Buying a Holiday Home in Bali
Make sure buying your dream home in Bali doesn't turn into a nightmare. Find out how you can safely buy a holiday home in Bali.
Table of contents
Finding a suitable villa for a holiday home in Bali comes with its own challenges. From confusing land ownership certificates to hunting for the right villa.
This article covers suggestions on buying a villa in Bali. Find out what you need to know about land certificates in Indonesia and the safe and correct way to buy a villa.
Buying a Villa with Hak Pakai (Right to Use)
There are different land certificates in Indonesia. But foreigners who want to buy property for personal use should use the hak pakai (right to use) certificate.
You need a valid limited stay permit (KITAS) to buy a property with hak pakai (right to use).
Your property must meet these requirements:
- Residential property
- Not larger than 20 acres
- A value of at least IDR 5 billion
- The land must already have an existing building (cannot be land only)
Check property licenses for free.
Enter the address of the property in Bali below.
Our consultants will check if it meets the requirements for a right to use certificate.
A right to use certificate grants you rights to the villa for 30 years initially. This is extendable first by 20 years, and then once more by 30 years for a total of 80 years. With these terms, you can enjoy your villa well into your retirement years and also sell it at any time.
+ 20 years
+ 30 years
Total of 80 years
Note, however, that your stay permit must be valid. If you don’t renew your stay permit, you have one year to get a new one or sell the property. Emerhub can assist you in obtaining and extending your stay permit.
It’s important to remember that a villa bought with a “right to use” certificate cannot generate income. For example, you can’t rent out your Bali holiday home on Airbnb. If that’s your plan, you need to buy or lease the land through a company operating in the relevant industry.
Leasing Properties Long-term in Bali
Long term leasing of a property is also a popular option for those who want to move to Bali. Foreigners usually lease properties for 25 years with the possibility to extend. When leasing land, it is important to agree on terms in the lease agreement. Use a professional property advisor to avoid future problems with the landlord.
Some important points to declare in a lease agreement include:
- Building on the land. The terms and conditions for building on the land must be clear in the lease agreement. The lease agreement must also clearly state that landowner’s cooperation with regard to applying for building permits. The agreement should also state what will happen to the building when the lease ends.
- Sub-leasing the property. If you want to sublease the property, the lease agreement must state that you have the right to do this. In addition to this, the agreement must also say what the rules or process for this is. For example, do you need to get the written consent of the landowner, or is giving notice sufficient?
- Terms for extending the lease agreement. It is important to set out the terms for extension in the lease agreement. Further, pay the extension fee as soon as right away because the extension is only valid after payment. Even with clear terms in the agreement, it is difficult to enforce extension clauses in case ownership changes in the future and the new landowner does not want to fulfill the agreement.
- Usage of access roads and communal areas. Make sure the lease agreement includes all matters related to access roads and communal areas if any. Many issues can come up with these and can even involve lawyers and police.
- Right of first refusal for buying property. The lease agreement must state that if the landowner decides to sell the property, he or she must first offer the sale to the lessor.
- Usage of the land. It is also important to state the purpose and use of the land. Even if you currently only wish to use it as your personal residence, we recommend that you leave the option to use it for business purposes open. That way in case you decide to use the property for commercial purposes, you are free to do so.
Why you shouldn’t use a local person’s name to buy property in Indonesia
A common misconception is that the best way to own property in Bali is by using an Indonesian national such as a friend or a partner. While it may be easier, it’s also inherently unsafe. Use such option only if you accept the fact that your property can be legally taken away from you at any moment.
In addition to that, this practice is illegal because freehold is not open to foreigners. If authorities catch you concealing foreign ownership under the nominee scheme, they will seize your property.
Another problem is when the local person passes away. The family members will inherit the property and you won’t have any legal claims to it.
When buying a villa with a right to use certificate the ownership is safe and legal so there is no need to use the risky nominee scheme. If you sell the property the new owner can also convert the certificate.
Get a Stay Permit
You must have a valid stay permit to buy a villa with a right to use certificate. There are two kinds of stay permits for foreigners, the limited stay permit (KITAS) and the permanent stay permit (KITAP).
A KITAS allows you to stay in Bali for an extended but limited period of time. You may live in Bali for six months to two years depending on how you got your KITAS, and this permit is renewable. There are a few ways to get this. Persons qualified for KITAS include:
- Retired persons who are at least 55 years old
- Employees of an Indonesian company that is willing to sponsor KITAS.
- Investors in a foreign company (subject to certain criteria).
- Spouses of an Indonesian citizen.
Emerhub can help you apply and renew your KITAS.
Checklist Before Buying a Villa in Bali
A very important step in buying a property is doing a comprehensive check on the property or conducting due diligence. Doing this ensures that you will not have issues while in the process of buying your property and in the future. Leasing a property long-term has similar risks and potential issues so conducting due diligence is also necessary for that.
The process of conducting due diligence includes the following steps.
Verify Land Ownership
Before anything else, make sure you are talking to the actual landowner or an authorized representative. You must also find out how many people own the land. In some cases, like inheritance, the land certificate might be out of date and not have all the current rightful owners listed. Make sure all owners are aware of the transaction.
Check the Zoning and Property Requirements
You don’t want to spend time and effort negotiating with the property’s owner only to find out that it doesn’t meet the prerequisites for a right to use certificate.
Check for Unpaid Taxes
Check if the property has any unpaid taxes before buying it. If landowners have unpaid taxes, it should lower the price of the property because you will assume responsibility for it. Checking taxes will also give you an idea of how much you will have to pay in the future.
Access to the Property
Access roads in Bali may be publicly-owned by the community or privately-owned. Disputes with your neighbors can spoil the mood in your holiday home. You can avoid issues related to access roads by making arrangements before buying the property.
Fees and other expenses
Find out if there are any other expenses related to your property. Buying a property in Bali usually involves the additional expenses including but not limited to:
- Village donation
- Legal fees
Our consultants at Emerhub have the experience and knowledge to do a comprehensive and detailed check on your future home in Bali.
Our consultants in Emerhub are ready to assist you in buying a villa in Bali. From obtaining your stay permit to conducting due diligence on the property, we will make sure that the process of buying a villa goes smoothly. Get started by filling out the form below or by emailing [email protected].
Let's grow your business in Bali
Get in touch with Emerhub by filling in the form below and our consultants will reach out to you within a few working hours.
More articles about Bali
Business Opportunities in Bali: New Positive Investment List
The new positive investment list in Indonesia opens up several new business lines to 100% foreign ownership that are especially attractive to foreigners looking to business in Bali.
A Guide to Renting out Villas in Bali as a Foreign Investor
Run a villa rental business in Bali legally and safely. Here’s what you need to know to protect your investment and avoid unnecessary losses.
Double Taxation in Bali: What you need to know to avoid it.
Before transferring funds overseas, a business needs to be aware of tax implications to avoid double taxation. Here’s what you need to know.