A Simple Guide to Buy Property with Bali Home Immo

 

You have contacted us and expressed your interest with one of our listings. Then our sales agent connects you with the property owner to negotiate on the price. Finally both parties agree with the price and are ready to take the next steps. In this simple guide, we will explain how the villa buying process with Bali Home Immo goes.

 

Buying Process from Overseas/Abroad/Remote

 

Bali Home Immo understands that not all of our clients have the privilege of free time to travel directly to Bali. Therefore, we accommodate such concerns to reduce the inconvenience to our clients abroad.

 

Freehold

 

If you want to buy a freehold property with Bali Home Immo while you are not in Bali, we have you covered. If you want to make sure about the requirements to buy a property, you can also check out this article here. Now, let’s get to the point.

 

 

1 . After negotiating the price with the property owner and reaching an agreement, our legal team will create a Memorandum of Understanding (MoU) and/or Pengikatan Perjanjian Jual Beli (PPJB), which is a binding sales agreement. This serves as proof that the property is reserved for you and no one else can buy it.

2 . You'll then digitally sign the MoU or binding sales agreement. We typically use Docusign for this purpose.

3 . Following your agreement, you'll make the deposit payment as previously arranged.

4 . Now, you'll need to initiate a Power of Attorney (PoA) process in your home country, adhering to Apostille regulations. You can nominate a trusted individual or our sales agent to represent you and sign the documents on your behalf. This is also when you'll make the remaining payment.

5 . Once the PoA and final payment are completed, your chosen representative will sign the Akta Jual Beli (AJB), or Sale and Purchase Agreement.

6 . After your representative signs the AJB, the title deed will be transferred from the previous owner to you, making you the new owner of a freehold property in Bali.

 

Leasehold

 

Leasehold properties are a popular choice for many foreigners investing in Bali. You can check this article here to know more about the requirements to have a leasehold property in Bali.

 

 

1 . Once you've agreed on the price and terms, our legal team will draft the MoU, which you'll sign digitally.

2 . After digitally signing the MoU, you'll make a deposit payment for the property.

3 . Next, you'll need to complete the Power of Attorney (PoA) process in your home country following Apostille regulations. You can nominate a trusted person or our sales agent to sign the documents on your behalf.

4 . Your chosen representative with PoA will sign the lease agreement in the presence of a notary.

5 . After the lease agreement is signed, you'll need to make the final payment as per your agreement.

6 . Once the final payment is settled, the lease agreement will be transferred to you, officially making you the new owner of a leasehold property in Bali.

 

Buying Process On-Site

 

Freehold

 

1 . After negotiating the price with the property owner and reaching an agreement, our legal team will create a Memorandum of Understanding (MoU) and Pengikatan Perjanjian Jual Beli (PPJB), a binding sales agreement. This document serves as proof that the property is reserved for you and no one else can purchase it.

2 . You'll then sign the MoU or binding sales agreement.

3 . Following the agreement, you'll make the deposit payment as previously arranged.

4 . Subsequently, the notary will conduct due diligence.

5 . Once due diligence is completed, you'll need to finalize the remaining payment and cover any necessary taxes.

6 . After the final payment, you can sign the final document, the Akta Jual Beli (AJB), or Sale and Purchase Agreement.

7 . With the AJB signed, the title deed will be transferred from the previous owner to you, officially making you the new owner of a freehold property in Bali.

 

Leasehold

 

1 . Once you've agreed on the price and conditions, our legal team will draft the MoU, which you'll sign digitally.

2 . After digitally signing the MoU, you'll make a deposit payment for the property.

3 . Next, the notary will conduct due diligence, which typically takes around 7 working days. This thorough process ensures all documents are in order.

4 . Following due diligence, you'll sign the lease agreement in the presence of a notary. The lease agreement becomes effective after you complete the payment.

5 . After signing the lease agreement, you'll need to make the final payment as per your agreement.

6 . Once the final payment is made, the lease agreement will be transferred to you, officially making you the new owner of a leasehold property in Bali.

 

Those are how the buying process works if you choose to purchase Bali property with Bali Home Immo. Regardless of where you are located, abroad or in Bali, we are fully prepared to provide you with first class service. In addition, you can explore our carefully selected collection of properties that includes land, apartments, villas and much more, not only in Bali but also in other regions.

