Freehold vs Leasehold: Which Ownership Type is Right for You?

If you’re an expat looking to invest in Bali’s real estate, you’ve probably asked yourself: Which ownership option is better: freehold or leasehold?

Both are widely used by expats living and investing in Bali today. But choosing the right one matters, because each comes with its own set of pros and cons.

Don’t worry. This guide will break it all down for you. We’ll compare both ownership types, so you can make a smart, informed decision that aligns with your financial goals and long-term plans.

Let’s dive in!

Key Takeaways

• Leasehold is cheaper and easier for foreigners, but ownership is limited by time (usually 25–30 years). This option is best for short- to mid-term use or those with lower budgets.
• Freehold offers full ownership and long-term security, but it costs more and requires a company setup for foreigners. This is ideal for those looking for higher resale value.
• Your choice should align with your investment goals, budget, and time horizon in Bali.

Start Exploring the Market: Available Bali Villas for Sale - Leasehold and Freehold

What Is Leasehold? 

A leasehold is a long-term rental agreement in which you "own" a property for a set period, usually 25 to 50 years. When the lease expires, the property reverts to the landowner.

However, you can often negotiate extensions, making leasehold properties appealing to those who want flexibility without a lifelong commitment.

If you’re an expat who wants to keep your options open—whether for future investments or to move back home eventually—leasehold might be your best bet.

It also allows you to buy property in Bali without dealing with complex legal setups like forming a foreign business in Indonesia.

How Leasehold Works in Bali

1. Find Leasehold Property: Search for a villa or land offered under a leasehold title.
2. Negotiate Lease Terms: Agree on the lease period (usually 25–30 years) with the landowner. You can also discuss extension terms upfront.
3. Sign Lease Agreement: A legal lease agreement is drafted and signed before a notary. This contract outlines your rights, lease duration, payment terms, and responsibilities.
4. Make Lease Payment: Pay the agreed lease amount, either upfront or based on agreed installments.
5. Use the Property: You now have the right to use the property: live in it, build on it, or rent it out—depending on what the lease allows.
6. Extend or Exit: Before the lease ends, you can negotiate an extension or transfer the remaining lease to someone else. If not extended, the property returns to the landowner.

Benefits of Leasehold Property

• More Affordable Entry Price: Leasehold properties are significantly cheaper than freehold, especially in popular areas like Seminyak or Canggu.
• Access to Prime Locations: Allows you to invest in high-demand areas without the high upfront cost of freehold land.
• Higher ROI Potential: Lower purchase price means better potential for rental yield and capital gain.
• Strong Rental Demand: Bali’s thriving tourism market supports consistent rental income, especially for well-located leasehold villas.
• Investment Flexibility: Leaseholds are ideal for investors focused on short- to mid-term returns without the long-term commitment of land ownership.

For example, a freehold 5-bedroom villa in Pererenan may cost around $3.45M, while a similar leasehold option could be just $525K. This approach can save you a significant amount of money.

Limited Picks: Browse top-tier leasehold and freehold properties in Bali!

What Is Freehold?

On the other hand, freehold means full ownership of the land and property. You own it for life and can pass it on to your heirs.

However, as a foreigner, you cannot directly own freehold property in Indonesia.

To do so, you’d need to set up an Indonesian legal entity, such as a PT PMA, which is more complex and has higher costs and regulations.

How Freehold Works in Bali

1. Set Up a PT PMA: Establish a foreign-owned company (PT PMA) in Indonesia. This requires an initial capital of IDR 10 billion (approximately USD 700,000).
2. Purchase Property Under the Company’s Name: You can bought the freehold property under the company’s name. The company becomes the legal owner.
3. Develop or Use the Property: You can now build, rent, or use the property as your business asset. The ownership is permanent as long as the company exists.

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

The Benefits of Freehold Property

• Lifetime Ownership: Freehold gives you full ownership of the property with no expiration—ideal for long-term planning.
• Stability for Future Generations: It’s the best option if you want to pass down property as a family asset or build generational wealth.
• Full Control Over the Property: You can renovate, redevelop, or expand the property freely to increase its value.
• Stronger Long-Term Equity: As Bali’s real estate market continues to grow, freehold properties offer solid capital appreciation over time.
• Better Resale Potential: Freehold titles are often more attractive to buyers, especially Indonesian nationals and companies.

