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How to Buy Property in Bali as a Foreigner

Below are some ways for foreigners to purchase a property in Bali under their name :


I. By setting up a Foreign Owned Company (PT PMA)

PT PMA ( Penanaman Modal Asing) company is a foreign owned limited liability company registered in Indonesia. With the PT PMA, foreigners have the right to acquire the Right To Build (Hak Guna Bangunan/ HGB)  and a Right To Use (Hak Pakai) Title under a Freehold Title.

Based on the regulations in Indonesia, Right to Build (HGB) may be owned by Indonesian citizens and companies established under Indonesian law and domiciled in Indonesia, thus making a PT PMA holder eligible to acquire Right to Build (HGB)

Technically foreign investment companies don’t actually own the land they’re investing in. Instead the license gives them the right to build the land in a certain way for a predefined amount of time, after which the company will need to buy another tax license in order to maintain control over the building in question.

Whilst this is clearly not the same thing as actually buying land in Bali, it is the closest that a foreign investor can get to actually owning land or villa in Bali. Renewing the license should be easy as long as the land is being used for the purpose which the original license was granted (e.g. building a set of villas with the intention of renting them out to tourists), therefore there shouldn’t be a problem to continuously extend the company’s right.


II. Long Term Rental (Leasehold)

This is a long-term lease contract. Although the land title is not under the foreigner’s name and remains under the ownership of the original owner, the land can be rented for an initial period of around 25 years and can then be extended up to a period of 70 years. After the lease begins, the owner’s title of Hak Milik (Right to Own) will be legally transferred to the foreigner under the Hak Sewa title (Right to Lease).

Under the lease contract the property is able to be sub-leased (rented out to other people). This is how many foreigners turn a leasehold property into a lucrative investment and source of passive income. For most investors, the beauty of a lease is that their focus is immediate cash flow and a passive income, allowing freedom from the burden of watching market conditions as the actual value of the property is of no huge concern. In a low market there will be an increased number of long-term renters, and in a high market when everyone is purchasing, there is still the benefit of short-term holiday rentals.

If the leasehold is not renewed or extend, once it expires, all rights go back to the original owner and it becomes a freehold Hak Milik property again.

 

Whichever method you choose for buying a property in Bali, Abirama Properties able to guide you through the process from beginning to end to help make the transaction as right & easy as possible for you. (Read more about our range of services)

Foreigners can’t own freehold property, but some still decide to indirectly own freehold property through local contractual setups. You should keep in mind that you won’t be protected if you decide to go for this option.

Foreigners should also thoroughly understand and carefully select the choice of property title they are buying into. Is it a Freehold, Right of Use, Right to Build or Leasehold. Our professional, acknowledgeable team of agents can help guide investors through every detail, making their dream of owning a property in Bali become a reality and right way. (Read more about Land Ownership)

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