What to Know When Buying Land in Bali

Buying land in Bali is a popular investment opportunity for foreigners and is often seen as a way to move to the island permanently. However, purchasing land in Bali isn’t as straightforward as it may seem. There are many potential pitfalls that can turn your property deal into a disaster if not handled carefully.

Key Considerations When Buying Land in Bali

When considering buying land in Bali, it’s essential to approach the process with caution, set aside personal emotions, and thoroughly research before committing to any deal. Here’s a comprehensive guide on what you need to know:

1. Land Ownership and Certificate Verification

The first step in buying property in Bali is to verify the landowner. Ensure you are dealing with the rightful owner or an authorized representative. You can do this by requesting an updated land certificate or reviewing the relevant inheritance documents to confirm the legitimacy of the ownership.

2. Zoning Regulations

Bali has various zoning regulations that dictate how land can be used, including residential, tourism, commercial, green zones, conservation areas, and more. It’s crucial to check if the zoning aligns with your intended use of the land. Make sure your plans comply with local zoning laws to avoid legal complications.

3. Tax Payments

Verify that the previous owner has paid all land taxes. Unpaid taxes can hinder your ability to obtain necessary permits, such as building permits (IMB), and may also lower the property’s value. Additionally, understanding the tax history can give you an idea of future tax obligations.

4. Absence of Disputes

Indonesia does not have a centralized notary system, so a standard due diligence check might not reveal all legal and financial issues related to the property. It’s essential to ensure there are no disputes, such as multiple notaries handling the same transaction or conflicts over inheritance claims.

5. Land Boundaries and Access

Confirm the exact size and boundaries of the land and check for any overlapping property lines. Proper verification helps prevent future disputes with neighbors. Additionally, make sure there is legal access to the property. Access issues can affect the property’s value and living convenience.

6. Building Permits and Licenses

If the land includes an existing building, ensure it has the appropriate building permit (IMB) that complies with zoning regulations. Buildings without the correct permits risk being demolished by authorities.

7. Additional Costs and Expenses

Aside from the purchase price, consider other expenses such as legal fees, taxes, construction costs, and village donations. These costs should be factored into your budget to avoid unexpected financial burdens.

8. Multiple Ownerships

Many land certificates in Bali are outdated and might not reflect the current rightful owners. It’s common to find certificates under the name of deceased individuals. In such cases, ensure all inheritors agree to the transaction to avoid legal disputes.

9. Limited Access to Your Property

Ensure that the property has clear access from a public road. If access involves crossing another person’s property, secure a formal agreement to prevent future conflicts or demands for compensation.

Avoid Buying Land Using a Nominee Agreement

Foreigners cannot purchase land with a freehold title (Hak Milik) in Indonesia. Many resort to nominee agreements, where the land is bought and registered under a local’s name. However, legally, the nominee is the rightful owner regardless of any private agreements. The safest way for foreigners to buy property in Bali is through a foreign-owned company (PT PMA) with a Hak Guna Bangunan (Right to Build) certificate.

Frequently Asked Questions

• Can foreigners buy a house in Indonesia? Yes, foreigners can purchase property with a Hak Pakai (Right to Use) or a Hak Guna Bangunan (Right to Build) certificate, each granting rights for 30 years, renewable.
• How much does it cost to build a villa in Bali? The cost varies depending on the size, design, and materials but typically starts around USD 400 per square meter.
• Is buying property in Bali a good investment? Generally, yes. Bali is a major tourist destination with millions of visitors each year, making real estate a potentially lucrative investment.

If you’re interested in buying land in Bali, contact The Agency Bali. Our experienced team is here to guide you through every step, ensuring a safe and informed investment.