Can Foreigners Buy Property in Bali? Full Legal Guide for You

Many foreigners want to buy a villa in Bali for various reasons, whether as a private holiday home, a peaceful place to live long-term, a retirement plan, or a profitable investment asset.

Although buying property here has become more common, navigating Indonesia’s real estate laws can still be confusing, especially for first-time buyers.

Indonesia does limit direct foreign property ownership.

However, expats can still acquire villas, land, or other real estate through several legal ownership structures for a set period of time.

Keep reading to learn more.

Key Takeaways

• Foreigners cannot own freehold in Indonesia, but they can legally invest through Leasehold (Hak Sewa), Right to Use (Hak Pakai), or Right to Build (HGB via PT PMA) with durations reaching up to 80–99 years.
• Each ownership structure has different usage rights, duration, and limitations, with leasehold being the most common for investors and HGB best suited for commercial development.
• Buying a villa requires legal verification, notary/PPAT involvement, and awareness of taxes & zoning regulations to ensure safe transactions and avoid illegal ownership risks.
• Working with trusted real estate and legal professionals makes the purchase process smoother, safer, and more profitable for foreign buyers in Bali.

The Basic of Indonesian Property Regulation

Property rules in Indonesia are based on Law No. 5 of 1960, also known as the Basic Agrarian Law.

Under this law, Hak Milik (Freehold or Right of Ownership) is the strongest type of land title. But it’s important to note that Hak Milik is only for Indonesian citizens.

Foreigners are not allowed to hold this title directly, and this is the main difference that shapes everything about property ownership in Indonesia.

Even with this restriction, the government understands that foreign investment helps the economy.

Because of that, they’ve created several regulations over the years to give foreigners safe and legal ways to hold property rights.

For non-Indonesians, the available options include:

• Leasehold (Hak Sewa)
• Right to Use (Hak Pakai)
• Right to Build (Hak Guna Bangunan / HGB)

So, foreigners usually obtain rights to use the land or to build on it, depending on what they need. Here’s the full explanation for each title.

Leasehold (Hak Sewa)

Leasehold (Hak Sewa), is one of the most common and straightforward ways for foreigners to legally control property in Bali.

Most leases in Bali begin at 25–30 years, and from our observation, this number is the sweet spot for investors.

But if you prefer to stay longer, many owners offer optional extensions that can bring the total period up to 80–99 years, depending on the agreement.

Here's how leasehold work:

1. You rent a property from the lawful owner (usually an Indonesian citizen who holds Hak Milik or freehold).
2. All agreement are drafted by a qualified notary or Land Deed Official (PPAT) to ensure legal protection for both parties.
3. You sign a formal lease agreement that gives you the right to use the land for a fixed period.
4. Once the lease is signed, you have the right to live on the property, build a villa, or use it as an investment asset (as long as you follow local regulations and the terms of the contract).
5. When the lease ends, ownership and land rights return to the original owner. So, it’s important to plan your exit or renewal strategy.

If you plan to rent your leasehold property for commercial purpose, you’ll need the proper permits like a Pondok Wisata license.

Another advantage is that foreigners can lease as many villas as they want, with no legal limit.

✅ Pros	❌ Cons
✅ Legal and safe for foreigners without needing to set up a company.	❌ Property value decreases as the lease period shortens.
✅ Lower entry cost than freehold, ideal for investors.	❌ Extension terms vary and depend on negotiation with the landowner.
✅ Easier to manage with the help of villa management service or real estate agent	❌ Commercial rentals require permits, adding steps and costs.

Read More: Freehold vs Leasehold Bali Property: Which One Is Better for Investors?

Right to Use (Hak Pakai)

Hak Pakai is a legal title that allows someone to use a piece of land for a certain purpose—usually for living.

For foreigners, this is the most common way to legally own the right to stay on a property in Indonesia.

The validity period of the Right to Use starts at 30 years, and can be extended for another 20 years and then another 30 years—giving a total potential duration of up to 80 years.

Though this may seem to work “similarly” to Hak Sewa or Leasehold, a property held under Hak Pakai for personal living cannot be rented out commercially.

Other differences of Hak Pakai include:

• A foreigner (or foreign family) is generally allowed only one Hak Pakai property for personal living. While leasehold has no limitation.
• A minimum property value requirement, which varies by region. In Bali, this usually falls between IDR 2–5 billion (around USD $130,000 - $325,000).
• Hak Pakai can be applied to State-owned land or to freehold (Hak Milik) land that gets converted into Hak Pakai.
• Foreigners can use Hak Pakai to build a villa on vacant land (except for strata-title apartments, where the building typically must already exist).

