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.

7 Essential Tips on Preparing Your Villa for Rental and Sale

 

With Bali’s real estate industry making a steady return thanks to the reopening, now is your best chance to put your property on the market again since the demand for villa for sale and rent in Bali is on the rise. To help you prepare for this, we have compiled some of the most crucial things that you should do beforehand to increase the chance of landing a deal soon. 

 

How to prepare a villa for rental 

 

It’s important to understand that tenants looking to rent a villa in Bali for a short term and a long term have different preferences, so first you must determine what your target is before making any adjustments. If you’re going to rent on a daily basis, focus on providing amenities and services that cater to vacationers as they will want a hassle-free stay. Since running a daily rental requires full time attention, consider hiring a property manager to save time and energy.

 

Enclosing the living room is a simple yet significant improvement for long-term rental villas

Photo by Bali Home Immo

 

Long-term renters want a Bali villa that they can comfortably live in for an extended period, so focus on improving living comfort. Enclosing the living area, adding a gate to the carport, and offering optional services such as cleaning, gardening, and pool maintenance are small upgrades that will help your villa easier to market and make the tenant feel comfortable. Monthly renters have similar preferences with the addition of having expenses such as electricity, laundry, and cleaning services already included in the rent price so that they can move in and out without a hassle.

 

If your villa has not been occupied for a while, be sure to fix any damages and blemishes (ie. mold, chipped paint) before putting your villa back in. An unkempt villa is harder to market because most tenants don’t want to renovate before or right after they move in. People who are new in Bali won’t know the cost of minor renovations and/or how to do it, so offering a poorly maintained villa limits your range to clients looking for a good deal or who have been here for a few years. Many owners choose to look for a tenant first and then repair the villa before the tenant moves in to save upfront costs, but this approach doesn’t work. In short, a villa that is prepared properly will appeal to tenants that won’t hesitate paying more for quality.

 

Also read: Measuring the Impact of Airport Reopening on Bali Villa Rentals 

 

How to prepare a villa for sale

 

The approach is largely similar to above, but with some key differences that should be applied on older properties. If your villa is 10 years old or more, consider refurbishing the building with new  paint, fittings, and furniture to give it a refreshed look more suited to today’s trend. Due to a huge number of new investments and villas popping up every year, the design trend in Bali changes faster than in other parts of the world. Newly built villas will mostly fit the most recent trend, so your property will need an upgrade after just 2 to 4 years. Again, not all buyers are interested in buying an old villa and then renovating it themselves so it’s strongly advised to give the villa a bit of makeover before putting it on sale to attract a broader range of potential clients.

 

Design trend in Bali changes rapidly, so your villa will need a remodel in less than 5 years

Photo by Bali Home Immo

 

Another important thing to consider doesn’t have anything to do with the building itself, but rather something intangible. If you’re subletting a leasehold villa, it’s best to discuss the possibility for extension with the landowner if you haven’t done it in the beginning. It’s quite tricky to find a client that would buy a villa with less than 20-25 years left on the lease, but having the possibility to extend can alleviate this.

 

Also read: How to Renovate Bali Villas for Investment

 

Other things to consider when marketing your villa

 

When you’ve taken all the effort to make your villa look gorgeous, now it’s time to present it in the best possible way. In this competitive digital era, you will need to catch the attention of potential buyers at a single glance and having professional photos will definitely help. This is where home staging plays another important role because it’s difficult to make an empty room look good in pictures and you could lose a potential client due to lack of interest. A good first impression will entice a client’s curiosity, so don’t hesitate to spend a bit more in marketing your property.

 

Exclusive listing grants access to marketing channels that are not available to open listing

Photo by Bali Home Immo

 

If you’re working with real estate agents in Bali, consider entering an exclusive listing agreement for a more focused marketing effort. Exclusive listing gives you access to their full range of marketing services typically including paid advertisement, which will give your villa a better exposure that you don’t get from open listing. Agents can’t afford to spend all their marketing efforts on every property that they list, and an exclusive agreement ensures that your villa is prioritized. 

Do you have a villa for sale or rent in Bali? Let us help you find the right client by listing it with us. Since 2009, we have successfully helped hundreds of property owners in selling and renting out their properties to clients from all around the world. If you wish to have your property listed with us or have any questions to discuss beforehand, please do not 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.

Bali, the famed Island of the Gods, has long been a magnet for travelers seeking paradise. However, beyond its stunning landscapes and vibrant culture, Bali is emerging as a hotspot for real estate investment, and 2024 presents a particularly opportune moment to seize the advantages of this burgeoning market.

 

1. Economic Resilience

 

As the global economic landscape continues to evolve, Bali has showcased remarkable resilience. Despite the challenges posed by global uncertainties, the island's economy has demonstrated steady growth. With a diverse economy that includes thriving tourism, agriculture, and a growing service sector, Bali stands as an attractive investment destination.

 

2. Tourism Rebound

 

After a period of subdued travel due to external factors, Bali is experiencing a notable tourism rebound. The island's unique charm, coupled with improved connectivity and infrastructure, is drawing a surge in visitors. This resurgence in tourism not only enhances the appeal of Bali as a vacation destination but also contributes to the demand for rental properties, making it an ideal time for real estate investments.

 

3. Infrastructure Development

 

Investors often seek regions with ongoing infrastructure developments, and Bali is no exception. The island has been investing significantly in upgrading its infrastructure, including roads, airports, and utilities. These developments not only enhance the overall quality of life but also contribute to the appreciation of real estate values. Investing in Bali in 2024 allows you to capitalize on these positive changes.

 

4. Favorable Regulatory Environment

 

The Indonesian government has been proactive in creating a conducive environment for foreign investors. However, foreigners can’t own property in Indonesia without a golden visa (KITAS) –also referred to residence permit. Read more about property ownership titles here. Fortunately, this commitment to fostering a friendly investment climate enhances the appeal of Bali as a destination for global investors looking to diversify their portfolios.

5. Increasing Demand for Luxury Properties

 

Bali has witnessed a growing demand for luxury properties, driven by an influx of high-net-worth individuals seeking exclusive retreats. The island's unique blend of natural beauty and cultural richness attracts discerning buyers looking for premium real estate. Investing in upscale properties in Bali in 2024 positions you strategically to cater to this rising demand.

 

6. Sustainable Development Initiatives

 

Bali is increasingly embracing sustainable development practices. Eco-friendly resorts, green architecture, and a focus on preserving the island's natural beauty are becoming integral to new projects. Investing in Bali aligns not only with financial goals but also with the global trend towards responsible and sustainable investments.

 

7. Potential for High Returns

 

Historically, real estate in Bali has demonstrated strong appreciation. With the current economic and tourism resurgence, there is significant potential for high returns on investment. Whether you are considering short-term gains through rental income or long-term appreciation, Bali offers a compelling case for investors seeking profitable opportunities.

 

In conclusion, 2024 presents a golden opportunity for real estate investors to capitalize on the unique advantages offered by Bali. With a resilient economy, a rebounding tourism sector, ongoing infrastructure development, and a favorable regulatory environment, the Island of the Gods stands ready to welcome savvy investors looking to secure their stake in paradise. As the global economic landscape evolves, investing in Bali is not just a financial decision; it's an investment in the timeless allure of a destination where natural beauty and cultural richness converge to create a truly unparalleled experience.