The PBG and SLF permit define the design and specification of the authorized building. They also grant permission for the building's intended usage. If a building does not comply with the registered permit, or even worse doesn’t have one, it is most likely that the building will be demolished by force, just like what happened in Uluwatu despite its near-finished construction.

The purpose of building permits is to carefully evaluate building designs to ensure they are properly planned and constructed in accordance with government regulations. This process will result in safer, hazard-resistant structures with proper electrical and wastewater systems, all while minimizing environmental impact.

So, what are the building permits in Bali? Let’s find out.

IMB (Izin Mendirikan Bangunan)/Building Permit

IMB is the name of building permits in Indonesia, until its update and replacement by PBG/SLF in 2021. As a result, IMB permits are no longer issued. However, if you already possess an IMB for a villa, this building permit remains valid and recognized by the government as long as your building stands.

PBG (Persetujuan Bangunan Gedung)/Building Approval

PBG or Persetujuan Bangunan Gedung, or Building Approval, in accordance with the latest policy of Peraturan Pemerintah No. 16 Tahun 2021 Tentang Bangunan Gedung. With this permit in place, you have the legal rights to construct an entirely new building, undertake renovations, or maintain your registered building according to the permitted technical requirements.

This permit only needs to be created once and will be valid as long as the building ages. If you happen to make any changes or modifications to the building, you only need to notify the Public Works Department for an amendment to the permit and get their approval.

An important note to keep in mind is that you should apply for the PBG certificate before commencing your construction.

SLF (Sertifikat Laik Fungsi Bangunan Gedung)/Certificate of Occupancy

This is another certificate that is a must-have besides PBG, and it serves as proof that your building is built by the applicable standards including safety, environment, culture, etc. You get this certificate after the PBG.

If your building is a residential one, the SLF certificate must be renewed every 20 years, and other than residential it must be 5 years.

SBKBG (Surat Bukti Kepemilikan Bangunan Gedung)/Certificate of Building Ownership

SBKBG is a proof certificate of rights to the ownership status of the building. You process and get this document along with the SLF. It is important to note that this certificate is different from land certificates (Hak Milik, HGB, etc.), as those only state the ownership of the land.

RTB (Rencana Teknis Pembongkaran Bangunan Gedung)/Technical Plan for Building Demolition

RTB is a document containing the results of identification of the built condition of the Building and its environment, demolition methodology, demolition risk mitigation, demolition technical plan drawings, and demolition implementation schedule.

You only need this permit if you plan to demolish your villa or any kind of building on top of the land.

If you don’t want to be a landlord or prefer to sell rather than rent out, you can buy off-plan villas and then resell them upon completion. Buying off-plan means that you’re purchasing a property before or during its construction at a lower price, and then you can sell it again at a higher price after it’s finished. There are more risks in buying off-plan compared to buying a finished villa, but buying the project from a trustworthy agent and a reputable developer is key to this kind of investment. 

What about investing for passive income? Then turnkey properties are the answer. These types of property are offered with a management program that handles the operation, maintenance, sales and marketing of the villa while the owners are allowed to stay in the property for a certain duration every year. That way, you will have a fully serviced vacation home that generates rental income without having to lift a finger.

How much does it cost to buy property in Bali?

As discussed in a previous article, the price of a newly built modern villa on a 3 are land in Berawa offered with a 25 year leasehold starts from $300.000 whereas land price in the area is around $1000-$1700 per are per year. Property prices in tourist areas such as Seminyak, Kuta and Canggu are very high, hence you should consider regions such as Padonan, Babakan, Pererenan, Cemagi, or Tumbak Bayuh for inexpensive options.

There is a wide variety of more affordable alternatives available if you don’t have the budget for a brand new villa. If you don't need large space, consider investing in apartments instead as you can find good ones priced between $60.000-$150.000 in Canggu and the surrounding areas. Alternatively you can choose to buy an older villa and then renovate it, which will be more time consuming but can save you a lot of money. Regardless of which option that you choose, it’s possible to invest with a budget of $150.000 or less.

Luxury and beachfront properties are expensive (starting from $500.000 and up) but the price is justified by their higher rental and occupancy rate. It’s really difficult to find beachfront villas for sale in Bali because they’re fairly easy to rent out and owners wouldn’t willingly sell such a profitable investment. Luxury villas for sale are easier to find, but you need to assess the property’s financials first to determine whether it’s a good investment or not. One way to achieve this is by requesting an ROI forecast from the developer or the real estate agency that lists the property.

Note that you will also have to take 5% transfer tax for freehold purchases and notary fee into account as well. Luxury houses (priced ~$1.38 million and above) and condos (priced ~$690.000 and above) are subject to 20% sales tax on luxury goods.

How do I buy property in Bali?

The process of acquiring property in Bali can be safe and straightforward if you work with partners that you can trust in securing your investment. Indonesia’s legal system is very different and you have to get good legal advice before committing to any decision. A professional real estate agency is the place to go as they can guide you through the transaction process, appoint a reliable legal advisor, provide useful investment advice, find properties that match your search criteria, and help you rent out or resell your property later on.

Avoid buying properties from questionable sources and using risky methods such as the nominee arrangement, the only safe approach of acquiring property is either with a leasehold or a foreign investment company (PT PMA). Foreign individuals have the right to rent a property in Indonesia, whereas establishing a PT PMA demands a lot of resources but provides greater freedom and better protection.

What should I do next?

Sit back, relax, and enjoy the island life. Consider renting out your villa occasionally or when you’re overseas for cash flow and your property won’t be unattended while you’re away. If you choose to sell the house in the future, asking for a valuation from real estate agencies will reveal the property’s market value and having the right price will increase the likelihood of selling quickly. 

Should you hire a property manager or manage the rental yourself? Handling a rental property requires constant attention and not everyone has the time or energy for that. For a hassle free experience, hire a trustworthy management company that will ensure your property is well managed by providing full-time support including sales, marketing and operational support so you can focus on everything else and enjoy the rental returns.

For more information on investing in Bali property or real estate related matters, do not hesitate to contact us as we’re more than happy to help.

Many luxurious off-plan villas for sale are offered as turnkey properties which are purpose built for passive investment rather than residence, with the owner typically allowed to stay in the property for a certain period of time per year and the villa’s management will rent it out for the owner. In short, you will have a luxurious vacation home that generates rental income on its own.

Feel free to browse our luxury villa collection if you are looking to buy or rent one, and do not hesitate to contact us for more information on luxury villas.

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. Past performance is not indicative of future performance and should not be relied upon as a basis for an investment decision. 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.