Disclaimer: The information provided in this article is intended for general informational purposes only. It should not be considered as legal advice or used as a basis for any legal, financial, or real estate decisions. Bali Home Immo does not accept responsibility for any consequences or losses arising from the use of this article's content. We strongly advise all readers to consult with their legal team, financial advisors, or real estate experts before making any property-related decisions, investments, or legal agreements. Property transactions involve a range of complex legal and financial considerations that may vary based on specific circumstances. This article is not a substitute for professional advice, and its content may not reflect the most up-to-date legal regulations or market conditions since this article is written. Readers are encouraged to seek personalized guidance to ensure that their property transactions comply with all relevant laws and regulations and are in their best financial interests.

Reopening International Travel Boosted Bali’s Villa Rental Market

 

Ever since Bali reopened its doors to foreign travelers, the hospitality sector experienced a surge of bookings which significantly affected villa rentals as well. In case you missed it, the airport is now open to international flights and fully vaccinated travelers can come to Bali without quarantine. Relaxed travel restrictions including the reinstatement of Visa on Arrival attracted travelers from all around the world to visit Bali again after more than two years, contributing to the recovery of its vacation rental market which is now making a comeback to a trend that was last seen before COVID lockdowns took place. 

We are excited to share the positive development that occurred in the last few months that signifies the return of Bali villa rentals into its former glory.

 

International tourist arrivals spiked since Bali’s reopening 

 

According to the report published by Statistics of Bali Province (BPS), the number of foreign travelers that arrived in March 2022 via air travel was 14.617 visitors, which is 11 times more than in February when travel restrictions began to ease. This number grew exponentially again in April, reaching 58.315 visitors in just one month. The official figures for May and the subsequent months weren’t released yet at the time of this writing, but it’s apparent that Bali is welcoming more and more visitors considering the recent development in the vacation home rental market which we’ll discuss below.

Digital nomads will be able to work from Bali for 5 years using a special visa

Photo by Peter Olexa

In addition, the government has announced the plan to issue a special visa for digital nomads soon. This visa will be a huge advantage for remote workers in Bali because it has a 5-year validity and the visa holder’s foreign-sourced income won’t be taxed. The plan was meant to be launched back in 2021 but had to be put on hold due to worldwide travel restrictions, and now is just the right time to put it back in motion again. 

Also read: Top 5 Places in Bali For Villa Investment

 

Villa rental revenue & occupancy rate increases significantly

 

The average monthly revenue of vacation home rentals continues to increase every month since Bali reopened, yielding double the amount generated in February within 3 months. Occupancy rate experienced a steady increase as well, with an average of over 60% from February to April and reached 80% in May. Villas in the 75th percentile performed remarkably better, yielding almost triple the revenue in February alone while the occupancy rate remained steady at over 90% from February to May.

Monthly revenue & occupancy rate of vacation home rentals in February - May 2022

Source: AirDNA

The opening brought back the trend that was last seen in 2019, when the vacation rental market enjoys good returns and continues to grow each year. Despite still in the early phase, the data proves that Bali’s short term rental industry can rebound quickly provided that the number of international visitors continues to skyrocket. At Bali Home immo, we also noticed that many villas for long term rental that were frequently available are now difficult to book due to overwhelming demand, which is a good indicator of increasing occupancy rate not only in short term rental but also in yearly and monthly rental villas.

Also read: How to Start an Airbnb Rental in Bali as a Foreigner

 

Market trend is shifting to pre-COVID statistics

 

After a long hiatus, the trend has shifted to pre-COVID times in such a short time span. Market revenue in May 2022 nearly matches the historical data of December 2019 and January 2020, yielding almost 120 billion IDR in just 3 months. Before COVID, the market was at an all time high with demand and revenue constantly increasing over the years. This development might mark the return of Bali’s lucrative vacation rental industry, presenting a golden opportunity for real estate investors to welcome a new wave of travelers eager to spend their holidays or settle on the island.

Villa rentals in Bali are thriving since the border reopened

Photo by Bali Home Immo

Looking to buy or rent a villa in Bali? Our selection of villas for sale and rent covers the best areas including Canggu, Seminyak, Pererenan, Sanur, Uluwatu, and more. Interested in buying land suitable for residential or investment development? We also have an extensive selection of land for sale and lease that you might be interested in. No matter what your goal is, we aim to help find the right property that suits you perfectly so please don’t hesitate to contact us.

Also read: How to Earn Passive Income from Property Investment in Bali 

Disclaimer: The content of this publication is provided as general information only and does not constitute legal, financial, tax, or other professional advice from Bali Home Immo. Some of the information provided on this publication is obtained from a third-party source and we do not guarantee that the content of this publication is accurate, complete or up-to-date. Past performance is not indicative of future performance and should not be relied upon as a basis for an investment decision.

