How to buy property in Bali as a foreigner ? That’s is good question, when you are foreigners and want to invest your money on property or real estate in Bali. If you you want to buying a property in Bali, you should seek professional legal advice from your friend in Bali who knows how things work in Bali legal law. I am not a lawyer, but only a humble real estate agent. This is my best attempt to explain a little bit regarding How to buy property in Bali as a foreigner. Well, this text i found at expat blog forum, which is wrote
” I want to buy a Villa in Bali and being Australian and not married to a local how can I
do it ?.”
You can read carefully on that forum as well, read and try to analyze the legal problem easy.
How to buy property in Bali as a foreigner
on my opinion you better to find a leasehold property in Bali, It is legal for foreigners to buy leasehold property. Normally this will be lease terms of 25 to 50 or even 100 years. There is some discussion about leasehold properties being limited to terms of 25 years. In some areas like central of Kuta, Seminyak, Legian and Petitenget today, its almost impossible to find freehold property for sale. Lease is the best option at this moment.
Many foreigners nominee system when they buy a property in Bali. This is where the foreign buyer puts the freehold title into the name of an Indonesian citizen. You will hear many horror stories (scary movie) about nominees stealing the land. That’s way i more suggest you to use Leasehold property investment.
Can foreigners purchase a property in Bali – Indonesia ?
The Indonesian government issued Law 5 of 1960 on the “Basic Regulation Of Land in Indonesia” (“UU 5/1960”), which came into force on 24 September 1960. This law explicitly and implicitly revoked many older laws. As a result, it can be said that UU 5/1960 established revolutionary new rules and principles concerning rights in land. UU 5/1960 recognized and regulated several rights over land and houses, including the: Right of Ownership (Hak Milik), Right to Cultivate (Hak Guna Usaha), Right of Building (Hak Guna Bangunan), Right of Use (Hak Pakai), and Right of Building Lease (Hak Sewa Atas Bangunan).How to buy property in Bali as a foreigner
- Right of Ownership (Hak Milik) – Right of Ownership is the most comprehensive and complete form of individual rights over land. There is no time limit, and the holder has the right to use the land, including the earth underneath and the water and air above. It does not, however, include the right to obtain wealth from resources underneath the earth. Right of Ownership may be had only by Indonesian citizens.
- Right to Cultivate (Hak Guna Usaha) – The Right to Cultivate is the right to cultivate State-owned land or to use it for other agricultural purposes for a certain period of time. There are two kinds of Right to Cultivate: for farming enterprises that are smaller than 25 hectares and for enterprises that are 25 hectares or more. Government Regulation 40 of 1996 on the Right to Cultivate, Right of Building, and Right of Use (“PP 40/1997”) states that the period for Right to Cultivate is not to exceed 35 years initially but can be extended for another 25 years. When the extension period expires, the Right To Cultivate shall be renewed over the same land. The Right to Cultivate may only be owned by Indonesian citizens and companies established under Indonesian law and domiciled in Indonesia.
- Right of Building (Hak Guna Bangunan) – Right of Building is a right over land, either State-owned or private, with which the holder may erect and possess buildings for a certain period of time not to exceed thirty years (can be extended for another twenty years). When the extension period expires, Right of Building shall be renewed. There are no limitations on the size of the holding. Right of Building may only be owned by Indonesian citizens and companies established under Indonesian law and domiciled in Indonesia.
- Right of Use (Hak Pakai) – Right of Use is a right over land, either State-owned or private, which gives the holder the right to use and obtain the product of a certain piece of land. The land to which Right of Use is applied may be used as a building site or for agricultural purposes. PP 40/1997 states that the initial period for Right of Use is not to exceed 25 years but can be extended for another twenty years or even indefinitely if the land is still in use for a certain reason. Right of Use may be owned by Indonesian citizens, resident foreigners, Indonesian companies domiciled in Indonesia, and foreign companies that have a representative office in Indonesia. Currently it is easy for foreigners in Bali to obtain the right of use.
- Right of Building Lease (Hak Sewa Atas Bangunan) – Right of Building Lease is a right to lease land, either State-owned or private, which gives the holder the right to use the land in return for compensation. The payment could be one-time or periodical as determined by mutual understanding between the parties. Right of Building Lease may be owned by Indonesian citizens, resident foreigners, Indonesian companies domiciled in Indonesia, and foreign companies that have a representative office in Indonesia.
Well, i hope all property and real estate legal law above can give you little bit information regarding How to buy property in Bali as a foreigner.
How foreigners own property in Bali :
There are a number of different types of title in Indonesia:
Hak Milik (Freehold) is the type of title that can only be held by an Indonesian citizen.
Hak Pakai (essentially leasehold title) and other forms of title can be held by a P.T. or PMA Company (Foreign Investment Company).
A non-Indonesian citizen cannot own land in Indonesia. However a foreigner can acquire a leasehold title to a building – almost the same as a strata title except that the title lasts only for 25 years with an extension of 30 years for a maximum of 55 years and then reverts to the original owner (lessor).
There are 2 ways for foreigners to own the land in Indonesia:
1. Using the Nominee
The Nominee will sign four documents with the foreigner as follow:
A Loan agreement: acknowledges that the foreigner has lent to the Nominee the purchase price of the land.
A Right of Use agreement: allows the foreigner to use the land.
A Statement Letter: where the Nominee acknowledges the foreigners loan and intention to own the land.
Power of Attorney: The nominee signs an irrevocable Power of Attorney giving the foreigner the complete authority sell, mortgage, lease or otherwise deal in the land.
2. Using the PMA
The most significant change in Indonesian investment law came in 1997 when the government introduced the PMA (Penanaman Modal Asing or Foreign Investment Company). This allows foreign investors to set up a company in Indonesia, without having to have Indonesian partners. The PMA can be 100% owned by the foreign investor. PMA companies are allowed to own the title of the property for a period 25 years and have to be renewed by the government.
To set up a PMA, you will be required to:
Submit the detailed business plan. Operate in a business environment that adds value to Indonesia in terms of foreign skills, employment and environmental benefit. Make an appropriate cash deposit in an Indonesian based Bank. The amount varies and is calculated from the capital employed in the business. Show the property investment as an asset of the company. The process takes approximately 3 to 4 months and once its completed; the company can apply for work permits for the foreign directors, 3 permits in the first year of operation. The cost of setting up the PMA is between IDR 30 to 40 Million or equivalent with USD 4,500.
C. Documents FEES
Notary: 2,5 % of the value of the transaction.
Vendor Tax & Purchaser Tax: Both the vendor and purchaser pay 5% tax on the value of land and property sales.
Mortgage Certificate: 2% of value of mortgage.
Read also may article : Indonesian Regulations On Foreign Ownership ( about Indonesian Agrarian Law )
I hope my article about How to buy property in Bali as a foreigner, can make your rich for Bali property information. Hope you like it … Cheer’s !!!!