How can foreigners buy property in Bali?

Did you know that foreigners can buy property in Bali? Despite restrictions in the Indonesian real estate market, many foreigners buy property in Bali, as there are still options available for those interested in investing in Bali property. However, it’s important to approach the process with careful consideration and informed decision-making to maximize your investment. Understanding the available options and developing a well-informed strategy can help you make the most of your investment in Bali real estate.

Can foreigners buy property in Bali?

Foreigners can buy property in Bali but never obtain absolute property ownership. The highest form of ownership is Hak Milik (HM) which can only be obtained by Indonesian citizens. This means foreigners cannot buy freehold property in Bali unless they use a legal entity, such as a PT PMA (Perseroan Terbatas Penanaman Modal Asing). Before buying a house in Bali, understand Indonesian real estate laws to avoid legal problems.

Understanding the real estate laws in Bali

In Bali, it’s essential to know how property ownership works. Freehold and leasehold are the two main types, and each has its own set of ownership rights:

• Freehold (Hak Milik): This is the best way to own property because it gives the person complete control and power over the property. But it’s important to know that freehold is only for people born in Indonesia. This type of holding is not open to people from other countries.
• Leasehold (Hak Sewa): Leasehold is more accessible for foreigners to get hold of. It means renting a house for a set amount of time, which is usually 30 years but can go up to 80 years. During this time, the person who has the lease can use the land, but the original owner still owns it.

In addition to freehold and leasehold, there are two other important titles:

• Hak Pakai (HP): This title gives someone the right to use and gain from someone else’s property. It’s a way to use something legally within specific rules. This is something that some outsiders can do.
• Hak Guna Bangunan (HGB): This title gives you the legal right to build and use buildings on someone else’s land. It is usually given for a set amount of time and can be renewed.

Leasehold is the most popular and sensible choice for foreigners who want to buy property in Bali. Hak Pakai and Hak Guna Bangunan can also be thought about based on the purpose of the land or property.

How can foreigners buy property in Bali?

Foreigners can buy property in Bali in three ways:

1. Indonesian nominee (not recommended): Buy under the name of an Indonesian citizen holding Hak Milik and establish an agreement with the citizen for security. This way is risky and illegal as the Indonesian citizen remains the legal owner.
2. Through a PT PMA (recommended for rental businesses): Establish a PT PMA in Bali to buy or lease property in the company’s name. When buying freehold property in Bali, make sure to acquire Hak Guna Bangunan and Hak Pakai titles. This method is perfect for generating rental income.
3. Leasehold as an individual (recommended for personal use): When using the property for personal use, go for a leasehold property similar to long-term rental agreements. The agreement is usually valid for 30 years and extendable up to 80 years. Hak Pakai title must be obtained for authorized use of the property.

Consider using a PT PMA for rental business purposes and a leasehold for personal use in Bali. Avoiding the Indonesian nominee method due to its legal risks is advisable.

6-Step guide for foreigners to buy property in Bali

How can foreigners buy property in Bali? They can do so by following these six steps.

Step 1: Learn about real estate laws in Bali

Before you start, learn about the different ways to own property in Bali (Hak Milik, Hak Pakai, Hak Guna Bangunan, and Hak Sewa). You can’t obtain Hak Milik (complete control) if you’re not a local. Focus on Hak Pakai or set up a PT PMA and use Hak Guna Bangunan.

Step 2: Choose how you want to buy your Bali property

Foreigners have three options to buy a house in Bali: buy through an Indonesian candidate (not advised and illegal), set up a PT PMA (foreign-owned company), or lease as a foreign individual. A PT PMA or leasehold is the safest and most acceptable way.

Step 3: Establish a PT PMA (if needed)

If you choose to use a PT PMA, you must set up a foreign-owned company in Bali called PT PMA. This lets you buy or rent property in the company’s name and gives you more power over the property. Using a PT PMA is a great way to make renting income.

Step 4: Find a Bali property and conduct due diligence (with a real estate agent)

Choose a property in Bali that fits your needs, wishes, and budget. It’s important to work with a trustworthy real estate agent in Bali and do your research and due diligence to avoid becoming a victim of a real estate scam or fraud.

Step 5: Sign the agreement and pay the taxes

To buy land in Indonesia as a foreigner, you must handle the legal paperwork and understand your tax responsibilities. You might want to hire a tax agent or a lawyer to help you through the process, as there are several taxes you must pay.

Step 6: Get the land titles, certificates, and permits you need

After signing the agreement, you will receive all the land titles, certifications, and licenses you need, such as Hak Guna Bangunan and Hak Pakai. You need these titles and certificates to build on the land or use the property.

Bonus: Obtain residency in Indonesia

You can apply for a temporary residency permit called KITAS to live in Indonesia. This visa in Bali is valid for up to 24 months, and there is also a way to get a permanent residency (KITAP) after living for five years in Bali.

Remember that Indonesia’s real estate market can be complicated, so it’s essential to watch out for scams and know how the law works. Hire a reliable real estate agent who knows the market in Bali to make sure the deal goes smoothly and safely.

Pitfalls to avoid when buying a house in Bali

Due to Bali’s unique charms, many buyers rush to live there and buy property, but they often end up losing. Here are some things to avoid when buying property in Bali so you don’t become one.

Using an Indonesian nominee

It’s not only illegal to buy land in Bali through an Indonesian nominee, but it’s also a terrible idea. Most of the time, this goes wrong and costs the foreigner a lot of money, so we recommend you not use an Indonesian nominee to buy a villa in Bali.

Purchase of land without a land certificate

Bali’s real estate rules are complicated, and more and more foreign buyers want to buy land in Bali. Because of this, government offices are strict about ensuring land deals have the proper land license. To buy land in Bali, you must obtain the right certificates and licenses before building or using it.

Not working with a real estate agent in Bali

Foreigners who want to buy or sell property in a country with different rules should work with a property agent. If you don’t hire the right agency, you could run into legal and financial problems. Check with your real estate agent about the terms and conditions of any deal before you sign it.

Do you want to buy property in Bali?

When you let a real estate agent in Bali assist you, you save time and avoid headaches. Imagine no more hassle in finding the right buyers or tenants, handling paperwork, or negotiating deals. The real estate agent takes property viewings, ensures smooth transactions, and helps you get the best value for your property. You can also seek assistance for just one specific aspect of the selling or renting process.

Interested? Make your real estate journey smoother, and consult with our expert real estate agent to discover the possibilities for your villa in Bali.

Conclusion 

Foreigners can own property in Bali, like a villa for sale in Bali, through different avenues, including leasehold agreements and setting up a PT PMA. These approaches have advantages and disadvantages, which can be best navigated by consulting a reliable property agent in Bali. When aiming to buy or lease a house in Bali, getting expert advice and ensuring that all legal protocols are met is crucial. By doing this and clearly understanding the processes, buying a home in Bali or investing in Bali property can become a good investment opportunity for foreigners.

Bali real estate for sale by owner can also be a beneficial avenue to explore. Whether you are looking to buy an apartment in Bali or a villa, professional guidance can help you make the most of your investment.

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