Bali has become one of the world’s most attractive spots for property investment—beautiful beaches, strong rental demand, and high ROI potential. But one question always comes up: can foreigners actually buy property in Bali?
The short answer: yes, but not in the same way as Indonesian citizens.
Indonesia’s property laws limit foreign ownership, but there are several legal and safe structures that allow you to invest.
In this guide, we’ll break down everything you need to know about the legal aspects of owning property in Bali, including ownership types, permits, taxes, and the safest ways to invest as a foreigner.
Legal Framework for Foreign Property Ownership in Bali
Property ownership in Indonesia is regulated under Law No. 5 of 1960 (The Basic Agrarian Law). This law established the foundation for all land ownership in Indonesia and introduced the “Hak Pakai” (Right to Use) title as the only form of direct land ownership available to foreigners. It also allows foreigners to lease land under legal agreements.
Over the years, the government has issued several additional regulations to refine these rules. Notably, Government Regulation No. 41 of 1996—later updated by Government Regulation No. 103 of 2015—clarifies the conditions under which foreigners can hold a Hak Pakai title.
More Legal Updates in Indonesia’s Property Sector:
- New Regulations Are Changing How You Buy Property in Bali
- Indonesia Eases Restrictions on Imported Goods: Brief Summary
- Buying Property in Bali as an Australian: Ownership Rules Explained
Bali Property Title for Foreigners
Indonesia has specific land laws that protect local ownership, but there are still legal and safe ways for expats to invest or live here. Let’s break it down simply.
1. Freehold (Hak Milik)
Freehold 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).
Some expats try to use local nominees (an Indonesian person’s name on the certificate), but this is risky and not recommended. It can cause serious legal issues if anything goes wrong later.
More about Freehold Ownership:
- Freehold Bali Villa Investment: Pros and Cons Revealed
- Freehold vs Leasehold: Which Ownership Type is Right for You?
2. Leasehold (Hak Sewa)
If you’re an expat who wants to own a villa or build a home in Bali, leasehold is your best option. You don’t own the land, but you lease it for a long term—usually 25 to 30 years—with the option to extend, sometimes up to 99 years.
During that period, you have the full right to use the land and property. You can stay there, rent it out, or sell the remaining lease to other people. You can also buy as many leasehold properties as you want—there’s no legal limit.
More about LeaseholdOwnership:
- What Investors Must Know About Leasehold Investment in Bali
- How Long Can You Really Lease in Bali? Unlock the Facts
- What Happens After the Lease Expires? Bali Leasehold Property Guide
3. Right to Use (Hak Pakai)
The Right to Use is a derivative right from Freehold, and it’s one of the most secure legal options for foreigners to invest in Bali. With this title, you’re allowed to own one property under your own name for 30 years, which can be extended for another 20 years, and renewed for up to 30 more years—giving a maximum total of 80 years.
When a foreigner buys under this title, the original Freehold is converted to Hak Pakai and registered under their name. If later sold to an Indonesian, it can revert to Freehold, letting you enjoy similar property value growth as locals.
However, this permit has limits on the property’s value and land size. It’s also only available for land that already has a building on it.
To be eligible, you’ll need to hold a residency permit, either a temporary (KITAS), permanent (KITAP), or a retirement visa if you’re over 55.
4. Right to Build (Hak Guna Bangunan)
The Right to Build (Hak Guna Bangunan / HGB) works similarly to the Right to Use (Hak Pakai), starting with an initial 30-year term and possible extensions. This land title is available to Indonesian companies, including those with foreign ownership (PT PMA).
In other words, it doesn’t matter whether the shareholders are local or foreign—as long as the company is legally registered in Indonesia.
If you’re establishing a foreign investment company (PT PMA), you’ll need at least two shareholders. The setup process is now quite simple; a notary can usually handle all the paperwork within a few days, and your company will be ready to operate.
More about Indonesia’s Building Permit:
Land Title Types
Indonesia has seven types of land rights (besides than the land zoning), grouped into two main categories. Make sure you understand each one before you buy land in Bali.
Primary Land Titles
- Freehold (Hak Milik): The highest and most complete ownership right in Indonesia, comparable to freehold property in other countries.
- Eligibility: Exclusively available to Indonesian citizens.
- Rights: Provides full control. Owners can sell, transfer, mortgage, or pass it on through inheritance.
- Leasehold (Hak Sewa): Gives the right to occupy and use land or buildings for a set period under a rental agreement.
- Eligibility: Accessible to Indonesian citizens, Indonesian companies, and foreign individuals.
- Right to Build (Hak Guna Bangunan or HGB): Allows the holder to construct and own buildings on land owned by someone else.
- Eligibility: Open to Indonesian citizens and Indonesian-registered companies.
- Rights: Transferable and can be used as loan security.
- Right of Use (Hak Pakai or HP): Gives the holder the right to use land for specific purposes, such as residential or commercial use.
