The following is the latest information on legalities and options for Foreign Property Purchases provided by Best Bali Real Estate, a division of PT Bali Affordable Lifestyles International, established 2004.
Can Foreigners Own Property in Bali? What You Need to Know in 2025
Let’s make this clear from the start:
Foreigners cannot legally own freehold (Hak Milik) land in Indonesia.
But don’t worry—there are legal alternatives, and the best option for you depends on your budget, purpose, and whether you meet the legal requirements.
At Best Bali Real Estate, a division of PT Bali Affordable Lifestyles International (est. 2004), we help guide buyers through these options safely, responsibly, and in full compliance with Indonesian law.
The Three Main Legal Options for Foreigners in Bali:
1. Hak Sewa (Leasehold) – Simple, Easy to Understand, 100% Legal
What It Is:
Hak Sewa allows foreigners to lease land or property for a fixed period—usually 25 years—with the possibility to extend.
Who Can Use It:
Officially, foreigners with a KITAS (temporary residence permit) or KITAP (permanent stay permit) can sign long-term lease agreements. Some notaries may allow leases on a tourist visa, but this is not fully legal, and you could run into problems.
Main Risks:
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No Ownership Rights: You never own the land or property.
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Lease Expiration: When your lease ends, you may not get it back unless you have a notarized agreement with a set price and time for renewal.
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Court Enforcement Issues: Leasehold are enforceable in court.
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Legal Disputes: These can happen if paperwork isn’t handled correctly or if zoning, immigration, or tax rules are violated.
Tax Notes:
The property owner usually pays income tax on rental income (10–20%), but this may be passed on to you depending on the agreement.
2. Hak Guna Bangunan (HGB) – Ideal for Investors and Developers
What It Is:
HGB is the "Right to Build." It allows a foreign-owned company (usually a PT PMA) to build and use a property on land for 30 years, extendable up to 80 years total.
Who Can Use It:
Foreigners who set up or partner with a PT PMA (foreign-owned company).
Benefits:
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Stronger legal protection.
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Long-term tenure.
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Allows property to be used as collateral for a loan.
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Can be inherited or sold under certain rules.
Risks:
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You must follow strict foreign investment laws.
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Renewal isn’t automatic—regulations can change.
Taxes:
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Annual land/building tax (PBB): 0.1%–0.3% of the assessed property value.
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Transfer taxes when selling: 2.5%–5% depending on transaction value.
3. Hak Pakai (Right to Use) – For Residential Use Only
What It Is:
Hak Pakai is the "Right to Use" land—usually for residential purposes. It’s similar to HGB but designed for individuals rather than companies.
Who Can Use It:
Foreigners who live in Indonesia full-time and hold a KITAS or KITAP.
Duration:
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25 years, extendable by 20 years, with possible renewal.
Benefits:
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More secure than a lease.
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Recognized right for foreign residents.
Risks:
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Still doesn’t allow ownership of freehold land.
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Renewal must follow government rules.
Which Option Is Right for You?
Choosing between Hak Sewa (Leasehold), HGB, and Hak Pakai depends on:
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Your budget
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Your long-term plans
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Whether you qualify for a KITAS, KITAP, or can establish a PT PMA
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Whether you're buying to live, rent, or invest
Leasehold is often the cheapest way to get started.
HGB and Hak Pakai require more effort and expense up front, but provide more legal protection, especially if you're staying long-term or using the property for business or retirement.
Do You Need to Be a Tax Resident?
Yes—foreigners who stay in Indonesia 183 days or more in a 12-month period are considered tax residents. You’ll likely need a KITAS or KITAP to qualify. If you’re a director or commissioner in a PT PMA company, you’re automatically a tax subject in Indonesia.
Government Reforms Make It Easier (But Still Not Freehold)
Thanks to the Omnibus Law on Job Creation passed in 2020, Indonesia has simplified and improved access to HGB and Hak Pakai. Bureaucratic hurdles have been reduced, and regulations are now clearer for foreign investors—but the core law hasn’t changed:
Foreigners still cannot own Hak Milik (freehold) land.
