The Ultimate Guide: Can Foreigners Buy Property in Bali?

Yes, of course!

Foreigners can buy a property in Bali. 

Thanks to the new regulations of the Indonesian government, foreigners can buy property in Bali. 

But if you’ve researched, you might realize that buying can be complicated.

You must consider many factors, such as the law, zone, location, ROI, etc…

Not to mention the contradicted information out there.

That’s why, in this article, we’ll explain everything you need to know for a smooth and safe property investment journey in Bali.

Whether you’re a first-time buyer or a veteran investor, this guide will help you navigate Bali’s property market.

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Is It Legal for Foreigners to Buy Property in Bali?

This is one of the most common questions we get, and it’s crucial to start here. 

In Indonesia, including Bali, the law prohibits foreigners from directly owning freehold land. 

Instead of owning land outright, foreigners can use legal structures like Hak Pakai (Right to Use), leasehold agreements, or establish a PT PMA (a foreign-owned company). 

Each option has pros and cons,  which we’ll outline in the table below:

Ownership typePros Cons 
Hak Pakai (Right to Use)Legal and straightforward for foreigners to obtain.You do not own the land outright.
It can be extended after the initial period, typically 30 years.Extension of the Hak Pakai is subject to government approval.
You can use the property similarly to owning it.Limited to residential use; not suitable for commercial purposes.
LeaseholdIt is easier and less expensive to set up compared to other structures.You are essentially renting the property for a set period.
Flexible terms with possible extensions.The value of the lease decreases as the expiration date approaches.
It can be used for residential or commercial purposes.Renewal terms can be uncertain and costly.
Foreign-owned Company (PT PMA) Allows full ownership of land and property under the company’s name.It is complex and costly to establish and maintain.
Suitable for those planning to run a business or develop land.Requires ongoing compliance with Indonesian corporate laws.
Provides greater control and flexibility in property use.Setting up a PT PMA can be lengthy and involve legal and bureaucratic hurdles.

Understanding Indonesian Property Law

Even though foreigners can’t directly own land in Indonesia, there are still ways to get involved in the property market in Bali. 

Let’s dive into the three main types of property arrangements available for foreigners:

1. Freehold

A freehold property means you own the building and the land it sits on forever. 

However, in Bali, foreigners can’t directly own freehold property because of Indonesian laws. 

Instead, foreign investors must set up a foreign-owned company in Indonesia called PT PMA

When you set up a PT PMA in Indonesia, the company buys the property under its name. 

This is how foreign investors can legally hold freehold property in Bali. However, it’s more complicated because you need a minimum investment of IDR 10 billion (~USD 670,000) and a paid-up capital of at least IDR 2.5 billion (~USD 167,000)…

You also need to have an Indonesian as one of the company’s shareholders who lives in Indonesia. 

But if you don’t want to set up a company, you should consider buying a leasehold property.

Browse freehold villas for sale in Bali here.

2. Leasehold

Leasehold is the go-to for many foreigners. It’s more like a long-term rental than actually owning the property. 

This arrangement doesn’t require you to set up a company, making it easier for foreign investors to invest in Bali.

With a leasehold, you get a lease agreement that lets you use the property for up to 25 years, and you can renew it for the years agreed between you and the landowner.

But remember that you only have the right to the building; the land still belongs to the property owner.

If the lease ends, the property and any changes you’ve made will be returned to the original owner.

Browse leasehold villas for sale in Bali here.

Common Misunderstandings

There are plenty of myths and misconceptions about foreign property ownership in Bali, and it’s essential to set the record straight. 

One of the biggest misunderstandings is the idea that foreigners can buy land through an Indonesian nominee. 

While this might have been a common practice in the past, it’s now considered risky and illegal. 

The Indonesian government has cracked down on nominee arrangements, and getting involved in one could lead to losing your investment. 

Always stick to the legal methods mentioned above to secure your property investment.

Also read Bali Real Estate: Why The Nominee System Is A Risky Bet.

When considering buying a villa in Bali, you must understand the prices you must pay. 

In Bali, the cost of a villa can vary depending on the location. 

For instance, a 3-bedroom leasehold villa in Seminyak might cost around $330,000. 

However, in Canggu, a place with the same number of bedrooms could be around $398,000. 

So, the location makes a difference in how much you’ll need to spend.

What’s more, you might need to consider the extra costs.

Now, besides the price of the villa, there are some extra fees you need to know about. 

One of the big ones is the notary fee. 

A notary is a person who makes sure all the paperwork is correct and legal. 

They charge about 1% of the total price of the property.

The notary is a really important person in the process. They ensure everything is done right and legally when you sign the contract. 

They check the contract, sign it, stamp it, and ensure it’s officially registered.

Paying for your villa

When purchasing your villa, the payment process depends on the villa’s construction status. 

For already-built villas, the norm is to pay the full amount upfront. 

However, if you opt for an off-plan villa, which means it’s yet to be built, you can pay in installments throughout the construction period. 

This approach makes the financial burden more manageable by spreading the cost over time and rewards you with a brand-new villa upon completion.

Buying Property in Bali as a Foreigner: A Simple Guide

Here’s a step-by-step guide to help you find the best property that suits your budget and needs:

Step #1 Finding a Property: What to Look For and Where

When investing in Bali, the first step is to dive into the options for the property types you want. 

An online platform is a fantastic place to start because it shows you a wide range of properties. 

Go to the Facebook forum or Bali’s real estate website They are a good start to see your investment option in Bali.

Step #2: Think about the location

Your property should be easy for people to find and get to. 

