How To Buy Property In Bali? Considering buying a property in Bali is an option for those who want to stay for a long time. However, residential ownership for foreigners in Bali offers quite a complex and time consuming process.
The process of buying a property in Bali includes quite restrictive policies from the Indonesian government. Long term renting can be a property in Bali be a good alternative rather then buying.
Renting Property in Bali
Renting a property in Bali might be a simple solution so that foreigners can have a place to live that suits their needs. However, foreigners also need to understand the risks that may be present and the process of finalizing a rental agreement which sometimes takes time.
In the rental process, both property owners and tenants must obtain detailed information regarding their rights and obligations. This rental contract agreement can be made directly by foreigners without the need for representatives of indigenous Balinese people.
This is because the house or property rental contract does not refer to the regulations of the National Land Agency (BPN). In addition, the rental period does not have a certain limit and can continue to be extended according to the agreement. However, it should be understood that the total lease term should not exceed 25 years.
Understanding the Applicable Legal System
In Indonesia, How To Buy Property In Bali is available in the Basic Agrarian Law No. 5 of 1960 is a legal system that regulates land and buildings. The law explains that Indonesian citizens are a mandatory requirement to own land.
Under these conditions, foreigners and foreign companies cannot own land for properties in Indonesia. However, there is an alternative to full ownership, which is called freehold.
To obtain rights over the land, the most common way that can be done is to establish a How To Buy Property In Bali Foreign Company.
Buy Property In Bali Through Local Representatives
After living in Bali for a long period of time and understanding the local culture, it is not uncommon for expatriates to decide to How To Buy Property in Bali with the help of their local friends.
However, it should be understood that buying property on behalf of an Indonesian citizen carries its own risks, even if it comes from a trusted representative. This is because the signed document is not considered to have legal force for foreigners.
- Due Diligence Consultant In Indonesia: Number 1
- How to Conduct Feasibility Study: 2 Best Steps
- What should be prepared feasibility study report? 4 Tips
- Feasibility Study and Financial Analysis
- The Best Property Consultants in Indonesia
If this case goes to court, it is likely that the law will side with the Indonesian citizen as the rightful owner. Another worrying condition is the risk of land confiscation by the government, because signing agreements as representatives of foreign nationals is illegal in Indonesia.
Purchasing Properties Under Foreign Company Name or Individual Terms
As previously explained, foreigners can own land or property without having to form a foreign company or in bahasa Penanaman Modal Asing (PMA) if they have a valid residence permit (KITAS or KITAP). However, the difference between the two is significant.
Basically, permanent residents in Bali can buy property or land for residential purposes only. The minimum value in Bali for a residential house is IDR 3 billion and IDR 2 billion for an apartment.
However, if foreigners want to buy property for investment or business purposes, they must set up a PT PMA. In both cases, JULIZAR CONSULTING Indonesia can assist you through professional services to help you to prepare your foreign company with foreign capital. We can help you to do the due diligence process to set up your business in Indonesia.
Property Certificate Type
In order for the process of buying a property in Bali to run legally, knowledge regarding valid property certificates needs to be the foundation before completing a transaction. Property documents that can be owned by foreigners are:
Building use rights certificates or Hak Guna Bangunan (HGB) give the owner the freedom to build property on land, according to what is stated in the certificate. This certificate is valid for 20 to 30 years and can be extended for another 20 years, so the total period is 50 years. During these 50 years, the property belongs to you completely.
How To Buy Property In Bali? When the validity period expires, the certificate owner can re-apply for a new certificate with the same conditions. In addition, HGB certificates are recognized by banks and related properties can be used for mortgage or other security purposes.
HGB owners are free to sell or exchange their property and if purchased by Indonesian citizens, they may change their status to full ownership.
Building use rights are guaranteed by BPN and foreign nationals can apply for the certificate through Foreign Company. Beyond that, if they have a valid residence permit (KITAS or KITAP) then foreigners can apply for HGB.
Right to Use or Hak Pakai (HP) is a type of long-term lease. Land that has an Hak Pakai (HP) certificate can be used by foreign nationals for purposes agreed to by both parties. Usufructuary rights are guaranteed for the first 25 years with possible extensions not exceeding 80 years in total.
Use rights are usually used by companies that need land for manufacturing activities or by international companies for social, religious and other events. You cannot deal with banks or other financial institutions because there are no rights other than usufructuary rights associated with this certificate.
Right to Use or Hak Pakai (HP) can be given to foreign nationals by local residents or local government. Foreign company owners, Foreign Company or residence permits (KITAS or KITAP) may apply.
Hak Guna Usaha (HGU) permits the owner to use the land for agricultural and agricultural purposes. This right is valid for 25 years and can be extended up to 35 years. A Foreign company needs to be owned in order to obtain this right.
Ownership Rights to Flats Units
This relatively new government regulation allows foreigners to own a unit, an apartment or an office, in a multi-storey building without being the landlord of the property. The validity of this right differs depending on the land on which the property is built.
You need to know that there are other types of ownership such as Property Rights, Lease Rights and Management Rights that cannot be owned by foreigners.