Beyond the perfect holiday location, Bali is also an expat hotspot for investment properties. It’s important to understand how to safely purchase property in Bali as a foreigner. Unfortunately, there are scams that can rob you of your new investment property.
Many foreigners believe they need a “nominee” in order to purchase property in Bali. A nominee is an Indonesian citizen who will act on your behalf when it comes time to your new real estate. This is an entirely risky process, as you are giving all property rights to the selected nominee. Paperwork completed with a nominee is not recognized as legal under Indonesian law.
Property and real estate ownership in Indonesia is regulated under Law 5 of 1960, with rights relevant to you known as: ‘Right To Own’ (Hak Milik) and ‘Right To Build’ (Hak Guna Bangunan). Foreigners are not given the ‘Right To Own’ (Hak Milik), which is why the belief that a nominee is needed was curated. But, this is not true.
As a foreigner, the safe way to invest in Bali real estate is to do it through a foreign owned company (PT PMA) and acquire the ‘Right To Build’ (Hak Guna Bangunan). PT PMA is a foreign owned limited liability company registered in Indonesia. With the PT PMA, you can obtain the ‘Right To Build’ (Hak Guna Bangunan/HGB) License and a Freehold Title/’Right To Use’ (Hak Pakai).
| Right to Build (Hak Guna Bangunan) | Right to Use (Hak Pakai) |
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| Purpose of Legislation | The right to use and construct property that is not owned by the entity constructing the property | The right to use property- owning freehold title |
| Duration of Right | A maximum of 80 years, with an initial duration of 50 years and can be renewed for a further 30 years | Granted for 25 years with a renewal option up to a total tenure of 70 years |
As you can see, the ‘Right To Build’ along with the ‘Right To Use’ will provide a foreigner with a lifetime (and then some) to have a property in Bali. In order to obtain these rights, all that must be completed is a packet of documents provided by BPN. Once you show a proof of land payment and the conditions of Hak Pakai are met and built with a correct IMB, a Hak Pakai Certificate will be issued under your name.
Dealing with paperwork might seem like a hassle in the beginning, but it is definitely a better alternative than showing up to a property your purchased only to find your nominee sold it to someone else!