Final Advice: Don’t Guess. Get Expert Help.
Indonesian property law is complex, and making a mistake could cost you your investment. That’s why you need to work with professionals who understand the local laws.
At Best Bali Real Estate, we’ve helped foreign buyers safely navigate the Bali property market since 2004. Whether you’re looking for a beachfront villa, a retirement home, or a rental income investment, we’re here to help you do it right.
We can Recommend a highly qualified, highly respected, notorious with excellent excellent English who will work vast and efficiently for your benefit to ensure that the property is free and clear of any encompasses and that the due diligence is 100 percent satisfied. Call or Whatsapp +62 811-3890-507 or Email: info@bestbalirealestate.com
Summary
| Option | Ownership? | Legal Risk | Duration | Visa Required | Use Type |
|---|---|---|---|---|---|
| Hak Sewa | ❌ No | High | 25 yrs | Often KITAS | Residential |
| HGB | ✅ Leasehold | Medium | 30–80 yrs | PT PMA | Commercial |
| Hak Pakai | ✅ Leasehold | Medium | 25–70 yrs | KITAS/KITAP | Residential |
Ready to Find Your Perfect Bali Property?
✅ Browse our listings at www.bestbalirealestate.com
✅ Get limited free legal advice tailored to your situation
✅ Learn about visas, taxes, and ownership options without the guesswork
Let’s make your Bali property dream safe, legal, and secure.
Call or Whatsapp +62 811-3890-507 or Email: info@bestbalirealestate.com
 |
Best Bali Real Estate, a division of PT Bali Affordable Lifestyles International, established 2004 |
Further Information:
Under Indonesian law, it is possible for a Foreign Investment Company (PMA) with a Hak Guna Bangunan (HGB) title to build a villa and rent it out to tourists. However, it's not a straightforward process and requires strict adherence to specific legal requirements.
Here's a breakdown of the key legal aspects:
1. PMA and Land Ownership:
Foreign individuals are legally restricted from directly owning freehold land (Hak Milik) in Indonesia.
To bypass this, foreign investors must establish a PT PMA, which is a foreign-owned limited liability company recognized by Indonesian law.
A PT PMA can legally hold an HGB title, which is the "Right to Build" on land. This title allows the company to construct and own buildings on the land for a specific period (initial 30 years, with extensions and renewal up to a total of 80 years).
2. HGB and Commercial Use:
The HGB title is specifically designed for commercial use. This means it is the appropriate land title for a PMA that intends to run a business, such as a rental villa.
The HGB title holder can build, use, and lease the property for business purposes, as long as it aligns with the company's business activities.
3. Business Licensing and Permits:
Simply having an HGB title is not enough. The PMA must also have the necessary business licenses to operate a tourism-related business.
The PMA must be established with a business classification code (KBLI) that permits it to operate in the hospitality or tourism sector, such as KBLI 55110 for hotels and villas.
The company must obtain a Business Identification Number (NIB) and other sector-specific permits, such as a Tanda Daftar Usaha Pariwisata (TDUP - Tourism Business Registration Certificate) if required.
Before building, the PMA needs to ensure the land is zoned for commercial or tourism use and must obtain a Building Approval (PBG).
4. Zoning and Spatial Planning:
The intended use of the land (building a villa for rent) must be in line with the local government's spatial plan and zoning regulations.
The government has been implementing policies to regulate land-use conversion, particularly in popular tourist areas like Bali, to ensure sustainable development and prevent overdevelopment.
In summary, a PMA with an HGB title can legally build and rent out a villa to tourists, provided it has been properly established as a legal entity and has acquired all the necessary business and building permits in accordance with Indonesian law and local regulations. It is highly recommended for foreign investors to consult with legal and real estate professionals in Indonesia to navigate these complexities and ensure full compliance.
