Buying Property in Bali

posted on : August 30, 2017

Buying Property in Bali

Ownership Titles, IMB and everything else you need to know

So you are looking for a nice house to buy for you family, a property to start your business or simply investing in real estate in Bali? That’s great!

Bali is THE place when it comes to living the sweet life: unique architecture, endless beaches, ethereal rice field views and stunning sunsets.

But wait!

Before you can fulfill this dream of owning a villa in paradise there are several things you should know first. And even if you know some wise expats who already live here forever and did what no one else did before, there are rules and regulations that have to be followed.

No way, I’ve heard about an easy way to buy freehold property! I have an Indonesian nominee whom I can trust 100% and I know a lot of foreigners who did that before successfully.

Are you sure about that?

Even with the best intentions it’s still an investment on a shaky ground. Unless you are ready to accept that in the worst case scenario you’ll lose your entire investment. Don’t go for that option, as those agreements are not legally based. Just follow the rules as you would do in your own country as well and everything should be fine.

We promise – it’s not as complicated as it may sound.

In Indonesia there is an Agrarian Law called Undang-Undang No.5 Tahun 1960 which is based on the Indonesian Constitution. In article 16 of this law there are seven kind of ownership structures mentioned. When you want to purchase a property in Indonesia, the 4 most important ones are Hak Milik (Freehold), Hak Guna Bangunan (Right to Build), Hak Pakai (Right to Use), Hak Sewa (Leasehold).

If you are an Indonesian citizen, you are free to use any of them – If you are a foreigner it is way more complicated.

To make it easier to understand the rules of those ownership titles, we created a simple breakdown with all requirements below.

 


Titles Hak Milik

(Freehold)

Hak Pakai Hak Guna Bangunan

Hak Sewa

(Leasehold)

Statement Right of Ownership Right of Use Right to Build Right to Lease
Entitlement For Indonesian citizens only For foreign and Indonesian individuals For foreign and Indonesian limited liability companies (PMA / PT) For foreign and Indonesian individuals
Validity No limit in duration Initial 25 years,

Extendable for 20 years & renewable for 25 years

Total of  70 years

Initial 30 years,

Extendable for 20 years & renewable for 30 years

Total of 80 years

Initial 25 years,

Extendable for 25 years or more based on Lease Agreement

Certificate status Registered certificate at Indonesian Land Office Registered certificate at Indonesian Land Office Registered certificate at Indonesian Land Office

Not registered certificate

Private agreement between two individuals

Advantage Capital appreciation due to unlimited ownership duration Ownership certificate written on foreigners name if resident in Indonesia Suitable for foreign property developers and business owners

Ideal for individual ‘lifestyle’ property investments

Lower investment capital compared to Hak Milik

No domiciled status required

Limitations Foreigners are not entitled to buy Hak Milik

 

Nominee agreements are not legally based!

Foreigners require domiciled status (KITAS, KITAP) to maintain ownership status

 

No commercial use of property allowed!

Tight regulations around foreign company formation (tax reporting, capital requirements)

 

Not suitable for a single property purchase!

No capital appreciation

 

Got it? Alright, let’s move on to the next thing you need to know, especially if you want to start a rental business or use your property for commercial issues. To be continued in the next post about IMB certificates.

 

With this knowledge you are already a Bali property expert and can start your search! Check out the best leasehold villas or freehold villas for sale in Bali and find your new dream home today!

If you have any more questions and concerns about this issue, don’t hesitate to leave us a comment below or contact us. We are always happy to help!

 



Bali Treasure Properties is a Real Estate Agency based in Bali. Our mission is to provide a new form of personalized, consistent, transparent and honest service for renters, buyers and owners.

Whether you are searching for a long term rental or want buy property and looking for villas & land for sale in Bali – we are happy to help. Contact us by mail info@balitreasureproperties.com and follow us on Facebook.

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