To qualify for Hak Pakai, you must meet certain requirements:

• Hold a valid residency permit such as KITAS or KITAP, or,
• Have a qualifying special visa, such as an Investor KITAS or the Second Home Visa

✅ Pros	❌ Cons
✅ Stronger and more secure than leasehold.	❌ Mainly for personal residential use, not commercial activity.
✅ Fully registered under the foreigner’s name.	❌ Limited to one property per foreigner or foreign family.
✅ Can be inherited by eligible beneficiaries.	❌ Must meet minimum property value requirements.
✅ Can be transferred to another eligible foreigner.	—
✅ Can be sold back to an Indonesian, who may convert it back to freehold.	—

Right to Build (Hak Guna Bangunan)

Next we have Hak Guna Bangunan (HGB) or Right to Build.

This is the land title used for commercial projects and property development in Indonesia.

It allows the holder to build on, use, and control the land for a long period, making it the closest structure to “ownership” available for foreign investors.

However, HGB cannot be held by an individual foreigner.

To use this title, foreigners must set up a PT PMA (Perseroan Terbatas Penanaman Modal Asing)—a foreign-owned company legally registered in Indonesia.

When a PT PMA is formed, it becomes an Indonesian legal entity.

This allows the company—not the foreigner personally—to hold HGB land. Your company also can buy freehold land and convert it into HGB.

HGB offers long-term security similar to Hak Pakai, from initial period up to 30 years with 20 years extension and another 30 years renewal (total up to 80 years).

This makes HGB ideal for serious investors and developers who need full operational control.

However, projects under HGB must follow this requirements:

• Zoning rules (e.g., only build in commercial/tourism zones)
• Balinese architectural guidelines
• Height limits (maximum 15 meters across Bali)
• All relevant building permits and operational licenses

✅ Pros	❌ Cons
✅ Gives companies full authority to design and construct buildings according to their project goals.	❌ Requires ongoing professional management to ensure the land and building remain compliant.
✅ Provides stronger legal certainty for long-term commercial planning.	❌ Can be more expensive to maintain due to corporate operational costs.
✅ Allows projects to access bank financing using HGB as collateral.	❌ Renewal processes may involve additional evaluations and approvals.
✅ Offers flexibility to sell or transfer the development to another eligible company.	❌ Any changes to project purpose may require new permits or updated approvals.
✅ Enables developers to scale up (e.g., multiple villas, resort expansions) under one corporate structure.	❌ Administrative mistakes—like late filings—can affect future extensions.

Freehold (Hak Milik)

Freehold title means full ownership of the land—forever. However, this type of ownership is only for Indonesian citizens.

Foreigners can’t fully own land in Indonesia, but they can hold rights that feel like ownership, such as the Right to Build (HGB) and the Right to Use (Hak Pakai).

In some cases, expats try to use the local nominee system to own freehold property.

However, this method has a high risk and can cause serious legal issues.

✅ Pros	❌ Cons
✅ Strongest and most absolute land ownership right in Indonesia.	❌ Any foreign involvement requires additional legal structures, which may cost more and more complex.
✅ Can be sold, transferred, gifted, or inherited without restrictions (among Indonesian)	❌ Converting a freehold property for foreign use has a high risk
✅ Offers full control over how the land is used within zoning rules.	—
✅ Highly attractive for long-term generational ownership.	—

Read More: New Regulations Are Changing How You Buy Property in Bali

Land Title Types

What about land ownership? Indonesia actually has seven types of land rights.

But just like villas, expats can only buy land in Bali through leasehold, Right to Build (HGB), or Right to Use (Hak Pakai).

Primary Land Titles

• Freehold (Hak Milik): The highest and most complete ownership right in Indonesia, comparable to freehold property in other countries.
• Leasehold (Hak Sewa): Gives the right to occupy and use land or buildings for a set period under a rental agreement.
• Right to Build (Hak Guna Bangunan or HGB): Allows the holder to construct and own buildings on land owned by someone else.
• Right of Use (Hak Pakai or HP): Gives the holder the right to use land for specific purposes, such as residential or commercial use.
• Right to Cultivate (Hak Guna Usaha or HGU): Provides the right to cultivate land for agricultural, fishery, or livestock activities.

Other Land Titles

• Right to Manage (Hak Pengelolaan or HPL): A management right granted over state-owned land for specific uses, typically managed by government institutions or appointed organizations.
• Strata Title (Hak Milik Atas Satuan Rumah Susun or HMSRS): Represents ownership of individual units within a multi-level building, such as an apartment complex, tied to the main land title where the structure stands.

Read More: Bali Land Zoning and Land Regulations Explained

Understanding the Bali Legal Experts: Notary (PPAT) and Property Lawyer

One of the most important figures in any property transaction in Bali is the land notary, officially known as a PPAT (Pejabat Pembuat Akta Tanah).

A PPAT is not just a standard notary. They are specifically authorized to prepare and legalize land deed documents, verify ownership, witness signatures, ensure compliance with local regulations, and handle the final registration process with the Land Office (BPN).

