News / Events

Can Foreigners Own Property in Bali?

Even in the midst of the global pandemic, Bali’s property market is still very attractive to foreign investment. Indonesia in general, is still a developing country with a wide range of business opportunities for beneficial investment. Bali’s more relaxed lifestyle, cheaper cost of living and cleaner environment are good reasons for people to continue spending time here. Due to covid-19, the property prices have sunk and you can now buy property at a 15-30 % lower price tag than pre-covid. Nevertheless, the most important question to ask is “Can foreigners own property in Bali?” The simple answer is yes, foreigners can own property in Bali. But as with everything in Indonesia, matters are not that straightforward and some deeper delving into how things work is needed to gain a better understanding.

Images source : Red Lotus Property

There are two types of property ownerships available in Indonesia: Freehold and Leasehold. There are foreign ownership rules and regulations, based on the Indonesian Constitution and Agrarian Law – Undang-Undang No.5 Tahun 1960 article 16 (1) that restrict freehold land (hak milik) and property ownership to Indonesians. This means that foreigners cannot obtain a right to own (hak milik) title to land needed for freehold property in Indonesia but nowadays foreigners can buy freehold property and thus, obtain certain rights to the land the property sits on, under the right to use (hak pakai) or right to build (hak guna bangunan) license/certificate. Buying freehold property under one of these licenses is the closest thing to owning property in Bali. To be eligible for either of these licenses, a foreigner should either set up a foreign-owned company (PT PMA) or hold a residence permit (KITAS or KITAP) to Indonesia. Do not use an Indonesian nominee, unless they are your legal spouse, to acquire hak milik land ownership as this gives a foreigner basically no protection and the nominee can overtake the property at any given time.

Images source : rumah.com

As for someone not residing in or wanting to set up a company in Indonesia and with limited funds, buying leasehold property is the way to go. Leasehold means buying the rights to the land for a certain period of time, in other words, leasing the land on which the property is built upon. After the lease begins, the owner’s hak milik title will be transferred to the foreigner under the right to lease/rent (hak sewa) title.

Once you have chosen whether you’d like to purchase freehold or leasehold property, it is highly recommended to enlist the help of a buyer’s real estate agent  to find you the property that matches your needs. Good agents know the market, they know what the prices should be and  the process. They know what PBG’s (former IMB’s) and other licenses are supposed to look like, what agreements and contracts should say, what taxes should be paid, what situations to avoid and more. They also have the networks to help them be the bridge between those that want to sell and you, the buyer. Do your research and choose an agent that you feel connected to and comfortable with.

Red Lotus Property is headquartered in Bali, Indonesia, with a mission to help people interested in buying, selling or renting residential and commercial real estate as well as looking for villa management services. We are passionate about listening to and accommodating our clients’ requests. Because we apply the authentic local touch, you can always feel safe when doing business with us. We deliver solutions and peace of mind to our clients and help them find the best way to prepare for the future.

If you’re thinking about property or lifestyle investments in Bali and need some professional and friendly advice and guidance, feel free to visit our office in Ubud, send us an email to info@redlotusbaliproperty.com or check out our property website, villa rentals and management website,  LinkedIN or Facebook.