If you’re a foreigner looking to settle down in the beautiful island of Bali, there are several viable options available to you. Whether you’re considering renting or buying property, understanding the local legal landscape is crucial. In this article, we’ll explore the best ways for foreigners to secure housing in Bali, providing valuable insights to ensure a smooth transition to island life.

Renting a Property

Renting a property in Bali is often the most straightforward and accessible option for newcomers. This arrangement offers a multitude of advantages but comes with its own set of responsibilities. Before diving into a rental agreement, it’s essential to clarify the rights and obligations of both tenants and property owners to prevent disputes in the future.

Fortunately, anyone can sign a rental agreement in Bali, regardless of residency status. This flexibility simplifies the rental process significantly. Notably, rental contracts are not regulated by the National Land Agency (BPN), meaning there are no strict limits on lease terms. Though in practice, most leases do not exceed 25 years.

Foreigners should also familiarize themselves with the Basic Agrarian Law no. 5 of 1960, which governs property and land ownership in Bali. Unlike many Western countries, Indonesian law mandates that land ownership must be held by Indonesian citizens or entities. Thus, foreigners can explore various options, such as leasing or setting up a foreign-owned company (PT PMA), to navigate the property landscape effectively.

The Importance of Legal Documentation

Understanding the types of legal certificates is crucial for foreign property seekers. Below are some of the main documents available:

Hak Guna Bangunan (HGB)

The Hak Guna Bangunan (HGB) certificate allows you to build on land for a period of 30 years, which can be extended for an additional 20 years, culminating in a total of 50 years of complete ownership. Once the certificate expires, the owner can reapply under the same conditions. Additionally, properties under HGB can be mortgaged or secured through banks, and it’s a popular choice for property buyers. Foreigners can apply for HGB through a PT PMA or possess a valid residence permit (KITAS or KITAP).

Hak Pakai (Right of Use)

Hak Pakai (HP) is designed as a long-term lease, where foreign nationals can use land for mutually agreed purposes. It typically grants usufructuary rights for up to 25 years, with the potential to extend up to a total of 80 years. However, HP holders have limited financial rights and cannot engage with banks using this certificate.

Hak Guna Usaha (Cultivation Rights)

If your interests lie in agriculture, you might consider Hak Guna Usaha (HGU), which permits the use of land for farming and agricultural activities. This right is valid for 25 years and can also be extended for another 35 years. A PT PMA is crucial for obtaining this right.

Purchasing Property Through a Local Representative

Many expats who have spent substantial time in Bali often consider purchasing property with the assistance of trusted local friends. However, this method can be risky. Buying property in the name of an Indonesian citizen can lead to complications as the legal ownership rests with the local representative. In case of any disputes, the law typically favors Indonesian citizens, and there’s a possibility of government confiscation if it’s determined that the agreement is unlawful.

Acquiring Property as PT PMA or Individual

Foreigners can legally own property in Bali without forming a PT PMA if they hold a valid residence permit (either KITAS or KITAP). It’s important to note that while permanent residents can buy homes for personal use, they must adhere to minimum value requirements — IDR 3 billion (approximately USD 225,000) for houses and IDR 2 billion (around USD 150,000) for apartments. For those looking to invest or run a business, establishing a PT PMA is necessary.

At VisaStation.id, we offer professional assistance to help you obtain permanent residency in Indonesia or establish a PT PMA, ensuring that your property investment process is straightforward and compliant with local laws.