Key Takeaways
- When a leasehold expires in Bali, you can renew or renegotiate the lease, sell the remaining lease as an exit strategy, or return the property to the landowner.
- Buildings and improvements usually revert to the landowner at the end of the lease unless your contract clearly states otherwise, making the original lease terms critical.
- Lease renewal costs are unpredictable and often rise over time, as they depend on market conditions and land values; negotiating renewal terms early can reduce future risk.
- Proper planning—such as choosing longer leases, including sale or renewal clauses, and understanding exit options—helps foreign buyers protect their investment and avoid costly surprises.
Leasehold is the main way for foreigners to own property in Bali. It offers access to Bali’s property market with a more affordable entry point. But what happens when the lease expires?
You can either renew the lease or return the property to the landowner. Some people also choose to sell the remaining lease to make a profit.
However, there are still crucial points you need to understand in order to handle the end of a leasehold period wisely and with minimal risk.
Today, we’ll share tips and strategies for when your lease ends—based on our experience helping clients navigate expired leases in Bali.
What Happens When a Leasehold Ends?
When you buy a leasehold villa in Bali, you’re buying the right to use the property for a set number of years. Lease terms are typically between 25 to 30 years, though they can be as short as 15, or as long as 99 years.
After a leasehold term expires, both the property and the land it sits on automatically revert to the freeholder.
At that point, you no longer have the legal right to occupy the property, and the leasehold interest ends as the lease and freehold merge back into a single ownership.
The freeholder may choose to issue a formal notice requiring you to vacate the property, which you are legally required to follow.
If no notice is given, you may have the option to negotiate an extension of the lease so you can continue living there.
Read More: Freehold vs Leasehold Bali Property: Which One Is Better for Investors?
What Happens to Building and Improvements when the Lease Expires?
Another thing to consider is what happens to any buildings or improvements you’ve made on the property when the lease is up.
In Bali, the general rule is that structures and improvements revert to the landowner once the lease expires unless you agree on something different.
However, if you structure your lease well, you may be able to negotiate terms that let you sell any improvements to a new leaseholder.
But more often than not, all the improvements you've made will revert to the landowner. So, plan and decide wisely.
Read More: What Investors Must Know About Leasehold Investment in Bali
How Can I Extend My Bali Villa Leasehold?
There are two ways to extend a lease: a formal route and an informal route.
- Formal lease extension: Under the formal route, eligible leaseholders have a legal right to extend their lease. Both the leaseholder and the freeholder must follow a set legal process, including fixed steps and timelines defined by law.
- Informal lease extension (negotiation): The leaseholder approaches the freeholder directly to ask whether they are willing to negotiate a lease extension. If both parties are open to discussion, this approach can be quicker and cheaper than the formal process.
If renewing the lease doesn’t suit your plans, there are other options to consider:
- Return the property to the landowner: You may return the property to the landowner. However, in most cases, any buildings or improvements made to the property will also revert to the landowner unless otherwise stated in the lease.
- Sell the remaining lease: If your lease still has time remaining, you can sell the remaining years to another buyer. This option can be useful if your plans change and you want to recover part of your investment. Read the guide here: Best Exit Strategies for Your Bali Property Investment
How Much Does It Cost to Extend a Leasehold?
Now, you might be wondering how much it actually costs to extend a leasehold. The honest answer is: it depends.
Several factors affect the cost, including:
- How many years are left on the current lease
- The ground rent
- Any improvements already made to the property
- The property’s current market value
Because of this, there’s no fixed price for extending a leasehold. If you’d like a rough estimate based on your specific situation, you can speak with our senior advisor for free.
Consequences of Not Renewing a Lease in Bali
When a property lease in Bali reaches its end date, both landlords (lessors) and tenants (lessees) face some consequences:
- For lessees: Missing the lease renewal deadline can lead to losing property rights, disrupting income, business, or investment plans. It may also cause legal uncertainty or force renegotiation under worse terms.
- For lessors: Letting a lease expire without renewal can result in lost income and vacant property. Landlords must choose to renew, adjust terms, or find new tenants while following local property laws.
That’s why it’s crucial for both parties to review their original lease agreement, stay proactive, and seek legal advice if needed.
Read More: Is Bali a Safe Place to Live? 5 Tips for Risk-Free Villa Purchase in Bali
Will Lease Extensions Become Cheaper Over Time?
Many foreigners ask, “Will it be cheaper to renew my lease later?”. Unfortunately, renewal costs in Bali are hard to predict, as they depend heavily on market conditions and land values at the time of renewal.
In reality, land prices in Bali tend to rise, which means renewal costs are more likely to increase rather than decrease.
That said, including a renewal clause in your lease can help. In some cases, it allows you to lock in a clearer renewal formula or agreed rate upfront, making future costs more predictable.
💡 Pro Tip: Negotiate a renewal clause before you sign the lease. This is an agreement between you and the landowner on extending your lease if you decide to stay longer.
Bonus: Tips on Planning Your Leasehold for the Future
When buying a leasehold villa in Bali, it’s important to think long term. A little planning upfront can help protect your position when the lease ends.
- Include a sale clause: This allows you to sell the remaining lease years if your plans change, giving you flexibility down the line.
- Choose a longer lease term: Longer leases usually cost more at the start, but they offer greater security—especially if you plan to spend extended time in Bali. Learn more about how to choose the right lease duration for a villa in Bali here.
- Negotiate a renewal clause early: Agreeing on renewal terms from the beginning helps avoid uncertainty or unexpected issues when the lease approaches its end.
Conclusion
There are several options available once your leasehold villa term expires.
You may be able to negotiate an informal extension with the freehold owner, or choose to sell the remaining value to another buyer as part of your exit strategy.
That said, it’s important to carefully review the extension terms and any costs involved. Always pay close attention to the leasehold contract you sign at the beginning to avoid issues later on.
Need further help? Our senior property advisor is here to support you, from recommending the right leasehold villas for sale based on your needs, to legal checks and finalizing the transaction.
Contact us anytime and let us know what you need. We’re here to help you invest smarter in Bali and elevate your life.
FAQ
Yes, you can. You can either sublease it to the new buyer or end your lease and have the owner create a new lease directly with the buyer.
It depends on the property's location and market prices, but it usually ranges from IDR 500 million to 1 billion.
You’ll usually need to negotiate with the landowner, which can take time and may not always be in your favor.
Start by hiring an agent, then inform the landowner. You’ll need a lawyer, collect all documents, review offers, answer buyer questions, and finalize the deal through contracts.
The land goes back to the original owner, and you no longer have rights to the property. In many cases, the landowner is the government or a developer.
