What You Need to Know About Property Ownership Title in Bali

 

From Leasehold to Right to Build, discover the different types of property ownership in Bali and what they mean for foreign buyers in this informative article.

 

Leasehold (Hak Sewa):

 

• Any type of VISA, including Tourist Visa
• Property rights are defined on a notarized agreement

 

Right to Build (Hak Guna Bangunan/HGB):

 

• Need to have a PT PMA
• Need a KITAS/residence permit

 

Right to Use (Hak Pakai):

 

• Need KITAS/residence permit
• Can only buy a single property per title

 

Right to Own (Hak Milik):
 

• Only eligible for Indonesian citizen

 

Leasehold (Hak Sewa)

 

When it comes to leasehold properties in Bali, the good news is that you can lease a property with any kind of Visa, including a tourist Visa. Unlike other forms of property ownership, leasehold doesn't require foreign nationals to register a company or obtain a residence permit in Indonesia. This makes the process much more accessible and straightforward for those looking for leasehold properties in Bali.

 

Leasehold villa in Canggu.

Photo by Bali Home Immo

 

In Bali, leasehold ownership grants you full control over the property for a specified amount of time, typically 25 years, although contracts for up to 30 years are not unusual, as well as negotiated extensions of 10-20 years. This flexibility, attractive price, and ease of acquiring a leasehold property have made it a popular choice for foreigners looking to invest in Bali's vibrant property market.

 

Right to Build (Hak Guna Bangunan/HGB)

 

On the other hand, if you are considering acquiring a freehold property in Bali through a foreign-owned company, known as a PT. PMA (Perseroan Terbatas Penanaman Modal Asing), a specific visa is required. The title you will get through PT PMA is an HGB (Hak Guna Bangunan) title, which will allow you to fully own property for up to 70 years. The 70 years comprises 30 years of initial validity + 20 years of extension + 20 years of renewal. 

 

And the great thing about this title is you can pass the HGB title to another company or sell it to Indonesian nationals and convert the HGB title to the Hak Milik title, which makes the property remains highly valuable to Indonesian nationals. You can also buy several properties under the name of the company and use them to operate as a business.

 

HGB title is excellent to build a villa or apartment complex.

Photo by Bali Home Immo

 

To acquire a freehold property through a PT. PMA, first, you’ll have to register a new PT PMA or acquire an existing one, you can set up a 100% foreign-owned PT PMA in the Hospitality Management Consulting category for a short-term villa rental or the Real Estate category for a long-term villa rental. You can acquire property in the name of your PT PMA immediately after the company’s Articles of Association have been approved and the company’s tax card has been issued which usually takes around 2-3 weeks.

 

Second, you must obtain a specific visa called a "KITAS" (Kartu Izin Tinggal Terbatas), which is a limited stay permit. It is important to note that the process of obtaining a KITAS can be more complex and time-consuming compared to leasehold properties. Working with a reputable legal and consulting firm specializing in foreign investments can greatly assist you in navigating through the necessary procedures and requirements.

 

Right to Use (Hak Pakai)

 

The Hak Pakai title has some similarities to HGB. Those similarities include:

1. Foreigners need to have a residence permit/KITAS.
2. Ownership validity of up to 70 years, comprises 30 years of initial validity + 20 years of extension + 20 years of renewal.
3. Family can inherit the title
4. Can be sold to Indonesian nationals and converted to Right to Own title (Hak Milik)

 

Besides those similarities, the Hak Pakai title doesn’t require you to own a PT PMA and can be bought individually. However, several limitations made many foreigners not choose this title:

1. Hak Pakai title only let you own land that has a building on it.
2. Limitations to operating as a business
3. A minimum property value of 5 billion rupiahs for a building built on land, and 2 billion rupiahs for an apartment.
4. Can only buy a single property.

 

Right to Own (Hak Milik)

 

Hak Milik title is hereditary, permanent, and valid for a lifetime. Basically, the Right to Own is the strongest property title that people can have over land in Indonesia.

 

A Hak Milik title can be transferred to another party through inheritance or purchase. However, Hak Milik is only owned by Indonesian citizens and legal entities that have met the requirements.

 

Only Indonesian citizens can own Hak Milik title.

Photo by dashu83 on Freepik

 

Foreigners who acquire property rights by inheritance without a will or by marital property mixing, as well as Indonesian citizens who have property rights but lose their citizenship, must relinquish their property rights within one year of acquiring the rights or losing their citizenship.