Comparing Freehold vs Ownership Property Options in Bali

To help you make an informed decision, here's a side-by-side comparison of the key differences between freehold and leasehold property in Bali:

Aspect	Freehold Property	Leasehold Property
Ownership Rights and Authority	Full ownership with complete control to use, modify, or transfer the property without time limits.	Right to use the property for a set period (usually 25–35 years); ownership remains with the landowner.
Contract Duration and Terms	No expiration—ownership is permanent, offering long-term security.	Lease period is fixed; property returns to the landlord after expiry unless extended.
Flexibility and Investment Prospects	High flexibility to use, sell, lease, or develop the property, offering strong investment potential.	Limited flexibility due to lease terms; restrictions may affect resale value and investment appeal.
Financial Considerations and Expenses	Requires higher upfront investment but offers long-term value and control.	Lower initial cost, but may include ongoing fees like ground rent and service charges.

Read More: Selling Your Villa in Bali? Don’t Overlook This One Thing

Freehold vs Leasehold Bali: Pros and Cons

Now, each option comes with its own advantages and limitations, especially for foreign buyers.

Leasehold: Pros and Cons

Pros:

• More Affordable Entry Point: Leasehold properties are much cheaper than freehold, offering an easier way to enter Bali’s property market with lower upfront costs.
• Flexible Ownership Terms: Lease periods of 25–30 years (with extension options) provide flexibility for those not seeking permanent ownership.
• Lower Legal Barriers for Foreigners: Leasehold is the simplest legal route for foreigners to control property in Indonesia without forming a PT PMA or using a nominee.

Cons:

• Limited Ownership Duration: Once the lease expires, the rights revert to the landowner unless you negotiate an extension.
• Decreasing Resale Value Over Time: The shorter the remaining lease, the less attractive the property becomes to potential buyers.
• Uncertainty Around Lease Renewal: Extensions are not guaranteed and must be renegotiated at the end of the term.

Freehold: Pros and Cons

Pros:

• Full and Permanent Ownership: You own the property outright through a legal entity, offering maximum security and long-term control.
• Better Long-Term Investment: Freehold properties generally appreciate more in value over time.
• Unlimited Usage Rights: You have full rights to redevelop, renovate, or resell the property without restriction.

Cons:

• Higher Upfront Cost: Freehold land typically comes with a premium price tag, along with capital and administrative costs.
• More Complex Legal Setup: Foreigners can’t directly own freehold titles.
• Ongoing Compliance: PT PMA ownership requires regular legal and tax reporting to remain valid.

How to Choose the Right Property Title in Bali

Before buying property in Bali, one of the key decisions you’ll need to make is whether to go with a freehold or leasehold title.

To help you make a smart and confident decision, here are some essential tips to consider:

• Align with Your Long-Term Vision: Think about your future goals—whether it's living in Bali long-term or investing—so you can decide which title suits you best.
• Understand Your Financial Readiness: Review your budget carefully, including upfront costs and long-term obligations for each ownership type.
• Get Expert Guidance: Consult with trusted real estate professionals or legal advisors who understand Indonesian property laws.
• Do Thorough Research: Look into local regulations, current market trends, and specific property details to support your decision.
• Know Your Risk Profile: Consider how much risk you're comfortable with when it comes to ownership terms and investment returns.

Read More: Cost of Property in Bali: What You Need to Know (2025)

Which Ownership Type Is Right for You?

Leasehold is a great choice if you’re not ready for a long-term commitment. It also offers the opportunity to earn a quick return on investment without requiring a large upfront cost.

On the other hand, freehold provides stability and full control over your property, but it comes with higher initial costs and more legal complexity.

Don’t worry if you’re still unsure—we’re here to help answer all your questions before you make any decisions.

Whether you need more information about investing in Bali or help finding the perfect property, we’ll guide you toward the best choice based on your goals and budget.

FAQ

1. Which is better freehold or leasehold?

Leasehold is generally more affordable upfront, making it a good option for first-time buyers or those with a limited budget.

2. Is it worth buying a leasehold?

Yes, leaseholds are usually worth it—especially if there’s a long term remaining. Extensions (like after 90 years) are often inexpensive, particularly if the ground rent is low.

3. Is freehold better than condo?

Freehold properties tend to appreciate faster than condos. Since there are no monthly fees and you get full ownership, they appeal more to long-term buyers and investors.

4. How much does it cost to convert leasehold to freehold?

The cost of converting a leasehold property to freehold can vary widely. In certain regions, such as Dubai, the conversion fee may be around 30% of the property's assessed value.