The costs involved in this process can be substantial and vary greatly depending on the location, size of the project, and the specific services you use. Here's a general breakdown of the potential costs, keeping in mind that these are estimates and can fluctuate:
1. Establishing a PMA (PT PMA)
Minimum Paid-up Capital: This is a crucial requirement. The minimum paid-up capital for a PT PMA is IDR 10 billion (approximately USD 620,000, but subject to exchange rate fluctuations). While not all of this needs to be paid upfront, the company must commit to this investment, and a portion (often 25%) may need to be deposited into an Indonesian bank account.
Legal & Notary Fees for Incorporation: The cost to establish the company itself, including notary fees for the deed of establishment, name reservation, and processing of legal documents, can range from IDR 15 million to IDR 35 million or more, depending on the law firm or consultant you use and the complexity of the business.
Business Licensing: Obtaining the necessary licenses, such as the Business Identification Number (NIB) and other sector-specific permits (like a TDUP for tourism), can have varying costs. While the NIB itself is often free, professional services to handle the application can be an additional expense.
Virtual Office/Registered Address: Many foreign investors use a virtual office to register their company, which can cost around IDR 8 million per year.
2. Land Acquisition (HGB)
Hak Guna Bangunan (HGB) Title Fee: The cost of obtaining the HGB certificate is calculated based on a formula involving the land's value and the duration of the title. While an example calculation shows a fee of around IDR 2.68 million for a 500m² plot, the actual cost will depend on the Land Processing Value (Nilai Perolehan Tanah - NPT) and the specifics of your plot.
Notary and Legal Fees: The process of transferring the HGB title to the PMA must be handled by a licensed notary (PPAT). Notary fees typically range from 1% to 2.5% of the property's transaction value. This can include services like due diligence and document preparation.
Taxes: When acquiring property rights, you will likely encounter the following taxes:
BPHTB (Land and Building Acquisition Duty): A tax of 5% on the government-assessed value of the property.
PPh (Final Income Tax): This is usually a 2.5% tax on the transaction value and is typically paid by the seller, but you should clarify this in your agreement.
3. Building Permit (Persetujuan Bangunan Gedung - PBG)
PBG Retribution Fee: The main cost for the PBG is a retribution fee calculated based on the building's size and other technical factors. One source provides an example of a fee of IDR 11.5 million for a 500m² building.
Soil Test (Sondir): A necessary soil test can cost from IDR 4 million.
Surveyor and Administration Fees: Professional services for surveys and administration can cost from IDR 8 million.
Architectural and Engineering Plans: Before applying for the PBG, you need to have a detailed technical plan. The cost for architectural services can vary widely but may be several thousand dollars, or around IDR 35,000 per m² for basic plans.
4. Construction Costs
Construction: This is the most significant cost. The cost of building a villa in Indonesia is typically calculated per square meter.
Standard Villa: Approximately $350 - $500 per square meter.
Luxury Villa: Can range from $700 - $1,500+ per square meter, especially with high-end materials and finishes.
Furnishing: You will need a separate budget for furnishing the villa.
Basic Furnishing: IDR 75 million to IDR 150 million.
Mid-Range to Luxury: Can easily exceed IDR 500 million, especially with custom or imported pieces.
Additional Costs: Don't forget to budget for landscaping, a swimming pool (if desired, which adds a significant cost per square meter), and a buffer of 10-20% for unexpected expenses.
Summary of Notaris and Legal Costs
PT PMA Establishment: IDR 15M - IDR 35M+ (plus the IDR 10B minimum capital commitment).
HGB Acquisition: Notary fees (1-2.5% of property value) + Taxes (5% BPHTB).
PBG Permit: Retribution fee (calculated per m²) + Surveying and administration fees.
Overall Legal and Notary Fees: For the entire process, including company setup, land acquisition, and building permits, legal and notary fees can amount to a few percent of the total project value.
Disclaimer: These figures are estimates and can change based on government regulations, location (e.g., Bali is often more expensive than other areas), and the specific service providers you choose. It is essential to engage with local professionals, such as legal consultants, notaries, and architects, to get a detailed and accurate quote for your specific project.
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