Bali has experienced a significant rise in both tourism and foreign investments in the real estate market over the past few years. Whether you are a seasoned property buyer or a first-timer, it is crucial to understand the various property permits and land titles available in Bali. This article will guide you through the most essential ones.
1. Hak Milik (HM)
Hak Milik, meaning Right to Own, is the most powerful freehold title that can only be obtained by Indonesian nationals. This type of real estate ownership grants the holder complete and unrestricted control over the land and its assets. Foreign nationals (WNA) and corporate entities, whether domestic or foreign, can’t own real estate under the Hak Milik title. Indonesian nationals can buy property under Hak Milik and transfer other titles to Hak Milik.
2. Hak Sewa (HS)
Leasehold, also known as Hak Sewa, refers to leasing a property from a freeholder for a specified period, ranging from a few years up to 25 years to a maximum of 80 years. The lessee and lessor sign an agreement that outlines their respective legal rights and obligations, ensuring complete protection for both parties during the lease term. Once the lease term expires, both parties can extend the agreement or revert the real estate back to the original owner.
Hak Sewa gives the property owner the right to lease their property to Indonesian nationals, foreign nationals, government bodies, and legal entities, including PT PMAs.
3. Hak Pakai (HP)
Hak Pakai, meaning Right to Use, is a land title that allows Indonesian and foreign nationals to use a building for residence. However, ownership remains with the original owner, the government, or a private entity. Only foreign nationals with a residency permit, such as KITAS or KITAP, can buy property in Bali under Hak Pakai. Not all properties are eligible to be bought or sold under Hak Pakai, and under this title, the property can only be used for residence by the title holder. This means it’s not allowed to rent out property in Bali when it’s held under Hak Pakai.
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4. Hak Guna Bangunan (HGB)
Hak Guna Bangunan (HGB) means the Right to Build and grants the title holder the right to construct and possess a building on a specific plot of land without ownership of the land itself. The HGB title is used by foreigners who construct their own villa on top of land they temporarily own under a leasehold agreement.
Only legal entities, such as PT PMAs, can apply for and hold the HGB title. Holders of the HGB title can transfer, sell, exchange, or mortgage the property. An HGB certificate is initially valid for 30 years, which you can renew for another 20 years.
5. Hak Guna Usaha (HGU)
Hak Guna Usaha (HGU) is a land title that grants the right to cultivate and utilize the land for agricultural purposes. Also, PT PMAs in Bali can apply for the Hak Guna Usaha land title. However, it has specific limitations, such as a validity period of 25 to 35 years. The certificate must be registered with the National Land Agency, and government supervision is usually present.
6. Hak Milik Atas Satuan Rumah Susun (HMSRS)
Hak Milik Atas Satuan Rumah Susun (HMSRS) is a type of ownership that grants individuals the right to own a multi-story building unit. It is commonly known as a strata title, where each unit is considered a separate property that various individuals or legal entities can own.
It’s important to note that the unit’s ownership does not extend to the land, which must have a different type of ownership, such as Hak Milik. Indonesian citizens, foreign nationals with valid KITAS or KITAP, and legal entities such as a PT PMA can buy a condo under the HMSRS title.
7. Hak Pengelolaan (SHLP)
Hak Pengelolaan (SHLP) is a land title in Bali that grants holders the right to manage and control a piece of land without giving them ownership of the land. This title lasts for 30 years and an additional 20 years. SHLP is the most restrictive land title available in Bali, and obtaining the title can be challenging for foreigners.
8. Persetujuan Bangunan Gedung (PBG)
Persetujuan Bangunan Gedung (PGB) means Building Approval and is formerly known as Building Permit (IMB). Building Approval is a building permit that anybody constructing a property in Bali must obtain before starting the construction project. The PBG permit ensures the safety of the building’s design and construction.
9. Sertifikat Laik Fungsi (SLF)
Sertifikat Laik Fungsi (SLF) is a certificate that serves as permission to use a building for a specific purpose. SLF is an essential document that homeowners need to obtain before they can occupy their property. Without this certificate, property owners may face legal and financial consequences, making it crucial to get it before using the property.
10. Pondok Wisata
Property owners who want to use their residential properties as vacation rentals must apply for a Pondok Wisata or Homestay Operational License. It’s similar to a building approval and allows commercial use of the property. Older licenses cover up to three units, while newer ones cover up to five bedrooms. If the property is more significant than that, a full hotel license is required, known as Hotel Melati.
What are the most important property permits, certificates, and land titles in Bali?
Do you want to buy property in Bali? Whether you intend to use the property for your residence or as an investment, you should know the following property permits, certificates, and land titles in Bali:
- Hak Milik (HM): Freehold title granting Indonesian nationals full ownership rights over land and its assets, with the ability to transfer to other titles.
- Hak Sewa (HS): Leasehold title allowing property leasing for a period typically up to 25 years, extendable to 80 years, with legal protection for both lessor and lessee.
- Hak Pakai (HP): Right-to-use title that permits Indonesian and foreign nationals with residency permits to use the property for residential purposes without owning it.
- Hak Guna Bangunan (HGB): Title that gives the right to build and possess a structure on land without owning the land, renewable after the initial 30-year period.
- Hak Guna Usaha (HGU): Title for the right to cultivate land for agricultural purposes, with a validity period of 25 to 35 years and subject to government supervision.
- Hak Milik Atas Satuan Rumah Susun (HMSRS): Strata title that allows individual ownership of a unit in a multi-story building without land ownership.
- Hak Pengelolaan (SHLP): Title granting the right to manage a piece of land for a specified period without ownership, with a maximum duration of 30 years plus a 20-year extension.
- Persetujuan Bangunan Gedung (PBG): A building permit that is required before starting construction, ensuring compliance with government regulations.
- Sertifikat Laik Fungsi (SLF): A functional fitness certificate that is required for a building to be occupied, ensuring the property is suitable for its intended use.
- Pondok Wisata: A license for residential property owners to operate their buildings as vacation rentals, with varying coverage based on the number of units or bedrooms.
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Frequently Asked Questions (FAQs)
Can you buy land and buildings in Bali?
Anyone can buy land or a building in Bali if they do it under the right land title and with the right property certificates. Some land titles are only available to Indonesian nationals or legal entities, so ensure you understand the local regulations in Bali.
How does property ownership work in Bali?
Property ownership in Bali works under a system allowing various land titles, including Hak Milik, Hak Pakai, Hak Guna Bangunan, and several others.
How much does it cost to own a house in Bali?
Prices can vastly differ depending on the size, location, and whether you are buying or renting a house. However, the average house price in Bali is IDR 14.5 million ($943) per square meter, while the average rent price is IDR 84 million ($5,460) per year.