F.A.Q. (Frequently Asked Questions): How to buy villa in Bali in optimal way for foreign citizen?
Buying a villa in Bali as a foreign citizen involves navigating Indonesian property laws, which have restrictions on foreign ownership of land and real estate. Here's a step-by-step guide to purchasing a villa in an optimal and legally compliant way:
1. Understand Indonesian Property Law for Foreigners
Indonesian law prohibits foreigners from directly owning freehold land. However, there are legal frameworks that allow foreign citizens to acquire property rights:
- Hak Pakai (Right to Use): Foreigners can hold a "Right to Use" certificate for a property, valid for an initial 30 years, renewable for 20 years, and extendable for another 30 years (a total of 80 years).
- Hak Sewa (Leasehold): A lease agreement where you rent the property for an extended period (e.g., 25–99 years).
- Hak Guna Bangunan (Right to Build): This is available for foreign-owned companies (PT PMA) established in Indonesia.
2. Choose the Optimal Ownership Structure
- Personal Ownership (Hak Pakai):
- This is suitable if you plan to live in or use the villa personally. Ensure the property is on land designated for residential use.
- You must hold a valid KITAS (temporary residence permit) to qualify.
- Leasehold Agreement (Hak Sewa):
- A simple and cost-effective option, as it doesn’t require legal entities or KITAS.
- Suitable for investment purposes or temporary use.
- Establishing a Foreign-Owned Company (PT PMA):
- Ideal if you plan to use the villa for business purposes, such as renting it out as a holiday home.
- A PT PMA can hold "Hak Guna Bangunan" or "Hak Pakai" rights.
3. Engage a Reputable Notary and Lawyer
- Work with an experienced local notary (Notaris) and property lawyer to ensure compliance with Indonesian laws and verify the property’s ownership status.
- Conduct thorough due diligence to confirm the villa has proper licenses and is free from legal disputes.
4. Find a Trusted Real Estate Agent
- Choose a real estate agent specializing in assisting foreign buyers. They can help identify villas in areas zoned for foreign ownership and assist with negotiations.
5. Perform Due Diligence
- Verify land titles to ensure the seller has full ownership rights.
- Check zoning regulations to confirm the property is eligible for your intended use (residential or commercial).
- Confirm the absence of tax arrears or encumbrances on the property.
6. Sign Agreements
- If purchasing under "Hak Pakai," the title will be officially transferred at the land office (Badan Pertanahan Nasional, or BPN).
- For leasehold, draft and sign a lease agreement detailing all terms, including duration, renewal options, and usage rights.
- Engage your lawyer to review and notarize all documents.
7. Pay Taxes and Fees
- Property acquisition taxes (approximately 10% of the transaction value).
- Notary fees, legal fees, and registration fees.
8. Optimize Costs
- Negotiate the lease term (longer terms often result in better rates).
- Avoid intermediaries who charge unnecessary fees.
- Work with professionals who have experience with foreign clients to avoid costly legal or procedural errors.
9. Consider Financing
- Foreigners typically need to pay in cash, as local banks rarely provide mortgages to non-residents.
- Explore financing options in your home country if needed.
10. Plan for Long-Term Management
- If purchasing as an investment, arrange for a property management company to oversee maintenance, marketing, and rentals.
- Stay informed about potential legal or regulatory changes affecting foreign ownership in Indonesia.
Would you like help finding a reliable lawyer, real estate agent, or more details about specific areas in Bali? Contact us in Whatsapp: 0812-3742-2920.