Many foreign homebuyers find it difficult to understand how to buy property in Bali or Indonesia in general because the procedure is different as well as some terminology, it doesn’t help. Bali real estate agents are here to help so you don’t get stressed over such things, but a little extra knowledge never hurts anyone and we always advise our buyers to have a clear understanding before making a purchase.

Please understand that there’s a very long list of terms related to this topic and we’ll cover only the frequently asked ones here:

What is a leasehold property? What is the difference between leasehold and freehold?

 

Homes for sale in Bali are typically advertised using terms widely used in Commonwealth nations, though the meaning may not be exactly the same because Indonesian property law is different. Here are some of the terms used in Bali real estate marketing:

1. Freehold: Properties for sale where the permanent ownership (i.e. Hak Milik title) will be transferred from the seller to the buyer. The law dictates that freehold properties can only be owned in the name of Indonesian citizens and foreigners often use a nominee to circumvent this, but it's illegal and we do not recommend this option. The safest legal approach to own property in Indonesia as a foreigner is by acquiring it with a PT PMA, which we’ll talk about below.
2. Leasehold: Properties for long-term lease where the buyer pays for the entire lease period upfront. Essentially the buyer enters an agreement with the seller to use the seller’s property until the agreement ends, but the ownership of said property does not change. This is a highly desirable option as foreigners have the legal right (i.e. Hak Sewa) to temporarily own a property directly in their name without having to use a nominee or a company. The agreement is recorded by a notary in the form of a lease agreement which serves as legal proof.
3. Monthly/Yearly Rental: Properties for rent on a monthly/yearly basis where the buyer and seller enters an agreement, but it’s different from a leasehold agreement as there are limitations. Typically the buyer won’t be able to modify the structure and/or sublease the property, and the agreement itself may not be notarized.

 

Can a foreigner buy a property in Indonesia? Can foreigners own land in Bali?

 

Foreigners can buy and own leasehold properties in Indonesia in their name with Hak Sewa or Hak Pakai. Proof of ownership for properties with Hak Milik, Hak Guna Bangunan, and Hak Pakai title takes the form of a certificate which is registered and recorded in the Land Office (i.e. BPN), whereas for Hak Sewa it is a lease agreement made and recorded by a government-licensed notary.

1. Hak Milik: Freehold ownership title, which grants permanent ownership of a property. Hak Milik is registered in the Land Office under the owner’s name, with every ownership transfer and title conversion recorded in the certificate itself as well as the Land Office. Only Indonesian citizens are allowed to hold this title. 
2. Hak Sewa: Leasehold ownership title, which grants the right to occupy someone else’s property (land or villa) for a fixed duration. Foreigners can legally own a property with this title for up to 30 years and may extend for 20 more years, but in practice it is the agreement between the buyer and the seller that determines the lease duration. The agreement will also determine whether the buyer can alter, renovate, and sublease the building.
3. Hak Guna Bangunan (HGB): Title reserved for commercial purposes, converted from Hak Milik and the ownership is transferred to either an Indonesian-owned or foreign-owned company. Using his title is the most secure approach to own a property for foreigners and grants the ability to acquire freehold properties. An HGB is valid for 30 years and extendable for 20 more years, and it can be reverted back to Hak Milik if the ownership is transferred to an Indonesian citizen or certain legal entities such as state-owned banks or religious bodies.
4. Hak Pakai: similar to Hak Sewa, but involves the conversion of the Hak Milik into Hak Pakai in the Land Office which will cost more time and money. Hak Pakai is less used than Hak Sewa due to other factors including Hak Pakai properties may only be used for private residence.

Strata titles for apartment/condo units are available for foreigners, but properties with such titles are rarely found in Bali as there’s relatively few apartment buildings compared to villas.

 

Also read: How to Buy a Villa in Bali as a Foreigner in 4 Simple Steps

 

What is zoning law? What is a Banjar in Bali?

 

The governance in Bali is unique in many ways, but nonetheless, the property buying and selling process is largely the same as the rest of Indonesia.

