Requirements for Purchasing a House in Bali for Foreigners You Must Know!

Bali is a paradise for many people, especially for foreigners who want to live or invest in Indonesia. Its stunning natural beauty, beautiful beaches, rich culture and laid back lifestyle makes Bali a top choice for expats. But before you decide to buy a house in Bali, you must know the requirements for buying a house in Bali for foreigners. By knowing the rules, you can avoid future problems and plan your investment better.

If you want to know more about the requirements for buying a house in Bali for foreigners, read this article until the end! We’ll go through everything so you can make the right decision when buying property in Bali. So, keep reading!

Why Bali is the Best for Buying a House?

Bali is one of a kind. With its amazing beaches, cool tropical air and green rice fields, who wouldn’t want to live here? The relaxed lifestyle Bali offers makes it an attractive destination for people from all over the world. And the warmth and hospitality of the local people adds to Bali’s charm as a comfortable place to settle down. Many expats choose to buy houses or villas as their home or even as a long term investment.

Bali also has international standard facilities such as international schools, top notch hospitals and numerous restaurants and cafes offering global cuisine. This is a big draw especially for those who want to live here for a longer time. It’s no surprise many foreigners choose Bali to settle down and enjoy a peaceful yet modern life.

But while Bali offers all these comforts and beauty, buying a house here as a foreigner isn’t as easy as it seems. There are certain legal rules that need to be followed especially regarding land ownership and property laws. Indonesia has strict regulations on this matter and it’s important to know these requirements so you don’t get into trouble later. Before you buy a house in Bali, make sure you fully understand the applicable laws so the process runs smoothly.

Legal Requirements for Foreigners Who Want to Buy a House in Bali

Buying a house in Bali is a dream for many, especially for foreigners who want to experience tropical living with all its comforts. But before you dive deeper, there are some legal requirements you must be aware of. Indonesia has strict regulations regarding foreign ownership of property, and only Indonesian citizens can hold full ownership rights (Hak Milik), also known as freehold, freehold ownership, or freehold property. These rights are reserved exclusively for only Indonesian citizens, and foreigners are not permitted to own land under Hak Milik. As a result, foreign ownership is restricted by Indonesian law, and foreigners must use alternative legal structures to acquire property.

Here are some things to consider regarding land status, land size limits, and how foreign nationals can buy property in Bali.

1. Land Status Foreigners Can Purchase

First thing you need to know is that foreigners cannot buy land with full ownership rights (Hak Milik). This means you can’t own land outright the same way Indonesian citizens can. Foreign buyers cannot hold land under Hak Milik in Bali, which is reserved exclusively for Indonesian nationals.

But don’t worry, there are still options available to own a house in Bali. As a foreigner, you can choose between two types of land rights: Hak Pakai (Right to Use) or Hak Sewa (Leasehold). Here’s a breakdown of each:

• Hak Pakai (Right to Use): This allows you to use or occupy the land or property for a certain period, typically up to 25 years, with the option to extend. This is the most common choice for foreigners who want to live long term in Bali. For example if you want to buy a villa or a residential home, Hak Pakai is the best option. Hak Pakai can be held by a foreign national for an initial 30 years, extendable for an additional 50 years.
• Hak Sewa (Leasehold): Alternatively you can lease a property with a leasehold agreement. In this case you’ll rent the property for a longer period, usually 25 to 30 years, depending on the agreement with the owner. While the property isn’t yours to own, you can still enjoy the property for a long time without issues.

2. Land Size Limitations for Foreigners

In addition to land status, there are restrictions on how much land a foreigner can purchase. Typically, foreigners are only allowed to buy land with a maximum size of 2,000 square meters for personal use, such as for their own residence or legal stay in Indonesia. So if you want to purchase property that is larger, you’ll need to look into other options such as buying through a company or using leasehold agreements.

Larger land sizes may only be possible through alternative methods like setting up a foreign investment company (PMA), which will be discussed later.

How to Buy a House in Bali for Foreigners

Now let’s talk about how to buy a house in Bali. There are several ways to do it depending on the type of property and your purpose of purchase. Foreigners can acquire property in Bali through different legal avenues, each with its own requirements and restrictions.

1. Through Hak Pakai (Right to Use)

One of the most common ways for foreigners to buy a house in Bali is through Hak Pakai. This is a relatively straightforward process. With Hak Pakai, you can live on the property for a set period as defined in the legal agreement, usually 25 years, and extend it if needed.

