Bali villas are a known attraction because of their relaxed atmosphere while blending with the island’s natural landscape. Villa rentals are one of the businesses in Bali where 100% foreign ownership is allowed. Because of this, it is a great idea to invest in it. If you are wondering how to start villa rentals in Bali, you’re lucky because this article will tell you everything you need to know.
Step 1: Establish a PT PMA to start villa rentals in Bali
Foreign-owned companies, locally known as Perseroan Terbatas Penanaman Modal Asing (PT PMA), are corporate entities allowing foreigners to engage in commercial activities in Bali and other parts of Indonesia.
To set up a PT PMA, you must acquire a business license from the Indonesia Investment Coordinating Board (BKPM). It necessitates submitting an investment plan, minimum paid-up capital of at least IDR 2.5 billion, and electing a board of directors.
Step 2: Find a property
Once you’ve successfully established a PT PMA, finding the right property is the next crucial step. The property should meet the needs of potential guests and be in a desirable area, such as near the beaches and tourist attractions. A clear idea of the layout and style you want would be best, as it helps you determine the appropriate property size that would fit your desired villa.
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Step 3: Acquire the necessary licenses to build or renovate the villa
There are a lot of nuances when it comes to land ownership laws in Bali. PT PMAs must acquire a Hak Guna Bangunan (HGB) if they own a property that is built on someone else’s land through leasehold. In addition to the Hak Guna Bangunan, you might acquire a Persetujuan Bangunan Gedung (PGB) or a building permit to start construction. This step may take months or years, depending on the size of your villa.
These ownership certificates are important, considering that laws are strict regarding foreigners owning land. Check out our guide if you want in-depth knowledge about these property rules.
Step 4: Find a maid/housekeeper to clean and improve the security
A clean and secure villa makes it even more attractive to tourists and returning guests. Find a maid or housekeeper to regularly clean the villa, take care of the utilities, and help the guests with check-in and check-out.
Also, think about the security of the property. You can install security cameras to secure the property and give guests a safe feeling. Hiring a security guard to monitor the property at night is also possible.
Step 5: List your villa on booking websites
It is now time to market your villa. Letting people find your villa may be a challenge at the beginning since there are probably other well-established listings. However, there are several strategies that you can employ to increase the visibility of your villa rentals in Bali.
You can use many platforms like Booking.com and Airbnb. These platforms provide a broad reach and enable you to showcase your villa’s unique features and amenities to a global audience. Social media platforms like Instagram and Facebook create a strong brand presence and engage with potential guests.
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Step 6: Promote your villa
Collaborating with local travel agencies and tour operators can also increase your reach and attract more guests. By building solid relationships with these businesses, you can tap into their existing customer base and expand your business’s reach in Bali. You can also promote by paying for targeted ads and posting in online marketplaces and word of mouth.
Step 7: Maintenance for your villa
Villa maintenance is key to long-term success. Maintaining a villa rental property on your own is challenging, especially when it comes to keeping it in top condition and ensuring the satisfaction of your guests.
To achieve this, we recommend using the help of property management companies that can manage everything from daily operations to villa maintenance and repairs.
What are the taxes for renting out property in Bali?
Another essential subject when renting out Bali villas is the taxes you need to pay.
Rental Income Tax / Lease Tax (PPH)
The rental income tax, or lease tax, is a percentage that is applied to the property’s gross rental income and paid annually. Property owners report the total rental income on their annual tax returns. Indonesian tax residents (this can be Indonesian nationals and foreigners) pay a 10% rental income tax, and non-tax residents pay a 20% rental income tax.
The 20% withholding tax default rate applies unless there is a Double Tax Agreement (DTA) between Indonesia and the non-resident’s home country.
Corporate Income Tax
On top of the rental income by the foreign individuals is the corporate income tax to be paid by the PT PMA. The corporate income tax is at a flat rate of 25%.
Personal Income Tax
Individuals living in Bali who earn income must also pay a personal income tax. It is separate from lease tax since personal income tax refers to all individual salaries. The personal income tax rate varies between 5% and 35%, depending on the income bracket. The following table outlines an overview of the personal income tax rates applicable to tax residents in Indonesia.
|Up to IDR 60 million ($4.075)||5%|
|IDR 60 million ($4.075) – IDR 250 million ($17.000)||15%|
|IDR 250 million ($17.000) – IDR 500 million ($34.000)||25%|
|IDR 500 million ($34.000) – IDR 5 billion ($340.000)||30%|
|Over IDR 5 billion ($340.000)||35%|
Do you want to buy a villa 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.
Get help with buying property in Bali
Entering the villa rental business in Bali is an exciting yet challenging endeavor. While the process may seem straightforward on paper, the reality is that it can take several months to establish a successful villa rental business in Bali.
Despite the challenges, entering the villa rental business in Bali can be an enriching venture, both financially and personally. You can establish a successful and thriving villa rental business in Bali by developing a solid brand presence, building lasting relationships with guests, and providing exceptional service.
Frequently Asked Questions (FAQs)
How much are villas in Bali to rent?
Villa prices differ depending on the size, location, and amenities offered. It can go for as low as IDR 2.5 million ($167) or IDR 4 million ($268) per square meter.
Is it worth buying a villa in Bali?
Yes. With the right plan, a villa in Bali can be a great second home or a good source of revenue.
How long can you own a property in Bali?
Foreigners can own a property in Bali for at least 20 to 30 years, depending on their land ownership certification.