Not every notary is certified as a PPAT, so it’s essential to confirm that the notary you work with holds this qualification.

In rural areas where a PPAT may not be available, a designated district official can temporarily take on this role.

Alongside this, working with a property lawyer is highly recommended. Their job is to conduct due diligence, review legal risks, and make sure your rights as a buyer are fully protected from start to finish.

Read More: How to Find Good Notary Services in Bali for Foreigners

Property Taxes and Fees

Most people tend to focus heavily on the property price and forget about the taxes and additional fees involved—which often leads to an unexpected final cost.

These costs apply to both buyers and sellers and can vary depending on the property type, ownership title, and transaction structure.

Tax Type	Description	When It Applies	Typical Rate	Who Pays
Property Acquisition Tax (BPHTB)	One-time tax when property ownership changes hands	Before the notary signs the property transfer deed	5% of property value (sale price or government-assessed value, whichever is higher)	Buyer
Annual Property Tax (PBB)	Recurring land and building tax based on assessed property value	Once a year within six months after SPPT is issued	0.1%–0.5% of assessed value	Property owner
Property Transfer Tax (PPh)	Income tax on property sale	At the time of sale, before notary finalizes transaction	Freehold: 2.5%, Leasehold with NPWP: 10%, Foreign without NPWP: 20%	Seller
Income Tax on Rental Income	Tax on rental earnings	Annually, based on residency	Residents: 5%–35% progressive, Non-residents: 20% flat	Property owner (or lessor)
Value Added Tax (PPN)	Tax on new or off-plan properties from developers	When buying/leasing from developer	11% of selling price	Buyer
Luxury Property Tax (PPnBM)	Tax on high-value properties	For properties priced ≥ IDR 30 billion (~USD 2M)	20% of sale value	Seller or developer
Name Change Tax (BBN)	Fee to register new owner on property certificate	During ownership transfer	(Land price per m² ÷ 1,000) × total land size	Buyer

In addition, a notary fee usually costs around 1% of the transaction amount and can be negotiated for higher-value deals.

For detailed real case example of taxes and fee calculation in Bali, check out our dedicated article: Understanding Bali Property Taxes for Foreign Buyers.

Bali Property Investment Common Myths and Illegal Practices

• Using a Local Nominee to Hold Land: Placing property under an Indonesian individual’s name to bypass ownership laws is illegal and extremely risky. Even with agreements, the property legally belongs to the nominee, so you have no enforceable ownership or protection.
  
• Skipping Proper Legal & Title Checks: This leaves buyers vulnerable to fake certificates, unclear ownership history, or land disputes.
  
• Assuming Leasehold Is Unsafe: Some people still thinks leasehold is unsafe. In fact, leasehold is a completely legal and secure structure for foreigners when drafted properly.
  
• Building Without Required Permits: Constructing a villa without proper building approvals (PBG/IMB, SLF) or renting it out without a Pondok Wisata/Hotel License can lead to shutdowns, fines, or forced demolition.
  
• Ignoring Zoning Restrictions: Not all land can be developed. Areas classified as sacred, agricultural, or community-owned (banjar land) may be protected. Building there can result in community conflict and legal action.
  
• Believing “No One Will Check”: Inspections do happen. Illegal ownership structures, unlicensed rentals, or zoning violations have resulted in fines, deportations, and property seizures — such as cases recently seen in Bingin.

Read More: Is Bali a Safe Place to Live? 5 Tips for Risk-Free Villa Purchase in Bali

We Simplify Your Bali Investment Process

With so many legal regulations and documents to handle, Bali Villa Realty by ILOT Property is here to make your investment process simple and stress-free.

We’ve helped many clients successfully purchase villas in Bali from abroad. One example is a client from Dubai who bought a villa without ever setting foot in Bali.

Watch their story here.

At Bali Villa Realty, we provide services tailored specifically to expats and investors:

• Curated Property Listings: Villas for sale and rent, in prime Bali locations like Canggu, Seminyak, Ubud, and Bukit.
• Legal Guidance: Assistance with leasehold, freehold alternatives (PT PMA, Hak Pakai), and compliance with Indonesian law.
• Investment Advisory: ROI projections, rental yield insights, and recommendations for profitable areas.
• End-to-End Support: From property tours to negotiations, contracts, and even post-purchase management.

Ready to invest smartly in Bali? Get your FREE Bali investment plan now.

Conclusion

While freehold (full ownership) is only available to Indonesian citizens, foreigners can still legally invest in property through leasehold or PT PMA.

Remember to work with a trusted real estate agent that has an in-house legal team, like Bali Villa Realty, to ensure a smoother process and a safe, compliant purchase.

Still have questions? Feel free to ask our agent anytime—completely free and with no strings attached.

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