While this process is simpler, it’s still important to work with an experienced notary to ensure all the documents and transactions are done according to legal procedures. You also need to make sure the land being purchased is qualified for Hak Pakai so there won’t be any legal issues later. Don’t hesitate to consult with a licensed property agent to make sure all the details are in order.

2. Through Hak Sewa (Leasehold)

Another option is Hak Sewa (Leasehold). With a leasehold agreement, foreigners can lease land or property by signing a lease contract with the property owner for a specific period, typically 25 to 30 years depending on the contract. Leasehold properties offer foreigners a stable investment option in Bali, providing long-term use without the complexities of full ownership.

The advantage of leasehold is you don’t need to buy the land directly but can still enjoy the property for an extended period. As with Hak Pakai, it’s important to involve a notary or real estate lawyer to ensure the lease contract is legally binding and doesn’t leave any loopholes that can harm you. A notary fee is a standard part of the transaction costs and is necessary for notarization and registration. Make sure all terms, such as lease duration, fees and other rights regarding the property are clearly outlined. The lease must also be notarized (PPAT) and registered for legal protection, ensuring your rights are safeguarded.

3. Through a PMA (Foreign Investment Company)

If you want to buy a larger piece of land or want to manage the property for business purposes, setting up a PT PMA (Penanaman Modal Asing) is the best option. A PT PMA is a foreign owned company that allows foreigners to acquire property rights such as Hak Guna Bangunan (HGB) in Indonesia. This structure enables your company to buy land and property for business use, so you can own larger properties including commercial ones. The PT PMA must operate within an approved business sector, such as tourism or property rental, and is authorized to conduct specific business activities as defined in its company documents. Foreign investors must establish a PT PMA to legally acquire HGB in Bali, which provides the right to develop and manage property. HGB is a title that allows foreign-owned companies (PT PMA) to develop property and can be extended up to 80 years.

Setting up a PT PMA isn’t a simple process. You’ll need to meet certain administrative and legal requirements in Indonesia. Usually setting up a PT PMA involves fees and a complex procedure, so make sure to have an experienced lawyer or consultant to guide you through the process. But if your goal is long term property investment, this could be a very profitable option, as it enables larger and more diverse investments in Bali’s real estate sector. Renewals of HGB under a PT PMA require approval from the Indonesian National Land Agency (BPN), ensuring compliance with local regulations. HGB provides the right to resell, transfer, or mortgage the property, making it a flexible option for foreign investors.

Read more: How to Buy Property in Bali for Foreigners? Check This Out!

Required Documents and Requirements

When buying a house in Bali there are several documents and requirements you need to prepare to make the process smooth. Besides understanding the legal regulations you also need to gather the necessary paperwork and fulfill the following requirements. These include various ownership documents, tax certificates, and, for certain property transactions—especially when transferring or developing land—building permits are also necessary.

1. Financial Requirements

Before you start the purchasing process you need to ensure you have the financial means to complete the transaction. Banks or financial institutions usually request proof of income or bank statements to verify you can afford the property.

You also need to have the funds ready for payment. Since foreigners can’t apply for local mortgages (KPR) from Indonesian banks, payments are usually made in cash or via international wire transfers. Make sure to keep clear documentation of the transaction and the origin of the funds to avoid legal issues later.

2. Visa and Residency Requirements

To purchase a property in Bali you must have a valid residency permit in Indonesia. You’ll need a KITAS (Limited Stay Permit Card) or KITAP (Permanent Stay Permit Card). Without a valid residency permit you cannot proceed with any property transactions. Additionally, foreigners can only own one property under Hak Pakai in Bali, so it’s important to plan your purchase carefully.

If you only have a tourist visa that won’t be sufficient for property transactions. You’ll need to apply for a visa that allows you to stay in Indonesia long term. The process can take time so make sure to take care of this before moving forward with buying a house.

3. Notary Process

A notary plays a vital role in ensuring all documents including the sales agreement are legally valid and comply with Indonesian law. The notary will help facilitate the transfer of property rights and ensure all parties involved have clear rights.

Make sure to work with an experienced and trustworthy notary. Don’t hesitate to ask questions if you don’t understand. With the right notary the house buying process in Bali will be safer and smoother.