1. Notary: In Indonesia, the term “notary'' can refer to a single person holding two public official positions. One is a public notary authorized to issue notarial deeds such as lease agreements, and the other is a land official known as Pejabat Pembuat Akta Tanah (PPAT) authorized to handle land registry. The two professions are distinct from one another, but “notary” is often used interchangeably because most public notaries also double as PPAT and vice versa.
2. Badan Pertanahan Nasional (BPN): The National Land Office responsible for issuing land certificates in Indonesia. BPN keeps a record of every ownership transfer and title conversions of a property, and the notary performs due diligence checks with them.
3. Land Zoning: Land in Bali is regulated by zoning law which restricts the land’s utilization depending on which zone it is located. The land zones that you would usually encounter are Pemukiman (residential zone), Pariwisata (touristic zone), and Pertanian (farming/green zone), with each zone having their own limitations.
4. Banjar: A community-level governing body uniquely found in Bali, responsible for the administration and governance of a given neighborhood. Each Banjar has their own customs and provisions. 

 

If this is your first time buying Bali properties for sale and/or unfamiliar with how property transactions work here, we strongly recommend buying through a licensed Bali real estate agent for a smooth and secure process. 

 

What is IMB or PBG? What is a PT PMA?

 

Having the necessary permits and licenses are crucial for the safety of your investment, especially if you’re operating a business such as villa rentals in Bali. As previously stated, each land zone has its limitations and it determines whether a property is eligible for certain permits or not.

1. Izin Membangun Bangunan (IMB) & Persetujuan Bangunan Gedung (PBG): Both refer to the building permit of a property which must be obtained before construction is completed. It is impossible to obtain a building permit for properties located in a Pertanian zone. While IMB is no longer in use since it was replaced by PBG in 2021, the term is still frequently used to this day.
2. Pondok Wisata: Homestay license is required to operate a house or villa as a daily rental. It can only be issued to properties located in a Pariwisata zone and to Indonesian citizens or companies including PT PMAs, but foreign individuals can acquire properties that are already registered with the license.
3. Perseroan Terbatas Penanaman Modal Asing (PT PMA): Foreign investment company legally established and registered in Indonesia, which may be partially or fully foreign-owned depending on the business classification. Establishing a PT PMA requires a hefty capital. Still, it is the most secure approach to owning a property for foreigners and grants the ability to acquire freehold properties with an HGB title.

 

Also read: How to Acquire a Property using a PT PMA

 

How much is property tax in Indonesia?

 

There’s the usual value-added tax and there are also other property taxes that you must take into account when buying Bali land for sale or Bali homes for sale, including:

1. Pajak Bumi dan Bangunan (PBB): Land and building tax of a property that must be paid annually. In leasehold or yearly rental properties, it is typically paid by the tenant rather than the landowner.
2. Nilai Jual Objek Pajak (NJOP): Tax object sale value applicable on freehold properties which determines the amount of transfer and acquisition tax that must be paid by the seller and the buyer, respectively. The value varies according to the region and increases from time to time, which must be checked by the notary as part of due diligence.
3. Bea Perolehan Hak Atas Tanah & Bangunan (BPHTB): Land and building acquisition tax applicable on freehold property transactions, which must be paid by the buyer. At the time of this writing, the tax value is 5% of the sale price.
4. Pajak Penghasilan untuk Pengalihan Hak Atas Tanah & Bangunan: Income tax on land and building transfer applicable on freehold property transactions, which must be paid by the seller. At the time of this writing, the tax value is 2.5% of the sale price.
5. Pajak Penghasilan untuk Sewa Tanah & Bangunan: Income tax on land and building lease applicable on leasehold property transactions, which must be paid by the seller. At the time of this writing, the tax value is 10% or 20% of the sale price depending on whether the seller has a tax identification number (NPWP) or not.
6. Nomor Pokok Wajib Pajak (NPWP): Tax identification number for individuals and companies in Indonesia. Foreigners residing in Indonesia on a long-term and/or generating income in Indonesia are obliged to have an NPWP.

 

Those are just the essential terms that you will hear or see often when browsing houses in Bali, and we truly hope it helps you understand better. If you’re looking for the best property agent in Bali to help you find the perfect home, feel free to contact us anytime.

Disclaimer: The information contained in this content is intended for general informational purposes only and should not be considered legal, tax, or other professional advice. Readers are advised to seek professional counsel, including legal and tax professionals, for any specific questions or concerns regarding property terms, regulations, and related legal and tax issues. Readers are advised that property terms, regulations, and tax laws are subject to change and may differ depending on specific circumstances or locations. The author and Bali Home Immo make no representation or warranty, express or implied, as to the accuracy, completeness, or currency of the information contained in this content, and shall not be held responsible for any consequences or damages arising from the reliance on the information provided in this content.