As we start our project Cliff-Front.com from the Island of Bali in Indonesia, we will here talk about the Property titles in Indonesia. And here we will explain you how to buy property in Bali as foreigner.
First of all, if a foreigner is considering buying a property in Bali, the first thing he must know is that Indonesian legislation does not allow foreigner citizen to own a land in Indonesia. However, foreigners have the right to own buildings or other form of acquisition.
The way to buy property in Bali as foreigner
A registered condominium
A building distinct from its land
A lease of 25 to 99 years for all types of land or buildings
PT PMA Company
Hak Pakai
100% of the shares of an Indonesian company which can owns land for an 80-year period and which can be resell to another entity or an Indonesian citizen.
A foreigner can Not own a land in Bali or Indonesia
As a foreigner, this is not allowed to buy a freehold land title with the full ownership in Bali & Indonesia.
The most popular ways to buy property in Bali as foreigner
Long-term Leasehold
These leaseholds are registered, secured and relatively simple. Also this long-term lease can be structured to be equivalent of the full ownership. Typically, the land is leased for a period of 25 years, renewable up to a total of 99 years. Ownership of the land is assured by the fact that you are the legal owner of the buildings that occupy the land during all the term of the leasehold contract. Therefore, the lessor can not take possession of the property upon termination of the lease.
PT PMA Company
If you are not comfortable with the 25-year lease method, the alternative is to set up an Indonesian company that you control 100%, and who can legally buy land. In other words, as a foreigner you are allowed to own 100% of the shares of an Indonesian company. The land will be owned by the company. However, as general manager of the company, you control the voting power of other shares, and therefore you have control over the ownership of the land.
Indonesian citizen married with foreigner
Any Indonesian citizen who married a foreigner loses the right to own a land in Indonesia. However, she still owns the land and she owned it before marrying with the foreigner. Generally the foreigner’s spouse signs a declaration stating that the funds were from the Indonesian citizen before marriage. Most mixed couples marry under a regime of separation of the capital in order to be able to access to the property thereafter. The property security scheme guarantees the government that the foreign national really has no financial or other control over his or her spouse’s land.
Property titles in Bali - Indonesia
If a foreigner or an Indonesian buys land in Indonesia, first of all he will have to choose one of the following deeds: Freehold, Leasehold, HGB, Hak Pake. According to the case the land can be sold, leased and used as mortgage warranty. And they are the only titles on which a right of ownership or lease may exist. More importantly, you will not be able to get a building permit on land without any of the property titles mentioned above.
Freehold (Full ownership without time limit)
The real title is officially called Hak Milik or more commonly Freehold. It is a certificate of full ownership of the land and buildings that are based on that same land. The certificate may be used as evidence confirming the right of ownership to the government authorities. It is issued by the government which uses a GPS to accurately trace the boundaries of the said land. This tittle is only available for Indonesian citizen.
Leasehold (Leasehold or Long-term lease)
The Leasehold or Hak Sewa or long term lease is a notarial deed attesting that the parcel of land in question has been properly leased for a limited period to a local or foreign person or a company. The use of this land must follow the rules and conditions stipulated in this contract established by a local notary. In the event of sale or succession, this contract remains a priority unless the parties organize a new agreement.
HGB (Right to construct)
The right to build or Hak Guna Bangunan or HGB may be granted for a maximum period of 30 years and may be extended for an additional 20 years. Multiple renewals and extensions of HGB titles are allowed. Once the initial extension period expires, the HGB title can be renewed for up to 30 years and extended to 20 years. If the HGB title is not extended or renewed and expires, it will cease to exist and the holder of the previous HGB title will lose its ownership rights for this property.
Hak Pakai (Right of Use)
A right of use or Hak Pake or HP allows the holder to use a land (subject to the conditions of authorization and right of buildings permits) and / or to collect the results of the production of such land. An HP title may be granted on a state land, a Hak Pengelolaan or HPL title, or a full title (Hak Milik or HM). An HP title on state land and an HP title on the HPL title may be granted for a maximum term of 25 years and extended to 20 years and may be renewed for an additional 25 years. Since 2016 an HP title on an HM title can be granted for a maximum duration of 30 years, with a first extension of 20 years and a last extension of 30 years.
Laws and property ownership by foreigners in Bali
In Indonesia, the law stipulates that a foreigner can NOT own a land in his own name. He can only have the right of ownership on the buildings. If a foreigner wishes to acquire a land in order to build a property, we recommend these 2 possibilities:
The land can be leased for a limited period like a 25-year lease contract, with an option to renew the lease for an additional 25 years. The possession of the land is thus governed by a deed of ‘Long-term lease’ which is perfectly legal and secured by the Indonesian law. At the end of the lease, the foreigner can’t seize the buildings anchored on the ground however a bungalow of wood of any form and size can legally be removed from the land at the end of the lease.
A foreigner can create and use a Company under the Indonesian law in order to obtain full ownership of a land for a limited period of 80 years (30 + 20 + 30). In this case the land will be the property of company and not of the individual person and the land can be sold before the end of the lease to an Indonesian citizen who will take back the full ownership of the land.
For more information, contact us here. And our team will assist you with pleasure.
