Bali has long been a desirable destination for investors, retirees, and expatriates seeking a tropical retreat. However, navigating Indonesia’s property laws can be complex, particularly for foreign buyers. Unlike Indonesian citizens, foreigners cannot directly own freehold property (Hak Milik) but can acquire property through leasehold agreements (Hak Sewa) or by establishing a foreign-owned company (PT PMA) to obtain building rights (Hak Guna Bangunan - HGB).
To ensure a smooth and legally sound transaction, buyers must prepare a set of essential documents. This guide outlines the documentation required for both leasehold and freehold acquisitions via PT PMA, equipping prospective buyers with the knowledge necessary to navigate Bali’s real estate market confidently.
Documents Required for Foreigners Purchasing Leasehold Property in Bali
Leasehold transactions involve minimal documentation, making this the preferred option for many foreign buyers. Below are the required documents before purchasing a leasehold property:
1. Passport (Valid for at least six months)
A valid passport is required to verify the buyer’s identity. Many notaries and real estate agencies recommend ensuring the passport has at least six months of validity remaining to avoid administrative complications.
2. Apostilled Passport Copy (If Required by the Notary)
An apostilled passport copy may be requested to make your documents legally valid for use in Indonesia, especially if you’re signing from abroad or giving someone Power of Attorney. Since Indonesia joined the Apostille Convention in 2021 (under Presidential Regulation No. 2 of 2021), documents like a passport copy can be recognized without needing further embassy legalization. In practice, notaries don’t often ask for this when dealing with buyers—especially for leasehold deals—but it really depends on the notary. Some might still request it, so it’s good to be prepared just in case.
What is an Apostille?
An apostille is an internationally recognized certification that verifies the authenticity of a document for use in foreign jurisdictions. This certification is issued by the buyer’s home country’s government authorities, such as:
- United States: U.S. Department of State
- United Kingdom: UK Foreign, Commonwealth & Development Office
- Australia: Department of Foreign Affairs and Trade
Buyers should confirm with their real estate agent or notary whether this requirement applies to their transaction.
3. Indonesian Taxpayer Identification Number (NPWP) (If Required by the Notary)
Although not always mandatory, some notaries may request a Taxpayer Identification Number (NPWP), particularly if the buyer intends to rent out the property and generate taxable income. Especially if the buyer is a PT PMA, an NPWP is required for tax compliance and must be registered during company setup. The NPWP can be obtained through a tax consultant or legal representative in Indonesia.
Documents Required for Freehold Property Acquisition via PT PMA (Hak Guna Bangunan - HGB)
For foreign buyers who wish to hold land under an ownership structure, the PT PMA route provides a legal pathway to acquiring long-term building rights (HGB). This process, however, requires compliance with Indonesian Company Law.
1. Passport & Apostilled Passport Copy
As with leasehold transactions, a valid passport and, in some cases, an apostilled copy are required for company registration and property transactions. This requirement is specifically for the Director of the PT PMA signing before the notary. If the company has more than one director, the President Director is preferred, provided they are present at the time of signing. If the President Director cannot attend, another registered director may sign, but their passport must also be provided and apostilled if required.
2. PT PMA Company Registration Documents
To purchase property under Hak Guna Bangunan (HGB), the buyer must establish a foreign-owned company (PT PMA). This involves:
- Deed of Establishment (Akta Pendirian PT PMA) – The official document registering the company.
- Business Identification Number (NIB) – Required for legal business operations.
- Company Taxpayer Identification Number (NPWP Perusahaan) – Used for corporate tax compliance.
3. Sale and Purchase Agreement (Akta Jual Beli - AJB)
The Sale and Purchase Agreement (AJB) is a legally binding contract between the PT PMA and the seller, detailing the property’s price, terms, and conditions. This document must be notarized and registered with the Indonesian National Land Agency (BPN). It is recommended to have it notarized even when not mandatory, as this will simplify future processes such as reselling the property or extending rights.
4. Land Certificate (Sertifikat Hak Milik - SHM), Converted to Hak Guna Bangunan (HGB)
Since a PT PMA cannot hold freehold land (Hak Milik), the property’s land certificate must be converted into Hak Guna Bangunan (HGB) under the company’s name. Since a PT PMA cannot hold freehold land (Hak Milik), the property’s land certificate must be converted into Hak Guna Bangunan (HGB) under the company’s name. This conversion process is facilitated by a notary and the BPN. While it is legally possible for the buyer to handle the process independently if familiar with the procedure, it is generally more practical and efficient to appoint a notary to manage it directly with BPN.
5. Proof of Payment (Bank Transfers, Tax Receipts)
- Buyers must maintain records of all payment transactions, including:
- Bank transfer receipts
- Tax payment receipts (such as the 5% transfer tax on property purchases)
6. Building Permit (IMB/PBG)
If the property is under construction or will undergo modifications, a valid building permit (IMB/PBG) is required. If the existing property lacks this permit, the PT PMA must apply for one.
Final Thoughts
For foreign investors, understanding and preparing the required documents is crucial to ensuring a legally compliant and seamless property acquisition in Bali.
- - Leasehold (Hak Sewa) remains the simplest and most hassle-free option for foreigners.
- - PT PMA (Hak Guna Bangunan - HGB) provides greater investment control but involves additional company registration and tax compliance.
- - Hak Pakai (Right to Use) is another legal option available to foreigners for residential purposes, typically granted for 30 years and extendable. However, it is only applicable under specific conditions—such as holding a KITAS or KITAP—and usually requires the property to be built on state land, making it less flexible and less commonly used in practice.
-
“Professional Guidance is Key”
It is highly recommended to consult with a trusted notary and legal advisor to verify the legal standing of the property and ensure all documents comply with Indonesian property regulations.
For official information on property rights and transactions, visit the Indonesian National Land Agency (BPN).
