Can Foreigners Rent Out Villas in Bali? Here’s How to Do It Right

Villa rental is one of the most common ways people invest in Bali property. And yes, foreigners can rent out their villas too. It’s a great way to earn income, especially if you’re not using the villa all the time.

But let’s be honest—it also comes with challenges. You’ll need to think about permits, how to manage the villa, deal with tenants, and pay taxes.

If that sounds like a lot, don’t worry. You’re not the only one feeling this way.

The good news? With the right plan, renting out your villa can be simple and smooth.

This guide will help you step by step—from getting the right legal papers to choosing how to rent, managing guests, and keeping your property in great condition. Let’s get started!

How to Rent Out Your Property Legally as Foreigner?

Bali has a great rental market potential. In April 2025 alone, tourism increased by around 25.56%, and the occupancy rate reached approximately 57.23% (read our full report here).

Now, let’s look at what you need to get started renting out your villa in Bali legally as a foreigner.

1. Know the Legal Side First

Let’s start with the basics: in Bali, foreigners can own property on a leasehold basis or through a legal structure like a PT PMA (a foreign-owned company). 

If you’re leasing, you’re free to rent it out, provided the property is in the correct land zoning and you have the proper permits.

Key Takeaways:

• Check the Zoning: To rent your property legally, it must be in a commercial or tourism zone. If it’s in a green zone, you could face serious issue like what’s currently happening at Bingin Beach.
• Get the Right Permit: Get a Pondok Wisata license (homestay permit) if you want to rent your property short-term, like on Airbnb. You can apply if your villa is in the right zone and follows building rules.

Pro Tips: It is highly recommended that you work with a property lawyer or a knowledgeable agent to avoid legal hassles and navigate the paperwork.

Read More: What Is Pondok Wisata Bali Homestay? Tips to Get Villa Renting License

2. Decide How You Want to Rent It Out

There are different ways to rent your property in Bali:

• Short-Term Rentals: These are popular with tourists and offer higher income potential, especially during high season.
• Long-Term Rentals: Great for a more steady income, often preferred by expats looking to live in Bali for a few months to a year.

Each has its pros and cons. Short-term rentals can earn more in peak season, but long-term rentals mean less turnover and fewer management hassles.

3. List Your Property Online

Now, it’s time to get your property in front of renters. Choose platforms that work best for your rental goals:

• Airbnb and Booking.com: Perfect for short-term stays, especially for tourists looking for vacation rentals.
• Long-Term Rental Sites: For long-term rentals, many people use real estate websites like Bali Villa Realty or join Facebook groups.

Remember to create a catchy title, clear description, and set a competitive price. Don’t be afraid to check other similar listings to see what they’re offering—just to keep yours competitive.

Read More: Ultimate Guide: How to ​​Start an Airbnb Business in Bali

4. Manage Bookings and Guest Expectations

Whether you’re nearby or not, managing bookings and guests can be a big task. Consider these options:

• Self-Manage: If you live in Bali and have time, you can handle the property on your own.
• Hire a Property Manager: Property managers can handle everything for a fee—like talking to guests, cleaning, maintenance, and sometimes marketing. It’s the easiest way to keep things running smoothly if you’re not in Bali.

Read More: Managing Your Bali Investment Property from Abroad: Expert Tips

5. Pay Attention to Taxes and Reporting

Rental income in Bali is taxable, and as a foreigner, it’s important to understand how it works to stay compliant. Here’s a quick breakdown:

Tax Name	Description	Types / Conditions
Income Tax (PPh)	Tax on income earned from renting out your villa in Bali. The rate depends on your residency status and legal business structure	– Non-resident individuals: 20% final tax on gross rental income – Resident individuals: Progressive tax from 5% to 35% on net income – PT PMA: 25% corporate income tax on net income
Value Added Tax (VAT / PPN)	Applies if your villa rental includes hotel-like services (daily housekeeping, breakfast, etc.)	– VAT Rate: 11% (as of 2025) – VAT Registration: Required if annual revenue exceeds IDR 4.8 billion

Income tax payments are due monthly and must be reported by the 10th of the following month. VAT, on the other hand, must be paid by the 15th.

In most cases, your tenant or property manager will withhold the tax and send it to the tax office for you. So you can sit back and relax.

6. Consider Marketing Your Property

Source: Bali Villa Realty

List your villa on booking sites is a good start. But, to boost bookings and get a higher rental income, you may need to do a bit of marketing. Here’s how:

• Create a Social Media Page: Show off your villa with photos and promos to attract more interest.
• Encourage Guest Reviews: Positive reviews help your villa stand out and appeal to future guests.
• Run Special Offers: Discounts for early bookings or long stays can help fill your calendar, especially during the low season.

Daily, Monthly, or Yearly Rentals: What’s Best for You?

We often get questions from clients who want to rent out their villa: “How long should I rent it for to get the best return?”

