Bali has become a top choice for foreigners to invest in real estate. But research on the property market can be tricky if you are unaware of the local laws and regulations.
In this guide, learn more ‘How to buy a property in Bali? The Dos and Don’ts of Buying Property in Indonesia as A Foreigner’ so your investment is safe and profitable.
Can Foreigners Buy a Property in Bali ?
Yes, foreigners can buy property in Bali, but there are specific restrictions that allow foreigner to buy property in Indonesia.
Before purchase property in Indonesia, understanding the legal framework allows for various types of property ownership in Indonesia.
It primarily focused on leasehold and right-to-use titles, while freehold ownership is reserved for Indonesian citizens.
About Indonesian Property Titles
When considering a property purchase, understanding the different types of titles is crucial:
Leasehold
This is the most common form of foreign ownership, where you can rent a property for a specific period, typically 25 to 30 years, with an option for renewal.
Freehold (Hak Milik)
Only for Indonesian citizens, this title gives full ownership.
Right to Build (Hak Guna Bangunan)
Foreigners can construct on rented land in Indonesia with this.
Right to Use (Hak Pakai)
This name permits foreign rights ownership of residential homes, but not land ownership.
Types of Properties Can Foreigners Own in Indonesia
Houses on Right to Use (Hak Pakai)
Foreigners can purchase individual houses built on land under a Right to Use title. This property investment title grants the right to use and occupy the property for a specified period, typically starting at 30 years, with options for extensions.
Apartments and Condominiums
Foreigners can own apartment units within buildings that are constructed in Indonesia granted under a property rights to use title. Worth noting that foreigner cannot own land outright in Indonesia. This allows for ownership of the unit while the land remains under state control.
Leasehold Properties
Foreigners may enter into leasehold agreements, allowing them to lease land for a defined period (usually 30 years) with the possibility of renewal. This arrangement is common for both residential and commercial properties.
Legal Considerations When Buying Property
Working with the law can be daunting; hence, it is advisable to get an attorney who is familiar with Indonesian property law.
They can assist you in due diligence tests to ensure that there are no liens or disputes regarding the property you wish.
The Do’s for Foreigners Buy Property in Indonesia
Do familiarize yourself with local laws and regulations, Learn what is acceptable for foreign property buyers.
Do hire experienced professionals, owning property real estate agents to lawyers, having wise allies can save you money and time.
Do investigate thoroughly, Investigate potential properties and locations thoroughly before acting.
The Don’ts of Buying Property in Indonesia as a Foreigner
Don’t rush the buying process, Take time to ensure every detail is correct.
Don’t overlook legal documents, Ensure all contracts are vetted by legal experts.
Don’t overlook property inspections, Always insist on a structural inspection or search for other defects before finalizing your buy.
PT PMA Property Investment Guide for Foreign Investors
For foreign entrepreneurs who wish to invest in property development, hospitality, or commercial real estate in Indonesia, establishing a PT PMA (Perseroan Terbatas Penanaman Modal Asing) is often the most secure and structured approach.
A PT PMA is a foreign investment company legally recognized under Indonesian law that allows foreign shareholders to operate businesses and hold certain property rights that individuals cannot. This structure is commonly used by investors planning to develop or operate income-generating properties such as villas, boutique hotels, guesthouses, restaurants, or commercial spaces in Bali.
Under Indonesian regulations, a PT PMA can hold land titles such as Hak Guna Bangunan (Right to Build), which allows the company to develop and use land for business purposes. This title is typically issued for an initial period of up to 30 years, with extension options available under Indonesian land regulations.
Establish a PT PMA with Lets Move Indonesia
Using a PT PMA structure offers several advantages for foreign investors:
Legal ownership through a recognized Indonesian company
The company becomes the legal entity holding the property rights, reducing the risks often associated with informal nominee arrangements.
Ability to operate property-related businesses
A PT PMA allows investors to legally run businesses such as villa rentals, hospitality services, or commercial property developments.
Greater investment protection
Because the property is held by a registered Indonesian company, the ownership structure is clearer and more compliant with Indonesian investment regulations.
Access to business licensing and tax registration
A PT PMA can obtain the necessary Business Identification Number (NIB) and business licenses through Indonesia’s Online Single Submission (OSS) system, allowing the company to operate legally.
However, investors should also understand that establishing a PT PMA involves certain regulatory requirements, including minimum capital commitments and compliance with Indonesia’s KBLI business classification system, which determines the type of business activities permitted for foreign investors.
Because of these regulatory considerations, working with experienced consultants and legal professionals is strongly recommended when structuring a property investment through a PT PMA.
Build Your Property Investment in Indonesia with LMI Consultancy
Navigating Indonesia’s property and investment regulations can be complex, particularly for foreigners entering the market for the first time. From selecting the correct ownership structure to ensuring regulatory compliance, proper guidance is essential to protecting your investment.
LMI Consultancy provides comprehensive support for foreign investors looking to establish investments and businesses in Indonesia centering in PT PMA company establishment, legal advisory, and regulatory compliance guidance.
