How to Buy a Villa in Bali as a Foreigner

Bali’s villa market is a powerful draw for foreign investors. With travelers opting for longer, more private stays, the demand for private villas has increased significantly over the years. For investors, this has turned well-located villas into high-performing assets. In fact, many now target annual returns of over 15%.

However, buying a villa in Bali is not like buying property back home. The market has unique laws when it comes to ownership, different risks, and a distinct focus on rental income over capital gains.

In this article, we’ll walk you through the legal, regulatory, and cultural steps of buying and operating a villa in Bali. This includes ownership structures and the local factors that directly impact how your villa functions.

Understanding Villa Ownership in Bali as a Foreigner

Before buying a villa, the most important thing to understand is this: as a foreigner, you cannot own land or any type of property under a freehold title (Sertifikat Hak Milik/SHM) in your name. This single rule shapes the entire property market and influences how you should think about your investment.

Because of this limitation, the Bali villa market is fundamentally different from many Western markets. 

With that in mind, you have two primary routes to acquire a villa. Your choice will depend on whether your main goal is personal use or running a commercial rental business.

1. Leasehold Ownership (Most Common for Personal Use)

Leasehold (Hak Sewa) is the default route for most foreigners buying a villa in Bali, especially those seeking a second home or long-stay property for personal use. Under this structure, you don’t own the land itself but gain legal rights to occupy and use the villa for a fixed term, usually 25 to 30 years (with option to extend up to 80 years).

• You can live in the property, renovate it, and even resell the remaining lease period to another buyer, provided those rights are guaranteed in your lease agreement.
• However, it doesn’t give you the legal right to operate a rental business or collect rental income. If you plan to list the villa on Airbnb or rent it out to guests (even occasionally), you’ll have to set up a foreign-owned company (PT PMA), ensure the right zoning classification for the property, and hold a Pondok Wisata License– more on this below.

FAQ: Can I sell my leasehold villa before it expires?
Yes, you can, but keep in mind that rights to resale or transfer must be stipulated in your leasehold contract terms. Our property experts can help review or draft your lease terms to protect your long-term interests and exit options. 

Read the full breakdown on leasehold property ownership in our Guide for Foreign Investors here.

2. Buying a Villa Through a PT PMA (Best for Commercial & Long-Term Investment)

Setting up a foreign-owned company (PT PMA) is the only legal way for foreigners to own a villa in Bali with the rights to generate income through the villa. It offers legal protection, better long-term control, and commercial flexibility to operate the property as a business asset.

Additionally, Bali is currently enforcing a “Quality Tourism” standard to ensure all commercial villas are properly licensed and taxed. This effectively ends the “grey area” that once allowed residential properties to operate as unlicensed commercial hubs. The PT PMA is now essential for several reasons:

• Better Investment Protection: Owning through a legal entity shields you from personal legal exposure and provides enforceable rights in Indonesia.
• Platform Transparency: The government now uses digital verification to regulate properties listed on major booking platforms. Listings without a valid business registration (NIB) and tax ID (NPWPD) held by a PT PMA are more likely to be restricted or removed.
• Stronger Land Titles: The PT PMA can legally hold Right to Build (HGB) and Right to Use (Hak Pakai) titles. These are renewable, mortgageable, and closer to full ownership than your average personal leasehold (Hak Sewa).
• Tax Deductions and Scalability: Operating as a legal entity allows you to formalize your tax filings, deduct eligible expenses, and scale your business. This is especially beneficial when you’re managing more than one villa or a full rental portfolio.
• Build Local Credibility: Within 3 to 4 years, your PT PMA can build a credit profile with Indonesian banks. This opens doors to refinancing or further expanding your portfolio.

You’ll also encounter “freehold” listings marketed to foreigners using nominee arrangements, where an Indonesian citizen holds the title on your behalf. These setups are not legally protected and leave you exposed if the arrangement breaks down.

How to Buy a Villa in Bali: Step-by-Step Process

Villa purchases in Bali often fall through when the legal structure behind the deal doesn’t hold up. The lease might exclude extension rights, or you might be holding licenses that don’t match your activities. The property might also lack the zoning and permits required for your intended use. Any of these can leave your property unusable.

Emerhub provides full support to secure your property in Bali, from helping you build the right ownership structure to verifying permits and closing the deal.

Step 1. Choose the Ownership Model That Fits Your Goal

Before you fall in love with a listing, ask yourself how the villa will serve you in the long run. Are you planning to live in it full-time, or do you plan to generate income through occasional or long-term rentals? 

• For personal use: A leasehold arrangement suffices. You’ll get to negotiate renewal and resale terms, as well as exclusive use during the agreed lease term. Just note that if you decide to rent it out later, you must convert your setup into a PT PMA, or risk penalties for operating illegally.
• For commercial use: Set up a PT PMA. This allows you to acquire the villa legally, operate short and long-term rentals, and apply for the Pondok Wisata license. You’ll also benefit from tax deductions and stronger resale value down the line.

Step 2. Verify the Villa is Eligible for Sale or Lease

This is the most critical phase where you verify the property’s legal standing. A villa might look ready to move into, but that doesn’t mean it’s legally eligible to be leased or sold to a foreigner.