This means it should be in a prime location where tourists love to visit. Not only does this help your property get discovered, but you can also earn a steady rental income from Bali’s bustling tourists.

If you’ve been interested in investing in Bali, you might be familiar with these locations: Canggu, Seminyak, Seseh, or Jimbaran.

They are the places that can bring you bigger returns as their popularity with tourists.

Also read: Why Canggu, Seminyak, And Uluwatu Are Top Investment Hotspots In Bali.

Step #3: Who’s your target audience?

Think about who will be staying on your property. 

If you’re targeting families, you might want a bigger place with a garden or a pool. You might also be looking for a location that caters to your and your kids’ needs—like an international school, gyms, shops, or beaches.

If so, a property in Umalas is the perfect choice. Located just a few minutes from Canggu and Seminyak, it offers everything you need nearby.

Look for a neighborhood that feels welcoming and safe, with friendly people, and that other tourists enjoy. 

A good neighborhood means a lot. It’s a place where you’ll feel comfortable, and if you plan to rent out the property, it’s more likely to attract guests.

Legal Due Diligence

When buying property in Bali, it’s super important to check everything is in order legally. 

This means doing your homework on the property’s paperwork and ensuring you can use the land how you want. Let’s break it down into simpler steps:

#1: Checking the Property’s Papers

These are the papers the owner should be able to provide:

  • The original Hak Milik Certificate from the owner. This paper proves who owns the land. Don’t settle for a copy; only the real deal shows true ownership.
  • ID documents. This includes a Kartu Tanda Penduduk (KTP), and an ID card for the seller and their spouse. The names on this card should match the ones on the Hak Milik Certificate. 
  • A family card (Kartu Keluarga or KK) and a Marriage Certificate are needed. If the seller’s spouse has passed away, a Death Certificate is needed instead.
  • PBB tax payment record, known as SPPT PBB. This shows whether all taxes on the property are paid up. You wouldn’t want any surprise bills later on. Also, check the seller’s tax number, known as NPWP.

#2: Understanding Zoning Rules

In Bali, what you can do with your land depends on its zoning. Some areas are marked for farming only (green zones), while others are for living in (yellow zones). 

Yellow zones might let you rent out your place, but only certain types. 

Then, there are areas where you can use the land for business (commercial zones).

If you’re considering renting your Bali property for short stays or longer terms, you’ll need a special Pondok Wisata license. This permit is a must.

Why This Matters?

Doing this legal check-up, or due diligence, ensures you won’t face any legal problems. 

It ensures the property is owned by the person selling it to you, that all taxes are paid, and that you can use the property how you plan. 

Understanding zoning rules means knowing exactly what you can and can’t do with your property, like whether you can turn it into a rental.

You might want to check out Bali Villa Realty’s current listings to see properties that have passed these checks.

Doing all this might seem like a lot, but it’s all about ensuring your Bali property dream doesn’t become a headache later.

What Are the Risks Involved?

Like any investment, buying property in Bali comes with risks. 

1. Property Scams

As Bali becomes popular, it’s unsurprising that more scammers are taking advantage of it. They sell fake property listings or properties they don’t even own. 

So how can you stay away from it?

  • Check Everything
    Ensure the seller owns the property and has a clear legal title on the certificate.

  • Choose Trusted Agents
    Work with real estate agents with a good track record with foreigners. They know the local market and can help you avoid scams.

2. Another risk is related to lease expiration. 

If you invest in a leasehold property, it’s vital to understand what happens when the lease expires. 

Will you be able to renew it, and if so, under what conditions? 

Being clear on these details upfront can save you from unpleasant surprises later.

Also read: Building Permits In Bali: Your Complete Guide To PBG/SLF Building Permit Regulation.

How to Find a Property Manager

If you own property in Bali but don’t live there all the time, it’s a smart idea to hire someone to look after it

A property manager can handle everyday tasks, like managing tenants, cleaning your property, and more.

Finding a Property Manager

  • Ask Around: Start talking to people who own property in Bali or know the local real estate scene. They can give you the names of property managers they’ve used or heard good things about.
  • Look Online: There are many websites and online forums for people living in Bali or investing in property there. These can be great places to find recommendations and read reviews.
  • Check with Real Estate Agencies: Some real estate agents in Bali also offer property management services, or they might be able to suggest someone reliable.

Understanding Fees and Contracts

  • Read the Fine Print: 
    Before you agree to anything, read the contract carefully. Look at what services are included, how long the contract lasts, how you can end it if needed, and if there are any extra costs.

  • Make Sure You’re on the Same Page
    Be Clear About What You Want: Make sure your property manager knows exactly what you expect, including how you want your property looked after, how often you want to hear from them, and what kind of renters you’re looking for.

  • Stay in Touch: 
    Agree on how often you’ll receive updates and reports from your property manager. Regular communication is key to ensuring smooth operation.

Also read: How to Manage Your Property Abroad for Foreign Investors in Bali.

What’s the Next Step? 

Foreign investment takes time. It’s hard work. 

You need to know lots of information before buying a property in Bali. 

While investing in Bali can be complex…

How you approach your investment will differ from how someone else approaches it, and it will even differ for you at different times, depending on your needs.

And that’s a good thing. 

Whether you’re looking to buy or build a property in Bali, we’ll help you with all the processes you need to do—based on your budget and needs. 

If you want to receive your personalized investment plan for your investment property in Bali, click here for a free consultation.

See also : 7-Step Guide to Safely Buying Property in Bali for Foreigners in 2024

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