Buying Villas with Bali Treasure Properties

posted on : September 22, 2023

Whether you visit Bali often, have decided to live the rest of your years there, or are simply looking for an investment that doubles as a summer villa, owning a property in Bali is an intriguing offer. Bali is the place when it comes to the sweet tropical life: beaches, rice fields, clubs, and cafes available 24 hours a day, seven days a week, 365 days a year!

But before you jump in and invest, it is best for you to know the rules and regulations that must be followed. Remember, you are going to OWN property in a foreign land. Surely, if there are laws for the locals, there will also be laws for foreigners.

This is where we, Bali Treasure Properties, come in as your property agency. We promise the process will not be complicated as we will guide you through the whole process step by step. Before we explain the steps of purchasing property with Bali Treasure Properties, you should understand first ownership titles in Indonesia and the building permit regulations in Bali.

 

Ownership Titles in Indonesia

In Indonesia, there are 7 ownership titles according to the 16th Article of Indonesian Agrarian Law called Undang-Undang No.5 Tahun 1960, based on the Indonesian Constitution. 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).

Any Indonesian has the privilege to use all those titles, but there are some conditions for foreigners. To explain things simply, we made a simple breakdown:

Titles Hak Milik

(Freehold)

Hak Pakai
(Freehold)
Hak Guna Bangunan – HGB
(Freehold)
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 to the 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 30 years,

Extendable for 30 years or more based on Lease Agreement, up to 90 years

Certificate status Registered certificate at Indonesian Land Office Registered certificate at Indonesian Land Office Registered certificate at Indonesian Land Office Not registered certificate

Private Notarial agreement between two individuals

Advantage Capital appreciation due to unlimited ownership duration Ownership certificate is written on the foreigner’s name if a resident of 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

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

 

Not suitable for a single property purchase

No capital appreciation
Extra Notes Upon sale, the Hak Pakai title can be exchanged with Hak Milik or HGB title Upon sale, the HGB title can be exchanged with Hak Milik or Hak Pakai title Notarized Lease Agreements are 100% legal and are fully protected by law

 

Building Permit Regulations in Bali

Now, when planning to own and rent a property, you need to familiarize yourself with PBG/SLF Permitas, formerly known as IMB (Ijin Mendirikan Bangunan). A PBG Certificate (Persetujuan Bangunan Gedung) is a permit issued by the government to the owner of a building or its representative to start construction, renovate, maintain, or change the building as planned. An SLF Certificate Is a certificate issued by the government to the owner of a building or its representative as a statement that the building in question is functional and can be appropriately used according to plan. These two PBG and SLF certificates are the latest adjustments by the Indonesian government regarding building permits and are replacing the previously known single IMB (Ijin Mendirikan Bangunan). 

Along with the ownership title, the building permit is one of the most important documents for owning a property in Indonesia. Villas and shops that have already been built SHOULD have a registered building permit in place. If they don’t, it is crucial to understand why they haven’t been registered. If the land zoning is deemed a green belt zone, it is best to take your hands off those establishments, as you might encounter legal problems and complications further down the road. If the land zoning, however, is “yellow,” which means you are legally allowed to build on the land, you can apply for a new building permit as long the property fulfills the Indonesian building requirements.  We at Bali Treasure Properties can help pre-check the documents for you and guide you further on the steps necessary. Rest assured that all our listed villas at Bali Treasure Properties have a registered building permit in place. 

You can consult with us regarding ownership titles and building permits during a personal consultation session, simply contact our office and request an appointment

Now let’s get into our step-by-step process of buying a property with Bali Treasure Properties!

 

The Buying Process

Bali Treasure Properties is here to help you to find the ideal villa that matches your needs and requirements. Not only do we have a very carefully selected and curated catalog of exquisite villas at the most desirable expat locations, but we also provide personalized service and clarity throughout the process. Here is a step-by-step process of finding and purchasing your home in Bali with us:

1. Inquiry and Personal Meeting

We believe a home is an extension of the person living there, and that’s why we would love to know you personally. To be able to help you in the most efficient way, we prefer a personal one-on-one meeting in our office or an extensive phone call. This way, we can know you better and determine your preferences, needs, requirements, and expectations regarding your soon-to-be home or your property investment in Bali.  Once we know what you are precisely looking for, we can deliver results.

  • Purpose

What is the intended purpose of the property you plan to purchase? Are you looking for a comfortable home to generate a passive income or both? Understanding the purpose of your property search is a very important aspect, which we must consider at the very beginning of your villa search, as each villa in our portfolio has its own unique features, advantages, and eventually disadvantages. 

Each villa listed with Bali Treasure Properties has its uniqueness, beneficial for either investment, residential or as a lifestyle investment (which is essentially a combination of both). We are here to help you find the one best suited for your needs.

You’d be surprised to hear that many clients become fully aware of their villa criteria only upon an extensive talk about their villa needs, expectations, and preferences. Once we have nailed it, we will move on with a suitable listing selection. 

