Can a foreigner own property in Bali?

Buying property in Bali attracts many foreign buyers drawn by the island’s lifestyle and investment potential. Before you start touring villas or signing letters of intent, a clear understanding of Indonesia’s land rules and the practical options available to non-citizens is essential. This article explains the legal framework, the main title types and ownership routes, a practical step‑by‑step acquisition process and the due diligence, costs and pitfalls you must manage to proceed safely.

Legal framework governing foreign property ownership in Bali

Understanding how property rights work in Indonesia is the first practical step for any foreign buyer. Indonesian land law reserves full freehold ownership to Indonesian citizens under the Basic Agrarian Law of 1960, so a foreign national cannot hold SHM (Hak Milik). That legal framework does not prevent foreigners from investing in property, but it does require use of recognised alternative rights or corporate vehicles to secure long‑term control and commercial use.

Key land rights to know are SHM (Hak Milik) for citizens and several alternatives relevant to foreigners. HGB (Hak Guna Bangunan) grants building rights to entities and is commonly used by foreign‑owned companies. Hak Pakai allows use for specific purposes and can be issued to foreign individuals with residency or to companies for limited terms. A customary arrangement is a lease known as Hak Sewa, widely used for residential villas with initial terms frequently set at 25 to 30 years and contractual options for renewal. HGB terms are typically issued for decades with statutory procedures for extension and renewal.

Many foreign investors use a properly established PT PMA (foreign investment company) to acquire development rights under HGB or Hak Pakai for commercial projects. This route requires compliance with investment regulations, adequate capital thresholds and registration with the investment authority. Any attempt to use nominee arrangements to simulate ownership is unlawful and creates serious legal risk for both buyers and sellers.

Finalising a lawful purchase always requires registration at BPN (National Land Agency) and a notary prepared to handle the transaction. Conduct mapped due diligence, verify title history and obtain professional legal advice so the chosen structure meets your long‑term objectives and complies with Indonesian law. With that foundation in place, you can evaluate which ownership route best suits your needs.

How a PT PMA company can enable foreign-held property

Forming a PT PMA (foreign investment company) provides a compliant corporate vehicle that can hold statutory land rights and operate property businesses in Bali. The company can acquire rights, enter contracts, employ staff and access financing within the national investment framework. This structure is commonly used for villa developments, rental operations and commercial projects where direct foreign freehold ownership is not allowed.

Legal mechanisms a PT PMA can use

A PT PMA can be the registered holder of HGB (Hak Guna Bangunan) and Hak Pakai, or it can enter long‑term lease agreements on behalf of its shareholders. These rights must be notarised and registered at BPN (National Land Agency) to be effective. For apartment or strata developments a PT PMA can obtain the legal basis to use and market individual units under local procedures tailored to tourism‑oriented properties.

Practical steps to establish property holding

Set up the PT PMA with a notarial deed and register it with the investment authority before applying for the relevant land right. Essential steps include verifying sector eligibility under the investment regulations, preparing company articles, appointing directors and commissioners, and obtaining tax and domicile registrations. Complete due diligence on the parcel at BPN (National Land Agency) and ensure all land transfers are notarised and recorded in the land registry to produce enforceable title for the company.

Benefits and key risks to manage

Using a PT PMA enables structured asset management, clearer access to mortgages and financing, and operational flexibility for leasing and hospitality activities. It facilitates professional management of rental income and allows multiple investors to hold economic interests. At the same time, investors must manage regulatory change risk, tax obligations and the strict prohibition against nominee arrangements. Robust contracts, transparent corporate governance and ongoing legal advice reduce exposure and protect value over time.

To reduce setup errors and compliance gaps, engage experienced local counsel and an advisory partner familiar with Balinese land practice and PT PMA requirements. A reliable advisor can coordinate documentation and registration so the company holds the correct land right for your project.

Leasehold and other property title options available to foreigners

Foreign buyers in Bali cannot hold full freehold land title for most parcels, but there are lawful structures that provide legal rights to occupy, develop and operate property while complying with Indonesian law. Choosing among these depends on intended use, length of stay and whether you plan to operate the property commercially.

Below are the principal options used by expatriates and investors, with practical notes on typical term lengths and who can hold each right.

