If you’ve ever spent time in Bali, you know how much the city is filled with real estate advertisements; from properties for sale to adverts in magazines. Given the high production quality of these adverts and that they are written in English, it’s only natural to assume that foreigners will have no problem buying a luxury Bali property.
The reality is a little different, however. It is possible – but that doesn’t make it easy. Here’s a look at how to buy property in Bali as an expat.
Property laws in Indonesia are handled by the legal article Undang-Undang No. 5/1960, Pokok-Pokok Argeria. The law clearly outlines that only citizens of Indonesia can own/control freehold property in Indonesia. That includes Bali. Even foreigners that marry Indonesian citizens aren’t able to legally share properly ownership. They are also typically required to state in writing in an official agreement, such as a prenuptial agreement, that they won’t make claims for freehold property owned by their spouse.
So, how can foreigners buy property in Bali? Here are the ways that expats can get their hands on a luxury property in Bali.
Hak Pakai (Right to Use)
Hak Pakai represents the closest that foreigners can get to owning a property in Indonesia. The right to use period lasts for a fixed period, commonly 25 years. In order to qualify for Hak Pakai you must be a permanent resident of Indonesia. The property you obtain can’t be used for business purposes, such as opening a hotel, and you are only able to hold one property at a time. If you want to sell the property, then you must apply to have the property status changed back to freehold in order to sell to an Indonesian citizen.
Hak Guna Bangunan (Right to Build)
Hak Guna Bangunan, also known as HGB, is a form of ownership used to allow businesses to own and lease property. Foreigners who are interested in HGB will typically need to have a PMA (foreign investment company). Once again, this kind of property ownership is only for a fixed period. It is designed to allow real businesses to have a property they can run the business out of.
Hak Sewa (Long Term Rental)
Hak Sewa isn’t exactly property ownership, and is more like extended rental. This lis an agreement between the expat and the landowner instead of ownership registered through the government. It is important that any and all agreements are made with a registered notary. There are some advantages to this method, such as not needing to be a permanent resident of the country, but you are completely at the mercy of the original property owner if a dispute arises.
A nominee agreement is one of the more controversial forms of land ownership. It is when an expat purchases property in Indonesia under the name of an Indonesian citizen. Most people would argue that such an agreement is illegal, but many notaries in the country will still process the transaction, even with the knowledge that the property is being bought by – and for – a foreign person. This can lead to many potential problems, including cases where the nominee – or their next of kin – believes themselves to be the proper legal owner of the property and attempts to seize the property for themselves.
Bali is a wonderful place to live, but buying property as an expat can be difficult. Unfortunately there’s no completely 100% safe way to purchase property in Bali. All of the above methods have their own risks attached to them. However, many people have managed to buy and sell property without much problem. At the end of the day, never invest more than you can afford to use and acknowledge that you are doing everything at your own risk.