Such a small island in the Indonesian Archipelago is large but surprisingly different at the same time with its customs, traditions, food and religion. The island has been a popular holiday destination for decades and many former-travelers and travelers choose Bali as their place of residence. It has a complete mix of unchanging magic of antiquity and modern simplicity. To the south of the island, you can live in vibrant beach towns with Western cuisine, movies, shops, hip cafes, restaurants and beach clubs. Get away from the big tourist attractions and you will feel away from everything and everywhere.
Private areas, mountains, lake, rice fields and village life. It’s amazing! Now, you are not going to buy bali real estate at night. You have to think about it, sleep on it and learn all about local laws and restrictions. Indonesia protects land and property well, does not allow foreigners to take over land or buildings but still, there are many opportunities for foreigners to go and live their ‘Bali Dream’! In fact, the building market in Bali is one of the best in Southeast Asia. You will read all about buying a villa in Bali in this blog, the full version of Bali Real Estate.
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What is your purpose?
First of all, it is important to think about your goal. Are you buying a villa to live here on the island if you are planning to rent and do business from it? You might think, why should I think about it now? Can’t think of it later or make it a 50/50 thing, partly living in a village and maybe renting it? Well, the thing is, Bali has different places.
Some of these areas are agricultural, some are residential and some are designed for tourism-related purposes. You cannot legally rent your villa if it is built in a residential area. Also, you must get a special Pondok Wisata license if you want to rent your villa. More than enough reason to think about your goals and the location of your property before you buy. Just remember, you can always switch to your property but you can’t change the location.
Can foreigners own property in Bali?
Long story short, the answer is no! Indonesia strongly protects the land and its resources. Many rules and regulations are not clear which is also why many foreign nationals have decided to buy buildings in other Southeast Asian countries. As such, Indonesia is looking to make a change in the property owners’ policies to foreign investors. They want to attract foreign investors and in the next ten years, all trends can be simpler and clearer. At present, foreigners may not have free equipment but there are several names to take, allowing foreigners to use, rent or build buildings in Bali and the rest of indonesia investment.
So, there is no need to give up on that tropical dream! Here is the list of names to find:
Hak Milik (right to own)
Hak Milik is a free name and is the strongest name anyone can find. Thus, the name can only be used by Indonesian citizens and local companies.
Hak Pakai (copyright)
For foreigners, Hak Pakai is the top name to find. This is the way the Indonesian government has come up with to allow foreigners to use only Hak Milik land. With Hak Pakai, the customer gets a unique name tag in their name. The first period is 25 years but can be extended several times up to 70 years. Hak Pakai is operated if you want to sell your site to an external customer.
It is important to note, a foreigner can only own 1 Hak Pakai property at that time. There is only one touch: to get the Hak Pakai name of the Bali region, you have to live in Indonesia and get a residence permit (KITAS). Another option is to start a PMA company, giving you the freedom to own a property (part) overseas. This is a very desirable choice although it takes time and effort to plan it.
Hak Sewa (rental right)
Another good option for outsiders to invest in real estate is to rent a site that goes under the name Hak Sewa. Rental periods can be as long as 50 years, usually agreeing in advance with the landlord.
Hak Guna Bangunan (building rights)
This name is only available to Indonesian citizens and PMA companies (foreign company), which is where you can do it. The name is valid for 30 years and may be extended for 20 years as well as another 30 years.
If you are thinking of building a building in Bali, it is important to know that there are restrictions on the height of your building. Locals would say, it should not be taller than the tall palm tree that surrounds a building that is down to a height of 15 feet [15 m].
Is there no easy way out?
There are always ways to get around with rules but is it wise? No! You’re in a foreign country, you invest a lot of money and so you want it to be a secure university, right? That’s what you might think but in reality, most foreign landowners bought properties under the ‘Nominee Agreement’ where they bought property under the name of an Indonesian citizen, in violation of the law.
So, what is the safest way to buy land in Bali?
In short, the best and safest option to purchase a site is to set up an external PT PMA company, allowing you to take the Hak Pakai (right to use) name or Hak Guna Bangunan (right to build). It takes time to set up a company and includes a lot of paperwork and know-how but in the end, it gives you freedom!