• Leasehold agreements Long‑term lease contracts are the most common choice for private villas, typically offered with initial terms between 25 and 30 years and contractual options to extend or renew at agreed points.
• Hak Pakai or right to use Hak Pakai grants formal use rights and can be issued to foreign individuals in limited circumstances or to companies for specific purposes. Terms are often around 25 years with possibilities to extend via administrative procedures.
• HGB via an Indonesian company A PT PMA can hold HGB (Hak Guna Bangunan) which is commonly issued for 30 years and can be extended or renewed under statutory rules, supporting construction, leasing and commercial operation.
• Strata title for apartments and units Developers who secure land rights such as HGB or Hak Pakai can issue strata ownership for individual units, allowing foreigners to purchase apartments with clear documentation.
• Mixed marriage and inheritance routes If a foreigner is married to an Indonesian citizen, property is typically registered in the Indonesian spouse’s name under SHM (Hak Milik) while contractual arrangements can define the foreign spouse’s economic interests.

Each option carries different registration, tax and renewal requirements. Discuss your intended use and timeframe with legal and notarial advisors to select the most suitable title and to plan for renewals and transfers.

Step-by-step process to buy property in Bali as a foreigner

Purchasing property as a foreigner follows a predictable sequence of checks and formal steps. A disciplined process reduces risk, protects funds and secures registered rights aligned with your objectives.

Initial preparation and title verification

Begin by confirming the land certificate type at BPN (National Land Agency) and reviewing the original document to confirm ownership, encumbrances and zoning. Verify whether the parcel is SHM (Hak Milik), HGB (Hak Guna Bangunan) or Hak Pakai and whether tourism use is permitted. Conduct an on‑site inspection to confirm boundaries and access and obtain a copy of the site plan. When organised through a licensed notary or local counsel, typical title searches and basic due diligence take one to three weeks.

Choose the ownership route and prepare agreements

Decide whether you will use a long‑term lease, obtain Hak Pakai, or hold rights through a PT PMA (foreign investment company). Draft a conditional sale and purchase agreement with a clear payment schedule and renewal clauses and lodge a reasonable deposit with a notary escrow arrangement. Expect transfer taxes and professional fees commonly in the range of three to six percent of the purchase price depending on service choices.

Closing registration and post‑purchase steps

Complete final payment and sign the notarised deed so the notary can register the transfer at BPN (National Land Agency) and update the land book. If a company holds the right ensure company registration, tax number and investment approvals are in place before transfer. Record utilities and tax accounts in the new name and formalise any property management or rental agreements. Plan renewal milestones well before expiry to avoid loss of rights.

Work with an experienced notary and specialised advisor at each step to manage documentation and filings. Practical support can streamline title checks, company setup and land registry completion so you move forward with certainty.

Due diligence, taxes, costs and common pitfalls to avoid

Thorough due diligence is the foundation of any safe purchase in Bali. Before signing, verify the certificate type at BPN (National Land Agency), confirm ownership history and check for encumbrances such as mortgages or pending disputes. Budget realistically for taxes and professional fees and include a contingency for unexpected compliance costs so the transaction does not stall after exchange of funds.

Practical due diligence checklist

Request the original land certificate and title number and have a licensed notary perform a thorough land book search at BPN (National Land Agency) to confirm the chain of title. Confirm zoning and permitted use with the local planning office and verify building permits and any tourism‑related licences if you plan to rent. Insist on seller tax clearance and review any outstanding utility or property tax arrears that could become your liability after transfer.

• Taxes and mandatory fees BPHTB (land transfer tax) is typically five percent of the taxable value payable at transfer and VAT (value added tax) at ten percent may apply when buying new construction from a developer. Notary registration and administration fees commonly range between one and two percent of the transaction value depending on complexity.
• Hidden cost traps Watch for unpaid PBB (property tax) back payments, unrecorded easements and undocumented service charges from local cooperatives which can lead to sudden invoices after closing.
• Legal pitfalls to avoid Do not use nominee arrangements which are illegal and expose you to loss. Avoid reliance on oral renewal promises for leases and insist on registered extensions filed at BPN (National Land Agency).
• Practical risk mitigation Use a notary escrow for deposits, obtain independent legal review and include clear renewal and exit clauses in leases and company articles to protect long‑term value.

Close the loop by engaging an experienced notary and a trusted local advisor to manage filings and tax payments. If you would like practical, local support with title checks, company setup or registry filings, consider contacting https://www.balivillahub.com/en for a confidential consultation and guidance tailored to your situation.

With careful planning, verified title, and professional advice you can pursue property in Bali with confidence while remaining compliant with Indonesian law.