There are a few rental options to choose from: daily, monthly, or yearly. Here’s a quick comparison to help you see the differences:

Rental Duration	Best For	Pros	Cons
Daily Rentals	Tourists, short-term guests, Airbnb-style stays	– High income potential (8–14% annual yield) – High occupancy (up to 90% in hotspots like Canggu) – Great for maximizing short-term ROI	– Needs full management (daily): cleaning, bookings, guest support
Monthly Rentals	Digital nomads, expats, long-stay travelers	– Steady income – Less effort than daily rentals – Growing demand in hotspots like Canggu and Umalas	– Risk of careless tenants – Harder to replace tenants (if problems arise during the rental period)
Yearly Rentals	Hands-off owners, passive investors	– Low effort (no frequent turnover) – No need for daily or monthly management	– Lower overall income – Long commitment with one tenant

Remember that each type of rental requires different legal documents and strategies. Here’s a clearer breakdown:

1. Daily Rentals

Daily rentals are perfect for maximizing income and attracting tourists or short-term through platforms like Airbnb, Booking.com, or Agoda. 

However, you’ll also need to invest in property management services to handle cleaning, bookings, and guest communication.

To operate your villa as a daily rental in Bali, there are two key legal requirements:

1. You’ll need a Pondok Wisata license: As mentioned earlier, this license is mandatory for daily rentals, ensuring your property complies with local laws and regulations.
2. Your villa must be located in the pink zone: This zoning area is specifically designated for tourism and hospitality businesses, making it the only legal zone for daily rentals.

With consistent demand and high occupancy rates, daily rentals in popular areas like Canggu can generate exceptional returns with a 90% occupancy rate.

Rental yields in these hotspots typically range from 8–14% annually, driven by Bali’s strong appeal to vacationers.

For deeper insight, you can check out our case study on how profitable a Canggu rental could be.

Source: Bukit Vista – Average occupancy rate in Canggu

2. Monthly Rentals

Source: Bali Villa Realty – Luxurious 4-bedroom villa for rentals in Berawa 

Monthly rentals offer a good balance between consistent income and easier management. This option is great if you don’t want to deal with frequent turnovers or daily cleaning.

But, you still need proper documentations:

• Legal Permit: You must ensure your villa has a valid PBG/SLF (Building Permit). On the other hand, you don’t need a Pondok Wisata License for monthly stays.
• Rental Agreement: A clear contract is key. Outline rent, payment terms, tenant responsibilities, and property rules.
• Tax Obligation: Monthly rental income is subject to income tax in Indonesia, typically 10-20% of your earnings.

These rentals are ideal for digital nomads, long-term travelers, and expats.

Demand for mid-term stays is growing in places like Canggu and Umalas, as shown by rising occupancy and nightly rates.

Source: Oniriq Property – Increasing demand on night booked properties and daily rates in Canggu

3. Yearly Rentals

Source: Bali Villa Realty – Spacious 9-bedroom villa for yearly rental in Canggu

Yearly rentals involve leasing your villa to a single tenant for a longer period (12 months or more). 

This is the most hands-off option, but generally offers lower income than short-term rentals.

The legal documents you’ll need if you’re interested in trying yearly rentals are:

• Legal Permit: Your villa must still comply with zoning laws and have a valid IMB/PBG (Pondok Wisata License is not required).
• Rental Agreement: A detailed contract is essential for yearly rentals. Have it drafted or reviewed by a lawyer to ensure both parties are protected.
• Tax Obligation: Like monthly rentals, you’re subject to income tax on rental earnings.

Long-term villa rentals on a yearly basis are ideal for owners who want peace of mind, with minimal involvement and stable occupancy. You don’t have to worry about frequent turnover, cleaning, or constant guest management.

Read More: How Long Should Your Lease Be When Selling a Property in Bali?

Want an Easier Start to Rent Out Your Villa?

Renting out your villa in Bali as a foreigner is not only possible—it’s also a smart source of income.

But it does come with homework: making sure your villa meets legal requirements, choosing the right rental strategy (daily, monthly, or yearly), and deciding how involved you want to be in managing guests and bookings.

We understand it can get overwhelming when you try to do everything on your own. Many foreigners face the same challenge, and that’s where we come in.

At Bali Villa Realty, we help foreign investors navigate Bali’s rental market with confidence.

From finding the right property to ensuring it meets all legal requirements, our team has the local expertise to make your investment journey smooth and profitable.

If you’re looking to rent out your villa with complete management, marketing and proper report, schedule a free consultation with one of our senior advisors below. Let’s make your Bali investment dreams a reality!

FAQ

1. How much does a villa cost to rent in Bali?

Villa rental prices in Bali vary. Short-term stays cost $100–$500+ per night, while long-term rentals range from $1,000 to over $5,000 per month, depending on location, size, amenities, and season.

2. What is the ROI on villas in Bali?

Returns on villa rentals are often strong, typically between 7% and 18% annually. Some top-performing properties can even reach 20%.

3. Can you get a loan to buy a villa in Bali?

Foreigners can get a mortgage in Bali, though it comes with unique conditions. Local banks offer options mainly for those living in Indonesia, and they usually require a large down payment (at least 40%)