning and permitted activities must be considered to ensure the property aligns with its intended use. At Uthara Property, we not only facilitate a seamless purchasing process but also offer comprehensive guidance on all aspects of your investment, ensuring informed decision-making.
Yes, absolutely! Foreigners are legally allowed to fully own leasehold properties in their names in Indonesia. You don’t need to reside in Indonesia, obtain a visa, or have residency status to do so. You can purchase a leasehold property and have it completely under your name. For more information on property ownership rights for foreigners in Indonesia, we recommend reading our comprehensive guide on the topic.
The villa prices include a 25-year leasehold period starting after construction is completed, ensuring no time is lost to construction. Additionally, you can extend the leasehold to 30 years by purchasing a 5-year extension at a fixed price ranging from EUR $7’000 to $10’000 for 1 to 3-bedroom villas.
In Bali, leaseholds rarely expire as extensions provide continuous income for Indonesian landowners. There is a possibility to extend the lease at prevailing market rate.
Moreover, you have the flexibility to sell your leasehold property at any time, offering options and flexibility throughout the lease period.
Our villas are available exclusively as leaseholds. It’s crucial to note that foreigners are not allowed to own freehold properties in their names in Indonesia. To acquire a freehold property, you would need to establish a company with a minimum investment of approximately USD $630’000. However, this would require converting the freehold into a time-limited ownership right, with extensions needed from the government for up to 80 years to retain ownership.
We generally advise against foreigners pursuing the freehold option due to the high costs and additional expenses, which significantly reduce the Return on Investment (ROI) compared to leasehold properties. For a more in-depth understanding of property ownership rights for foreigners in Indonesia, we recommend reading our detailed guide on the subject.
Our payment plan enables you to pay in five installments over the construction period, rather than paying the full amount upfront. The current payment plan is outlined below. Please note that while there is some flexibility to adjust the installment percentages, doing so may increase the price of your villa. Full payment is required by the construction completion date in August 2026.
- Payment 1: 25%
- Payment 2: 25%
- Payment 3: 25%
- Payment 4: 20%
- Payment 5: 5%
Unfortunately, there are no financing options available for foreigners in Indonesia. You will need to secure financing in your home country before purchasing a villa. However, we do offer a payment plan that allows you to pay in 5-6 installments.
Yes, construction began in September 2024, and the entire complex is scheduled to be finished by August 2026.
Extended 5-year warranty: We provide a 5-year warranty, which exceeds the usual one-year warranty standard in Bali. By adhering to stringent building standards, we are able to confidently offer this extended warranty, guaranteeing your peace of mind.
Yes, indeed. The villas are delivered complete with all the necessary items for your everyday needs. Each villa is meticulously furnished with essential items, including sofas, bedsheets, and cutlery. Our purchase contracts outline a detailed list of all furnishings and appliances included with each villa.
The estimated ROI of 20%+ is based on thorough estimations, utilizing comprehensive data analytics of the current average performance of modern, professionally managed villas in Pemuteran and surrounding area. It’s important to note that ROIs should be considered as long-term averages and may fluctuate in the short term, with certain months outperforming others.
Our estimations offer a realistic projection of the potential returns from your investment. Nonetheless, we advise taking a long-term approach to investing to fully leverage the potential benefits of your villa investment, particularly in this emerging location that is still in the early stages of development. As the area progresses and matures, we anticipate even greater opportunities for value appreciation and enhanced returns in the future.
Not necessarily. You do not need a local bank account in Indonesia to receive your rental income. We provide the convenience of transferring villa rental revenues directly to international bank accounts. However, if you prefer to have a local bank account, we can assist you with the process.
Certainly! We provide comprehensive villa management services, including premium rental management, for all our developments. When you invest in one of our villas, you can trust us to handle all aspects, ensuring a seamless and stress-free experience for you. Find out more about our villa management services.
Reach out to us to secure your villa reservation worry-free for up to 14 days with just a EUR 2500 refundable deposit as you review the villa contracts. If you’re satisfied with the contracts, we’ll proceed to sign the agreements and send you the invoice for the initial deposit. If not, we’ll refund the reservation deposit to you.
Certainly, you can purchase a property remotely. We provide comprehensive legal support to ensure a seamless and secure property acquisition process.
No, it is not mandatory to establish a company in Indonesia to purchase a villa; you can buy it under your own name. However, there may be instances where setting up a company could be advantageous. For example, if you intend to expand your property portfolio in Indonesia or have specific investment objectives.
We recommend discussing your plans with us so that our team can offer expert advice tailored to your individual circumstances and goals. Whether you opt to purchase under your name or explore the possibility of setting up a company, we are here to assist you through the process and ensure a seamless experience.