Buying a Holiday Home in Bali

Purchasing a villa as a holiday home in Bali can be challenging. Navigating through the complexities of land ownership certificates and finding the perfect villa are just a few of the hurdles.

This article provides tips on buying a villa in Bali, including crucial information about land certificates in Indonesia and the safest ways to purchase a villa.

Can Foreigners Purchase a Villa in Bali for Personal Use?

Buying a Villa with a Hak Pakai (Right to Use) Certificate

Indonesia has various types of land certificates, but foreigners looking to buy property for personal use should acquire the hak pakai (right to use) certificate.

To purchase a property under hak pakai, you need a valid limited stay permit (KITAS).

Your property must meet the following criteria:

• Residential property
• Maximum size of 20 acres
• Minimum value of IDR 5 billion
• The land must have an existing building (it cannot be vacant land)

We offer a free property license check.

Simply provide the property address in Bali below.

Our team will verify if the property qualifies for a right to use certificate.

The right to use certificate initially grants ownership for 30 years, which can be extended first by 20 years and then by an additional 30 years, totaling up to 80 years. This allows you to enjoy your villa into retirement and sell it whenever you choose.

• 30 years – Initial term
• + 20 years – First extension
• + 30 years – Second extension
• Total: 80 years

It is crucial to maintain a valid stay permit. If your stay permit expires and is not renewed, you have one year to either obtain a new permit or sell the property. The Agency Bali can help you with the process of obtaining and renewing your stay permit.

It’s important to note that a villa purchased with a right to use certificate cannot be used to generate income, such as renting out on Airbnb. If your intention is to rent the property, you would need to buy or lease the land through a company that is registered to operate in that sector.

Long-Term Leasing in Bali

Leasing a property for the long term is another popular option for those looking to relocate to Bali. Typically, foreigners lease properties for 25 years with an option to extend. When leasing, it is essential to have a well-defined lease agreement. Engaging a professional property advisor can help avoid future disputes with landlords.

Key aspects to include in a lease agreement are:

• Building on the Land: The lease agreement should clearly outline the terms for constructing buildings on the land and ensure cooperation from the landowner for obtaining building permits. It should also specify the fate of the building after the lease ends.
• Subleasing the Property: If you plan to sublease the property, the lease agreement should grant you this right and outline the conditions for doing so, such as obtaining written consent from the landowner.
• Extension Terms: Clearly define the terms for lease extensions in the agreement and ensure the extension fee is paid promptly. Even with clear terms, enforcing extension clauses can be challenging if the property ownership changes and the new owner does not wish to honor the agreement.
• Access Roads and Communal Areas: Include all details regarding the use of access roads and communal areas to avoid potential disputes that could involve legal action.
• Right of First Refusal: The lease should state that if the landowner decides to sell the property, they must offer it to the tenant first.
• Usage of the Land: Outline the intended use of the land. Even if you initially plan to use it as a private residence, it’s wise to keep the option open for commercial use to ensure flexibility for future plans.

Why You Shouldn’t Use a Local Person’s Name to Buy Property in Indonesia

A common myth is that the easiest way for a foreigner to own property in Bali is to use the name of an Indonesian national, such as a friend or partner. While this may seem straightforward, it is risky and not legally secure. If you choose this route, you must accept that your property could be legally taken from you at any time.

Moreover, this practice is illegal because foreigners are not allowed to own freehold property in Indonesia. If authorities discover foreign ownership concealed under a nominee arrangement, your property may be confiscated.

Additionally, if the local person whose name is used to hold the property passes away, their heirs will inherit the property, leaving you with no legal claims.

Buying a villa with a right to use certificate is a safe and legal method, eliminating the need to resort to a risky nominee scheme. If you decide to sell the property, the new owner can convert the certificate.

Safely Buying a Villa in Bali

Obtain a Stay Permit

To purchase a villa with a right to use certificate, you must have a valid stay permit. There are two types of stay permits for foreigners: the limited stay permit (KITAS) and the permanent stay permit (KITAP).

A KITAS allows foreigners to reside in Bali for an extended but limited duration, ranging from six months to two years, depending on the type of KITAS. This permit is renewable. Eligibility for a KITAS includes:

• Retirees aged 55 and above
• Employees of an Indonesian company willing to sponsor the KITAS
• Investors in foreign companies (subject to certain conditions)
• Spouses of Indonesian citizens

Pre-Purchase Checklist for Buying a Villa in Bali

Before purchasing a property, it is vital to conduct a thorough check or due diligence to prevent potential issues during and after the buying process. The same diligence is needed for long-term leasing to mitigate risks and potential problems.

The due diligence process includes these steps:

• Verify Land Ownership: Ensure you are dealing with the actual landowner or their authorized representative. Determine the number of people who own the land. In cases like inheritance, the land certificate might be outdated and not list all current owners. Make sure all owners are aware of the transaction.
• Check Zoning and Property Requirements: Verify that the property meets all prerequisites for a right to use certificate before negotiating.
• Check for Unpaid Taxes: Confirm there are no unpaid taxes on the property. Outstanding taxes could lower the property’s price as you would assume responsibility for them. Knowing the tax status also helps you estimate future tax obligations.
• Access to the Property: Be aware of the ownership of access roads, whether public or private. Resolving access issues beforehand can prevent conflicts with neighbors and maintain peace at your holiday home.
• Fees and Other Expenses: Identify any additional costs associated with the property, such as:
  • Village donations
  • Legal fees
  • Taxes

Ready to Buy a Villa in Bali?Our consultants at The Agency Bali are here to help you with every step of buying a villa in Bali, from securing your stay permit to conducting comprehensive due diligence. Contact us today by filling out the form below or emailing bali@theagencybali.com.