Step-by-step guide on leasing property in Bali
- Use a professional and reliable real estate agent
- Find the right property
- Check the property licenses
- Conduct due diligence
- Draft leasehold agreement and downpayment
- Final payment and sign the lease agreement
- Obtain the proper land certificate
Step 1: Use a professional and reliable real estate agent
Indonesian property ownership structures can be complicated. Working with amateurs or inexperienced parties may complicate the process. That’s why working with a professional and reputable real estate agent is recommended.
Step 2: Find the right property
Finding properties in Bali is the first step towards leasing land or property. One can explore real estate websites, consult with local agents, or search for advertisements in local newspapers. Ensuring that the properties meet your requirements before negotiating lease terms with the owner or agent is essential. It’s worth checking out the different real estate places in Bali to get an idea of where to find a property.
Step 3: Check the property licenses
Always ask to check the following property licenses:
- The Certificate of the Property
- The Building Approval (PBG)
If the owner cannot provide these licenses, don’t even consider moving forward with the transaction, as it means that something is probably not correct.
Step 4: Conduct due diligence
Conducting due diligence is a critical step in the leasing process, and the duration can vary depending on the property/land. It involves a thorough investigation by a notary or lawyer to ensure that the vendor has the legal right to lease the property, that all relevant paperwork is in order, and that there are no disputes over the property or land. This process can take one to three weeks, and it is necessary to ensure a smooth and legally compliant lease agreement.
Some questions you should ask when conducting due diligence:
- Who is the owner of the real estate object? Is it a private individual, or are other persons involved as well?
- Is the property inherited? If so, are all of the beneficiaries willing to lease? Have they declared their permission to lease?
- What type of certificate does the property have? Does it allow you to perform your planned activities?
- Are the documents with the owner or at a bank?
- What are the local zoning laws of the property?
- How much tax would you need to pay for leasing the property?
Getting answers to these questions helps you to understand the situation better.
Step 5: Draft leasehold agreement and downpayment
Drafting a leasehold agreement is a crucial step in leasing land in Bali. The lease agreement should clearly outline the terms and conditions agreed upon by both parties. It should include the duration of the lease and who is responsible for paying maintenance, utilities, and property taxes. It is best to consult a legal professional to ensure the lease agreement is legally binding and protects your interests.
Step 6: Final payment and sign the lease agreement
After finalizing the lease agreement and agreeing on its terms, signing the deal and keeping a copy of it for your records is crucial. To ensure the agreement is legally binding, a public notary (PPAT) should notarize it. This process involves verifying the signatures of both parties and registering the lease agreement with the land office. Therefore, notarizing the lease agreement is crucial in the leasing process.
Leasehold as an individual or through a PT PMA?
In particular, foreigners cannot own properties under a freehold title because these are only available to Indonesian nationals. Nonetheless, a leasehold is an alternative with the same rights as a freehold. Both foreign individuals (WNA) and foreign-owned companies (PT PMA) can acquire a leasehold title.
Are you planning to use the property for residence? Leasing in your personal name may be more suitable. Do you want to lease property and rent it out to generate income? Then, it might be better to lease through a PT PMA.
What you need to know about renting properties in Bali
1. Terms are negotiable
One significant advantage of leasehold agreements is their flexibility, as the terms of the agreement are entirely negotiable. Parties are free to determine their words, and even after the contract has ended, they can still renegotiate the deal. However, the lease agreement must only be for a 25 to 35-year period but can be consecutively extended when the contract ends. It allows for a more personalized and adaptable understanding tailored to both parties’ needs.
2. Restricted ownership
Leasehold entails that you merely rent out the property for some time, and full ownership remains with the owner. This characteristic has both advantages and disadvantages. The downside is that you can only make significant changes to the property with the owner’s permission, limiting your freedom of use. On the positive side, you do not have to commit to the property long-term, and you are not responsible for taxes and other government regulations, which is a benefit that may suit some individuals.
3. Costs of leasing a villa in Bali
Villa leasing prices differ depending on the size, location, and amenities. It can go for as low as IDR 2.5 million ($158) or IDR 4 million ($252) per square meter.
Worried about leasing property in Bali? Let us guide you!
Leasing property in Bali requires understanding lease agreements, legal requirements, and compliance with Indonesian property laws. Navigating these steps can be overwhelming without expert help. Our team specializes in assisting foreigners with the leasing process, ensuring everything is handled smoothly and securely. Whether you need full guidance or help with specific steps, we’re here to support you. Leave your details below, and we’ll reach out to assist you, or email us directly at [email protected] for tailored advice.
Frequently Asked Questions (FAQs)
Can I lease a house in Bali?
Yes, it is possible to lease a house in Bali. The process of leasing a home in Bali involves finding a suitable property, negotiating lease terms, conducting due diligence, and signing a leasehold agreement.
Can you live permanently in Bali?
Foreigners can only live permanently in Bali with a valid visa or a work permit. A social or retirement visa is available for those who want to stay longer in Bali.
What is the difference between leasehold and freehold in Bali?
Freehold ownership grants the owner exclusive and absolute license of the property. On the other hand, leasehold ownership gives the owner the right to use the property for a specified period. Only Indonesian nationals can own freehold titles.
6 Responses
Can you sell a leasehold property and transfer all the terms and conditions?
Hi David,
Yes, it’s possible to sell a leasehold property and transfer the terms and conditions if the agreement allows this 🙂
^ Matt
Can I start the process while my pma is pending, then transfer to my pea?
Hi Soul,
In most cases you can start the process while your PMA is still pending. However, you can’t sign any documents in the name of your PMA once the PMA is not yet established.
^ Matt
Hi Matt,
looking to rent a Bali villa and then sub rent it out while we are not there, is this possible to do?
what are some things that arnt so obvious that we may need to consider?
would it be useful to use a property management company to look after the guests and the properties?
Hi! Yes, it is possible to rent a Bali villa and sub-rent it when you’re not there. However, it’s crucial to check the terms of your rental agreement to ensure sub-letting is allowed. Some things to consider include tax implications, permits, and potential wear and tear. Hiring a property management company can definitely help with managing guests and maintaining the property while you’re away, especially if you’re unfamiliar with local regulations.