A Practical Guide for Buying A Property as a Foreigner in Bali
Indonesian law restricts foreign investment to buy land in Bali. Because the property-rights shall remain locally, to protect the booming economy of Indonesia. But there are absolutely legal methods of buying real estate in Bali.
Similarly to other countries, Indonesian law requires three permits to own land and to build a house on it:
- Ownership certificate (Hak Milik)
- Right of use (Hak Pakai)
- Building permit (Hak Guna Bangunan)
Ownership certificate (Hak Milik)
Under Indonesian law, a foreigner cannot own property (Hak Milik) without the help of a nominee or a business.
Land ownership or freehold (Hak Milik) is more advantageous in the long term. However, they are only possible for foreigners via an Indonesian business. A business, even if owned by a foreigner, can buy and own land, property, and houses. If you already have a business in Bali, this is the best way. Only treating a business for this purpose, its too much effort, which hardly will payout.
Right of use (Hak Pakai)
But there is another way, how foreigners can invest privately in real estate or land to build and own a house on it. For real estate in Bali, private individuals can conclude a leasehold. This is a right of use (Hak Pakai) for a certain time. Due to that, it costs lesser. The period can be arranged individually, e. g. for 10, 30, 100 years, or even longer. After that, it can be extended, or it falls back to the owner, who owns the freehold.
Building permit (Hak Guna Bangunan)
The building permit (Hak Guna Bangunan) can be issued on freehold or leasehold properties. However, it depends on the development plan of the region in which the plot of land is located. So it is necessary to clarify this before buying land in Bali if you want to build a house on it. And even if there is already a house on it, it is worthwhile a check, if a building permit is issued.