These issues are common in off-plan builds, renovations done without approvals, or older villas never formalized under updated regulations. Never sign anything or transfer funds until you have confirmed several key points: 

• Zoning: You cannot build the villa on green zone (agricultural) land. Only tourism or residential zones are valid for villa acquisition.
• Land Titles: Identify the legal owner, check for disputes, validate land titles, and ensure your leasehold terms protects your long-term interests.
• Building Permits: Does the villa have an updated building permit (PBG) and usage certificate (SLF)? Without them, you cannot qualify for the rental license or ensure your investment.

These oversights might not show up on listings, but they can render the property unusable, uninsurable, or ineligible for licensing.

Step 3. Understand the True Cost and Valuation of the Property

To understand if a villa is fairly priced, you need to know how properties are valued in Bali. A common method is the cost-based valuation:

Land Value + Building Cost + Developer’s Profit = Sales Price. 

For rental properties, the price is often based on its income potential. However, the listing price for the villa is just the starting point. The price you see on a listing is almost never the total price you’ll actually pay. Here is a breakdown of the additional costs involved when buying a villa:

• 5% BPHTB (Sales and purchase tax paid by buyer)
• 2.5% seller’s tax
• 0.5-2% in notary and land registration fees
• 11% PPN (VAT on the property): Paid by buyer if contractor/developer is registered as VAT collector
• PT PMA setup costs (if applicable)
• License application fees (e.g. Pondok Wisata)
• PBG/SLF building permits
• Annual property tax (PBB)
• Banjar and community fees
• Permit renewals and legal upkeep

Step 4. Sign the SPA and Make a Down Payment

Once you’ve confirmed the villa’s legal standing and chosen your ownership, the next step is signing a Sale and Purchase Agreement (SPA), or a Lease Agreement. The SPA should typically cover:

1. Property Details: land size, certificate number, building specifications.
2. Price and Payment Terms: total price, deposit amount, payment timeline.
3. Handover Conditions: physical condition, fixtures, permits, warranties.
4. Extension and Renewal Rights: crucial for leasehold buyers, benefits your resale value (longer lease terms for sale = more value)

You’ll must also make a 10% deposit into a Notary escrow account. This is subject to the Villa passing due diligence and all SPA conditions being met. 

Pro Tip: Contracts in Bali are often drafted to favor the seller or developer. As your buyer’s agent, Emerhub ensures every clause in your agreement protects your interests and you are investing in a legally sound property.

Step 5. Finalize the Leasehold Agreement and Transfer the Deed 

Once you sign the SPA or Lease Agreement and make the deposit, the notary will formalize the transfer and register ownership under the correct structure.

• If you’re buying a leasehold: The notary will prepare a Deed of Lease (AJB), signed by both parties. Your lease rights are registered under your name for the agreed term, and you’ll receive an official record of the transaction.
• If you’re buying through a PT PMA: The notary will transfer the land title to your PT PMA and register it with the BPN (National Land Office).
  • HGB (Right to Build) is the most common land title for villas.
  • HGU (Right to Cultivate) is available for larger land plots with development potential (e.g. resorts, agriculture-linked villas) and will require additional investment reporting.

Need clarity on which titles fit your investment plans? Our experts can advise based on your specific land sizes, zoning, and operational goals.

Step 6. Maintain Legal Compliance After Purchase

For leasehold owners, staying compliant means monitoring lease expiry dates, ensuring the zoning remains valid for residential use, and keeping your permits (like PBG and SLF) up to date.

If you’re operating through a PT PMA, the obligations are more extensive. You’ll need to stay on top of monthly corporate filings, LKPM investment reports, tax submissions, and regular license renewals.

Emerhub manages all of these moving parts for you, so that your villa remains fully compliant and investment-ready throughout.

Additional Considerations When Buying Villa in Bali

What makes or breaks your villa investment in Bali also lies in what happens once you become part of the local landscape. Foreign buyers tend to overlook the unspoken rules that shape life in a Balinese neighborhood, especially when managing staff, hosting guests, or making changes to the property. 

These can directly impact your ability to maintain good standing with local authorities, secure permits smoothly, and even retain your local staff:

• Banjar involvement: Every village is overseen by a Banjar, and most expect villa owners to contribute in small but consistent ways: monthly donations, registering staff, or participating in local ceremonies. If you run a rental, this becomes even more essential and you’re likely expected to engage.
• Ceremonial permissions: In many areas, building, renovating, or even opening a rental call for a traditional blessing such as Melaspas or Mecaru. While not legally required, these rituals are an important show of respect to the local community.
• Cultural permissions: Overlooking design norms or social cues can backfire. A front gate facing the wrong direction, loud music during temple periods, or insensitive staff behavior seen as disrespectful can spark tension that’s hard to recover from.

Navigating these local dynamics requires on-the-ground experience. Emerhub not only handles your legal and corporate compliance but also provides the local insight you need to ensure your investment operates seamlessly within the community.

Looking to buy a villa in Bali? Fill out the form below and get in touch with our local experts.