 

In summary, if you are interested in leasehold properties in Bali, you can proceed without needing a specific visa. The leasehold agreement, which grants you temporary ownership, can be established without the complexities associated with obtaining a residence permit or registering a company. However, if you have your sights set on acquiring a property through a PT. PMA, it is crucial to ensure that you meet the necessary visa requirements and comply with Indonesian regulations.

International arrival to Bali is steadily rising and Bali Villa is welcoming the opportunity

 

It has been 6 months since the Indonesian government decided to reopen its border to international arrivals. After a long pandemic, Bali started welcoming foreign nationals to relieve the pent-up pressure after the pandemic. We’re delighted to show you how Bali is faring so far.

 

Bali Tourist Arrival Spike

 

Bali is still experiencing a steady increase in foreign tourist influx to the island. Since the border reopened in February 2022, foreign tourists have started flocking to Bali.

 

In July, the statistics are already showing a similar number as in 2012 and 2013, when Bali tourism began to flourish. This is only the foot of the mountain as the number of arrivals is expected to rise.

 

On that note, the current market villa in contrast to that years is incomparable, as the villas on the market now are already in higher demand and way more expensive.

 

Source: BPS Provinsi Bali (2022)

 

Bali Resilience and Its History of Strong Rebound to Recover

 

Looking back to its previous record of major disruptive events, Bali typically showed a tendency to rebound stronger from adversity.

 

In 2003 the SARS outbreak forced several countries to restrict their borders and further reduced tourists coming to Bali by another 22.76%. However the next year, Bali rebounded strongly with 48.23% growth compared to the previous year.

 

An interesting case was also observed when Mount Agung erupted in 2017. This was followed by multiple minor eruptions in 2018 and 2019. However, international arrivals to Bali unexpectedly increased in those years.

 

This demonstrates Bali's strong attraction to international tourists despite the natural disaster occurrence.

 

Bali comes back stronger after a difficult period.

Photo by Ruben Hutabarat

 

The most recent post-pandemic event in Bali shows the same signs of a strong U-shaped recovery in its statistics. In 2021 Bali received only 51 visitors for the whole year. Upon reopening the border in February, the number of international visitors surged to more than 600 thousand by July. That is a more than 10 thousand percent growth.

 

Pent-up demand after a long period of lockdown might also contribute to its explosive growth.

 

Bali always recovers stronger from challenging periods.

Source: BPS Provinsi Bali

 

Bali Villa Market Overview

 

Despite the number of international arrivals to Bali having a shocking spike and constant rise, the 4-5 starred hotel experienced a dynamic trend and relatively low occupancy rate. On average, the occupancy rate between January to July only scores around 25-27%. 

 

Despite the massive rise in foreign tourist arrival, the starred hotel still maintains a relatively low occupancy rate.

Source: BPS Provinsi Bali (2022)

 

A stark difference in the occupancy rate of villas. The 50th percentile of villas in Bali alone at least had a 60% occupancy rate in March. This number continues to rise until it finally reached 91% in August.

 

Villa occupancy retains a higher rate compared to starred hotels

Source: AirDNA (2022)

 

The demand and revenue growth for villas also continues to increase. The number of nights booked keeps rising from March until reaching nearly 40,000 in August.

 

Villa booking between March to August saw a staggering 152% increase.

Source: AirDNA (2022)

 

Bali villas in the 50th percentile range generated 20.9 million IDR in monthly revenue in March and steadily climbed to 110 million IDR in August. Whereas the 75th percentile of Bali villas generated around 53 million IDR a month in March and reached 179 million IDR in August.

 

Source: AirDNA (2022)

 

Opportunity for Bali Villa Market

 

The data shown above is a sign for Bali villas to seize the golden opportunity.

 

The lower numbers of people staying in hotels and positive growth in the demand for villas indicate that there’s a growing trend among international travelers that led them to lean toward villa rentals rather than hotels. It is even more so after the pandemic.

 

It stands to reason that villas offer more varied options for various kinds of tourists. It can accommodate the single digital nomad while also providing options for the large tourist group.

 

According to a survey, more people preferred to rent a private villa than a hotel for added privacy, security, and peace of mind.

 

Villa offers more variable options to choose from.

Photo by Bali Home Immo

 

Besides the supporting market statistics, there are other factors worth considering for the villa business in Bali after the border reopened.