Popular Areas in Bali for Foreign Buyers

Bali offers a diverse range of areas that attract foreign buyers, each with its own unique character and investment potential. Seminyak, Legian, and Canggu are among the most popular choices for those looking to buy property in Bali, thanks to their lively atmosphere, trendy cafes, and proximity to beautiful beaches. These areas are especially appealing for investors interested in rental properties or a dream villa with strong returns.

For those seeking a more tranquil environment, Ubud stands out as Bali’s cultural and wellness center, surrounded by lush rice fields and offering a peaceful retreat from the busier coastal regions. The Bukit Peninsula, with its dramatic cliffs and world-class surf spots, is rapidly growing in popularity for both residential and commercial properties, making it a hotspot for property investment.

When choosing where to invest, it’s important to consider practical factors such as road access, compliance with zoning laws, and adherence to local regulations. These elements can significantly impact the value and usability of your property. Whether you’re looking for a luxury villa, a family home, or a commercial investment, Bali’s varied regions offer something for every type of investor, all within the framework of Indonesian law.

Risks to Be Aware Of

Although Bali offers many benefits and attractive features there are certain risks you should consider before purchasing property. Here are some risks to watch out for:

• Property Legal Status Issues
  One of the biggest risk is purchasing property that doesn’t have complete or legal documentation. Make sure the property you’re buying has clear title and is free from legal disputes.
• Property Fraud
  Sometimes properties are sold at very low price but turn out to be fraudulent. The seller might not have full ownership of the property. To avoid this always work with licensed agents or notaries who have experience.
• Changes in Property Regulations
  Rules about property ownership by foreigners may change. For example rules about the rights of use or lease may become stricter or modified. This can affect the ownership status or usage rights of properties you’ve already purchased.
• Land Size Restrictions
  If you’re planning to buy land larger than 2,000 square meters make sure to consider alternatives like buying through a company or leasehold. Ignoring these restrictions can result in legal issues later.
• Reliance on Third Parties
  If you buy property through a third party like a PMA or leasehold agreement make sure the legal relationship and contract are solid. Relying on a third party without clear agreements can lead to problems if disputes arise.
• Potential Tax or Fee Increases
  Some areas in Bali may face rising taxes or additional fees that can affect the cost of owning a house. Make sure you understand your tax obligations and any additional maintenance fees in advance.

Tips for Foreigners Buying a House in Bali

Buying a house in Bali can be a good investment but there are several aspects to consider to make the process smooth and secure. Here are some tips for foreigners buying property in Bali:

• Understand Land Status and Ownership Rights
  As a foreigner you can’t own land with full ownership. But you can buy a house with rights such as Hak Pakai or leasehold. Make sure you understand the type of rights that suit your needs and aware of the 2,000 square meter land size limitation for residential use.
• Check the Legal Status of the Property
  Before buying make sure the property has clear legal status. Ensure the land is free from disputes and has all valid documents such as a legitimate land certificate. Don’t hesitate to ask for help from a notary or experienced property agent to confirm the legal status of the property.
• Choose the Right Location
  Location is one of the most important factor in buying a house in Bali. Popular areas like Seminyak, Canggu and Ubud offer great beauty and strong investment potential.
• Understand Taxes and Other Financial Obligations
  Every property purchase involves taxes like property taxes and rental income taxes if you plan to rent out the property. Make sure you understand your tax obligations as a property owner and prepare for ongoing costs.
• Work with Bali Premium Trip
  To make the home buying process smooth Bali Premium Trip is the right partner. We offer property legal services and investment guidance to help you through the entire property buying process in Bali. Our team consists of experienced professionals including notaries and property lawyers who will ensure the transaction goes smoothly and legally compliant.

Read more: Guide to Buying Property for Foreigners in Bali: What You Need to Know!

Start Your Property Investment in Bali with Bali Premium Trip!

Buying a house in Bali for foreigners can be a good decision but you need to understand the legal requirements properly. From choosing the right property status, preparing necessary documents and ensuring everything goes smoothly all of these steps must be handled with care. By understanding the requirements for buying a house in Bali for foreigners you can make informed decisions and avoid problems in the future.

If your goal is long term property investment it is highly recommended to use Bali Premium Trip’s property and real estate law services. We provide comprehensive support to ensure your property purchase and investment in Bali comply with all relevant laws. Our professional team can offer the right legal guidance and market analysis to help you maximize your property investment in Bali. With our assistance you can ensure your property investment is safe and profitable in the long run.

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