  • Listing Selection

Once we fully understand your personal needs and preferences, we will go through our database of villas and select the ones that are available and suitable based on your requirements. We will present to you the selections truthfully and explain to you in detail about the location, setup and facilities, pros and cons, paperwork, past usage of the property, and everything in between. We would not want any surprises during your villa visit. 

We won’t waste your time with hundreds of villa viewings. Based on our experience, only three to five villas are truly suitable for any given criteria. 

2. Property Viewing & Buying Offer

  • Villa Viewings

Once you have selected a specific villa that captures your interest, we will arrange a personalized, accompanied on-site viewing with our knowledgeable agents. We provide a chauffeured car or motorbike ride to the villa location, depending on the traffic and your preference. During the inspection, we will guide you through the villa itself, point out the details, and provide all the background information which are important to know. Do note that villa inspections require 24-hour notice before arranging appointments with the owner or representative, and in some cases, properties are not immediately inspectable due to residing villa guests.

  • Choosing the One

The villa viewing will usually end in our office, so we can review together and evaluate the inspected villas. This is crucial to help us further understand your needs and narrow down the villa selection if needed. Generally,  2-3 villa viewing tours are sufficient to cover and see all the suitable villas.

It won’t serve you any good to do more villa visits just for the sake of seeing more unsuitable villas. Instead, exclude those you are not comfortable with and narrow down to the very best options. We would advise you to revisit your list of needs, requirements and preferences at this stage and compare it to your final selection. 

Once you find your most suitable choice, it is time to start the legal process. We will guide you through the whole process step-by-step and will ensure you a smooth and stress-free buying experience

  • Buying Intention / Offer

Once you decide on a property, we will inform the seller immediately about your intention to buy in order to secure the property on your behalf. Do note that most property listings are open listings, meaning whoever pays a deposit first gets the villa. We want you to make an informed decision and not rush or push you to make hasty decisions. Hence we inform the seller about your intention to buy via a “Letter of Intent,” following a small holding deposit payment, to assure the seller takes the property off the market and gives us sufficient time to work out the details of the binding Sale & Purchase Agreement.

It is important to note that the Bali real estate market is very competitive, and valuable properties are often sold very quickly. That said, we will never ask you to quickly put down a deposit payment as this may put unpleasant pressure on you and may hinder you from making an informed decision. On the other hand, we wouldn’t want you to lose out on an exceptional opportunity, so consequently, the best and safest way to go is with a small holding deposit and our written “Letter of Intent.” 

  • Preliminary “Sale & Purchase Agreement”

The preliminary agreement is the contract that binds you, the buyer, and the villa owner/seller. We provide a very detailed and safe Sale & Purchase Contract, which protects you as the buyer and clarifies all your buying conditions. We will work out this contract in detail with you to the point where both parties are willing to sign. After signing, your deposit payment will go to the notary, and we will ensure that unless all buying criteria and conditions are met, your deposit sits safely in the notary’s account. Only if all buying conditions are fulfilled is the contract binding, and only then will your deposit be released to the seller.

3. Legalities and Handover

  • Due Diligence and Notarial Signing

At this stage, the notary will proceed with the due diligence, which includes:

  1. The property seller’s identity. Is the seller the rightful owner of the property you are purchasing or holds the authority to assign, transfer, and sell the leasehold right to you?
  2. The ownership title. Is the certificate free of mortgages or any encumbrances? 
  3. Is the property lease period valid and fully paid? 
  4. Is there a valid public access road to the property
  5. The building permit is registered and valid?
  6. Tax settlement between the seller and the buyer

Bali Treasure Properties works with and can suggest reputable and trustworthy notaries who will work on behalf of you, the buyer, and will point out any deficiencies, if any. The buyer is the party paying for the notary fees with the rate usually at 1% of the purchase price.

  • Transfer of Lease Rights Agreement

Once the notary has finished the due diligence, you will receive a clear report about all findings. If the results are satisfactory, we can proceed with the notarial signing – the transfer of lease rights – for which both parties need to be present in person. Upon signing, the full balance payment for the property has to be made, while the notary will finalize the payments of the lease income tax, which can be paid from the initial deposit payment. The notary will release the finalized Lease Agreement Deed in your name approximately one week after signing. 

  • Property Handover 

After the notarial signing is done and the final payment has been received, you can collect a complete set of all relevant documents, including the Lease Agreement Deed in your name, and the English translation of it. For the property handover, we will guide you through the final details of the property (eg. internet arrangements, electricity meter, staffing contacts and similar), so you can start enjoying your stay in your new home on day one. 

 

Congratulations, you are now a proud owner of a beautiful property in Bali!

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Bali Treasure Properties
custom-map-marker-no-shadow Jl. Subak Sari No.2c, Canggu – Brawa Kuta Utara, Kab. Badung, Bali 80361 – Indonesia
ico-clock-green-wbg Opening hours: Monday – Friday (9:00- 17:00) Saturday (9:00- 13:00)
ico-envelope-green-wbg info@balitreasureproperties.com
ico-envelope-green-wbg service@balitreasureproperties.com
ico-phone-green-wbg Office : +62 851 0015 2013 (9:00-17:00)
ico-phone-green-wbg Mobile: +62 878 6050 0289 (9:00-17:00)

 

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