Interested in getting a leasehold property in Bali? Great choice! Many foreigners prefer this type of ownership because it offers flexibility and a more affordable way to invest in Bali real estate. However, it’s important to pay attention to your lease period.
The lease duration is something many investors overlook before signing a contract. A short lease (under 20 years) rarely give good ROI, while 99-year leases are complex and often need to be passed down later—especially for individual tenants.
But don’t worry, we’ve identified the ideal lease length based on our clients’ real investment experiences in Bali. Keep reading to find out!
Key Takeaways
- The best leasehold length in Bali is around 25–30 years, offering a balance between flexibility, ROI, and legal simplicity.
- Longer Leases = Better Value. Longer leases (20+ years) attract more buyers, provide stable rental income, and give investors better control and resale potential.
- Here's how leasehold works: Foreigners lease land and gaining rights to use (Hak Sewa) and build on it for a set period, with options to extend or sublease.
- Remember to plan smart. Work with experts to secure the right term and handle legal requirements properly.
How Long Should a Bali Property Lease Be?
In Bali, foreigners can typically lease property (villa and land) for 25 to 30 years, with the option to renew. Renewal agreements often allow extensions of the lease term, sometimes adding up to a total of 80 years.
Alternatively, investors can also negotiate longer lease terms upfront—up to 99 years. While this is possible, it’s less common and requires careful negotiation and proper legal documentation.
Read More: Freehold vs Leasehold: Which Ownership Type is Right for You?
Why 25 Years of Lease Is the Sweet Spot for You
Based on our experience handling clients’ leasehold properties, leases with around 20 to 25 years remaining often hit the sweet spot.
This duration gives buyers peace of mind; enough time to enjoy the property without feeling rushed to extend the lease immediately.
That said, it doesn’t mean you can’t sell a property with a shorter lease. You just need to adjust your expectations and be ready to negotiate. Many buyers are still interested, especially if they love the villa and the price reflects the remaining lease term.
Read More: How Much Does It Cost to Extend a Leasehold in Bali?
How Does Leasehold Property Work in Bali?
A leasehold title (known in Indonesia as Hak Sewa) grants the tenant the legal right from the landowner to use, build on, and benefit from a property for a specific period.
Here how it works: the lessee pays the lessor an agreed amount to gain the right to develop and use the land. The lessee may also transfer or sublease those rights to another party before the lease period ends. Simple, right?
Read More: What Happens After the Lease Expires? Bali Leasehold Property Guide
Benefits of Long Term Rental in Bali
If you’re thinking long-term lease with your villa investment in Bali, having a longer lease can give you more control, flexibility, and peace of mind. Here are some key benefits of holding a long lease:
- Faster Return on Investment: On average, most investors recoup their initial costs within 7 to 8 years.
- Ongoing Rental Income: Once the payback period is over, most of what you earn from the property becomes profit.
- More Flexibility: If you’re not in a rush to sell, you can keep renting the villa and enjoy steady income.
- Better Position for Future Sale: A longer lease makes your villa more attractive to buyers, especially if the lease has 20+ years remaining.
- Option to Extend: You can extend the lease early to add value and give your property a fresh start—especially useful if your paperwork is already clean and legal.
- Less Pressure, More Control: Whether you sell now or later, a long lease gives you time to plan and negotiate on your terms.
Conclusion: Plan Your Lease Carefully for More Profits
If you want to earn higher profits, we recommend leasing your property for around 25–30 years (the sweet spot). Don’t forget to prepare all the required documents to keep your investment legal and on track.
Need someone to guide you through the process, from finding the right villa to managing your stay? We’re here to help!
Our expert agents will walk you through every step, from renting out your villa to planning your strategy and ensuring everything is in order.
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FAQ
1. Can I sell my leasehold property in Bali?
Yes. Selling a leasehold title may happen in two different forms:
- As a sublease that you grant to your buyer, or
- By cancelling your lease and replacing it with a new lease directly between the owner of the freehold title and your leasehold buyer.
2. Can you Airbnb a leasehold property in Bali?
Yes, you can. Renting out a leasehold villa on platforms like Airbnb is common and can be highly profitable, thanks to Bali’s strong tourism demand.
3. What is the leasehold tax in Bali?
Leasehold properties are subject to a 10% tax on the total transaction value. This is usually paid by the seller, but buyers should confirm it’s handled correctly during negotiations.
4. What are the disadvantages of leasehold property?
The main downsides include rising ground rent, service fees, limited ownership time, and added costs for permits or approvals. Since leaseholds decrease in value over time, it’s important to plan carefully and seek professional advice.
