Understanding the legal laws about properties in Bali is crucial for anyone looking to buy or invest in real estate on the island. Especially for foreigners that are always asking “Can foreigners buy properties in Bali?”. Well here are some key legal aspects to answer that question:
Can foreigners buy properties in Bali?
To put it simply, Foreigners cannot buy property in Indonesia, including Bali. Well you may have seen some website or agent saying foreigner can buy properties in Bali. While that may be true, that is more like an alternative. The alternative for a foreigner to buy a property in Bali is through a leasehold agreement and setting up a foreign-owned company (Penanaman Modal Asing).
Leasehold agreements typically grant a leasehold right for a specified period, usually 25 to 30 years, with an option to extend. While PMA allows foreigners to establish a company in Indonesia and acquire property under the company’s name, subject to certain regulations and restrictions. One thing to note is buying property in Bali via a local nominee is illegal and completely unsafe for foreigners.
Local law about properties
There are two primary types of titles in Bali: Hak Milik (Right of Ownership) and Hak Pakai (Right of Use). But when you’re buying property for commercial use, you will acquire a special title – HGB, Hak Guna Bangunan that lasts, as well, for up to 80 years.
We will provide some general information on local law about owning property in Bali, but please keep in mind that local laws and regulations can change over time. So it’s always a better idea to consult to your real estate agent or lawyer.
- Foreign Ownership: Foreign individuals cannot directly own freehold land in Indonesia, including Bali, except in certain circumstances. However, there are alternatives available, such as long-term leases and forming a foreign-owned company (PMA).
- Leasehold: Foreigners can enter into lease agreements for land and buildings in Bali. Leasehold arrangements typically last for an initial period of 25 to 30 years, with an option to extend for an additional 25 years.
- Foreign-Owned Company (PMA): Foreigners can establish a foreign-owned company (PMA) in Indonesia, which can acquire freehold land. This option involves specific requirements and procedures and usually requires a local nominee structure.
- Nominee Arrangements: While foreign ownership of land is restricted, some foreigners have utilized nominee arrangements, where local individuals hold the property title on behalf of the foreign buyer. However, it is important to note that nominee arrangements are generally considered illegal and can involve significant risks.
- Hak Pakai: The Indonesian government allows foreigners to obtain a “Right to Use” (Hak Pakai) certificate for residential properties. This right grants usage and control over the property for a period of 30 years, extendable for another 20 years.
- Building Ownership: Foreigners can have full ownership of buildings (not the land) on land that is leased or held through a Hak Pakai certificate.
- Zoning and Restrictions: Bali has specific zoning regulations and restrictions that determine the type of property that can be built in different areas. These regulations vary depending on the specific location and intended use of the property.
It’s important to note that laws and regulations can change, so it’s crucial to stay updated with the latest legal requirements and consult with professionals well-versed in Bali’s property laws and regulations.