 

As Indonesia established its vision to organize tourism that would bring brand awareness and revenue, its government also introduced convenient regulations and favorable policies that would facilitate tourism.

 

The most recent one is the implementation of a digital nomad visa that may let foreigners stay continuously in Indonesia for a total of 6 months.

 

The digital nomad visa will be an opportunity for the Bali villa

to capture the longer-stay international visitors.

Photo by Unsplash

 

The second home visa also might entice the advanced age group to spend their retirement years in a more climate-friendly Bali.

 

G20 as one of the most influential international events also brings new bouts of tourists to Bali, expanding its brand awareness and range of visitors to a considerable degree.

 

Also Read: Bali Opportunity in the G20 2022

 

With all these factors considered, the villa rental market in Bali should seize the golden opportunity presented.

 

Looking to buy or rent a villa in Bali? Our villas for sale and rent cover 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.

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 in 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.

Tips to buy land in Bali from the experts

 

Purchasing land in Bali can be an exciting and rewarding experience, but it can also come with its challenges and risks. To help you make the most informed decision and avoid costly mistakes, here are five common pitfalls to be mindful of when purchasing land in Bali.

 

Not verifying the road access to the property

 

When purchasing a property, road access can be fully or partially private, it is important to ensure its status before deciding. Properties that are priced significantly lower than comparable properties may be lacking road access. This can lead to costly expenses, such as purchasing a portion of a neighbouring property to gain access to the land.

 

If you’re inspecting land that has no road access to it, then you should ensure that you have adequate space to build your own road or you might have to enter an arrangement with your neighbor to get shared access to an existing road. Consulting with a local real estate agent can help ensure that you are aware of any potential issues and can take the necessary steps to secure access to your property. Our team of consultants is available to assist with any concerns you may have regarding road access and other property-related issues in Bali.

 

Photo from iStock Photo

Verify the tax rules applicable for Bali real estate transactions 

 

It's important to be aware of the tax rules when it comes to Bali real estate transactions. If you purchase freehold land, then you must pay land and building acquisition tax which amounts to 5% of the purchase price. You can read more about the tax and other necessary info about Bali property regulation here.

 

Photo from iStock Photo

Not being mindful of zoning restrictions when purchasing property in Bali 

 

All land in Bali is subject to zoning law which regulates the kind of activities and development that you can do on it. The zones that you will commonly encounter are Pemukiman (residential), Pariwisata (touristic), Pemerintah (governmental), and Pertanian (agriculture, commonly referred to as green zone). A reminder you might want to note, it is not possible to obtain building permits for land located in a green zone.

 

Keep in mind that the zoning of a given area can change from time to time, and the best way to check it is to contact the local government office of the area.

 

To ensure that your intended activities align with the zoning regulations, it is recommended to seek the guidance of experts. At Bali Home Immo, we can assist and introduce a legal advisor that will help navigate the zoning regulations in Bali and advise you on the appropriateness of the zoning for your planned activities.

 

Photo from iStock Photo

 

Not having the right real estate partner to carry out proper research

 

When it comes to purchasing land in Bali, you want to make sure you have a reliable and experienced real estate partner on your side. This person should be knowledgeable about the local market trend and be able to carry out proper research on your behalf to make sure you're making a profitable investment. A good real estate partner will also be able to negotiate on your behalf, with real-case experience in the same location as your intended property, all of this to make sure you get the best deal possible.

 

Photo from iStock Photo

 

Not choosing the right legal partner & notary 

 

Anything legal-related can easily become a headache without the right partner. That is why choosing a legal partner with experience is the most important for having crystal clear due diligence on your land. This includes drawing up contracts, reviewing title deeds, and making sure the transaction complies with all relevant laws and regulations, as we have mentioned in the previous list.

 

Photo from iStock Photo

 

Avoiding these five common mistakes will ensure your experience purchasing land in Bali is smooth and stress-free. As Canggu's first real estate agent, our team of experts has been helping property seekers for over 13 years find their ideal home and investment in Bali. We invite you to schedule a consultation with us for expert guidance and support.

 

Disclaimer: The information contained in this content is intended for general informational purposes only and should not be considered legal advice. Readers are strongly advised to seek professional legal counsel for any specific questions or concerns regarding the purchase of land in Bali, including but not limited to tax and zoning regulations. The author and Bali Home Immo shall not be held responsible for any consequences or damages arising from the reliance on the information provided in this content