- Eligibility: Available to Indonesian citizens, Indonesian companies, government bodies, and foreign individuals holding valid stay permits.
- Rights: Granted for a fixed period with possible extensions.
- Right to Cultivate (Hak Guna Usaha or HGU): Provides the right to cultivate land for agricultural, fishery, or livestock activities.
- Eligibility: Can be held by Indonesian citizens or Indonesian legal entities.
- Rights: Valid for up to 35 years, extendable, and can serve as collateral.
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.
More about Bali’s Land Rules:
Understanding the Legal Experts: Notary (PPAT) and Lawyer
The key figure in every property transaction in Bali is a licensed land notary, known as a PPAT (Pejabat Pembuat Akta Tanah). It's an official authorized to issue land deeds and register ownership. Not all notaries hold this qualification, so it’s crucial to confirm their PPAT status.
In rural areas without a PPAT, a district official may temporarily act in this role. Additionally, hiring a property lawyer is highly recommended to perform due diligence and protect your rights throughout the transaction.
More about Indonesia’s Property Legal Experts:
Visa and Residency Considerations
If you’re a foreigner planning to buy or manage property in Bali, it’s important to know how visa and residency rules work. Indonesia has several visa types, and some of them can help you live here legally while managing your investment.
1. KITAS (Temporary Stay Permit)
A KITAS is a temporary stay permit that allows foreigners to live in Indonesia for one year, with the option to extend. You can get a KITAS for different reasons, such as work, retirement, or family.
For property owners, the Retirement KITAS is one of the most common options. It’s available for people over 55 years old who want to live in Bali long-term and rent or lease a home.
2. KITAP (Permanent Stay Permit)
After holding a KITAS for a few years, you may apply for a KITAP, which gives you permanent stay rights.
This is great for investors or retirees who plan to stay in Bali for the long run. It also makes many legal processes, like extending leases or managing property, much easier.
Taxes and Fees
Before completing a property transaction in Bali, it’s important to understand the taxes and fees involved.
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 |
| Construction Tax | Tax on new building construction based on project cost | Upon building completion | 1.75%–6% of construction cost | Contractor or property owner (if self-built) |
| 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.
More About Bali Property Prices and Taxes:
- Understanding Bali Property Taxes for Foreign Buyers
- Cost of Property in Bali: What You Need to Know
Bali Property Investment Common Myths and Illegal Practices
There are several investment common myths and illegal practices that you better avoid:
- "I can buy freehold property under my own name"
Indonesian law allows only Indonesian citizens to hold Hak Milik (Freehold Title). If a foreigner’s name appears on a freehold certificate, it’s considered illegal and can be revoked by the government.
- "Using an Indonesian nominee is safe": It's risky and illegal. Even with a private agreement or contract, the property legally belongs to the nominee, not to you. If the relationship breaks down, you could lose the entire investment with no legal protection.
- "I don't need a notary or legal check": Every land certificate, lease contract, or company setup must be verified by a licensed notary or PPAT. They check ownership history, zoning, and validity — protecting you from fake documents or scams.
- "Leasehold is unsafe compared to freehold": Leasehold is a fully legal and recognized way for foreigners to invest. If drafted correctly by a notary, you can hold the right for 25–30 years (extendable) and safely rent or resell your interest.
- "I can build anything on my land": Even if you lease land legally, you can’t just start building whatever you want. You need proper building permits (PBG/SLF) and must follow zoning rules (yellow/red/pink zones). Building in the wrong zone or without permits can lead to demolition or fines.
- "No one checks if I break the rules": A dangerous myth. The Authorities conduct regular inspections. Illegal ownership structures or unlicensed rentals can lead to property seizure, deportation, or legal penalties like what happened in Bingin.
More about Common Mistakes Investing in Bali:
- 12 Hidden Dangers of Investing Alone in Bali: Avoid These Common Mistakes!
- Why Bali Property Investments Fail? Overlooked Reasons You Lose Profit
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.
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.
Interested in learning more? 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 proper channels such as leasehold agreements or by setting up a PT PMA (foreign-owned company).
Always work with a trusted real estate agent, notary, or legal team to make sure your purchase is safe and compliant. Avoid shortcuts like nominee agreements—they may seem convenient but come with serious legal risks!
FAQ
Yes, property investment in Bali can be very rewarding. The island sees steady demand, especially for rentals, which means owners can earn strong returns.
That depends on the location and type of property. Some regions like Tabanan or Seseh are still relatively budget-friendly, but hotspots like Canggu and Seminyak are becoming more expensive.
Villa prices vary depending on the area, demand, and available facilities. For example, villas in Kuta start at around $300,000; villa in Seminyak can cost about $500,000; while similar homes in Ubud average around $250,000.
Yes, buying a villa in Bali comes with taxes. You’ll need to pay a one-time Property Acquisition Tax (BPHTB), usually around 5% of the transaction value (varies by region and property assessment). There may also be ongoing Land and Building Tax (PBB).
