Have you ever dreamt of escaping to your own Balinese oasis, a tranquil retreat amidst lush rice paddies, or a vibrant villa overlooking the ocean? Bali, with its stunning landscapes, vibrant culture, and relaxed lifestyle, has long been a magnet for foreigners seeking a slice of paradise.
Many dream of owning a piece of this island haven, but the legal landscape surrounding property ownership for foreigners can be complex. This is rooted in Indonesia’s fundamental philosophy regarding land, as enshrined in Article 33 of the 1945 Constitution, which designates land as a state-controlled resource for the prosperity of its citizens.
This article provides a comprehensive guide to navigating the intricacies of property ownership in Bali for foreigners, outlines the available options, and highlights the associated risks and benefits.
Can Foreigners Own Property in Bali?
The straightforward answer is NO.
Indonesian law, specifically the Basic Agrarian Law (UUPA), restricts freehold land ownership (Hak Milik) to Indonesian citizens. This law underscores the nation’s stance on land as a national asset, prioritizing its use for the welfare of Indonesian citizens.
But don’t lose hope just yet!
While outright ownership might be off the table, there are still ways to secure your piece of paradise. Read on to discover the legal avenues available to foreigners seeking to establish property rights in Bali.
Indonesian Property Laws for Foreigners
Before we dive into the exciting possibilities, it’s essential to grasp the legal framework governing land ownership in Indonesia. The Indonesian Constitution, along with the Basic Agrarian Law (UUPA), clearly states that land ownership is reserved for Indonesian citizens.
This might seem restrictive at first, but it reflects Indonesia’s commitment to safeguarding its land for its people. However, in the spirit of globalization and international cooperation, Indonesia offers alternative pathways for foreigners to acquire property rights, each with its own set of conditions and limitations.
Ways for Foreigners to Own Property in Bali
- Leasehold (Hak Sewa)
This is the most common and secure option for foreigners, providing a legal foothold in Bali’s property market. It involves leasing land from an Indonesian citizen for a specified period, typically 25 years, with an option for renewal.
This aligns with UUPA’s provision for Hak Sewa, allowing foreigners to utilize land for a defined period. Leasehold offers legal certainty and protection under Indonesian law, and it comes with the flexibility to sell the remaining lease period if needed.
The process is relatively straightforward compared to other options. However, it’s important to be aware of the limitations. Leasehold does not grant ownership of the land itself, and there might be complications during lease renewal. Additionally, control over the land’s future is restricted.
- Right to Use (Hak Pakai)
If you’re looking for a more extended period of property usage, Hak Pakai might be the answer. This right grants foreigners the ability to use and build on land for a specific purpose, such as residential or commercial. As per UUPA Article 42, foreigners residing in Indonesia can obtain Hak Pakai.
It can be granted for up to 80 years for Indonesian citizens and 30 years for foreigners, with the possibility of extension. This offers a significant advantage over leasehold in terms of potential usage duration. However, the application process is more complex, and it’s not as easily transferable as leasehold. There are also limitations on the extent of usage rights.
- Foreign Investment Company (PMA)
For those with entrepreneurial ambitions, establishing a PMA could be the key to owning property and conducting business in Bali. A PMA allows foreign nationals to own property through their company. The PMA can obtain a Right to Build (Hak Guna Bangunan – HGB) title, which grants the right to construct and own buildings on the land for 30 years, renewable for another 20 years, and then extendable for another 30 years.
This route is in line with UUPA Article 36, which permits foreign-owned legal entities established under Indonesian law to hold HGB. This option provides greater control over the property and opens possibilities for business activities.
However, setting up a PMA is a complex and expensive process, and it comes with ongoing administrative requirements and tax obligations.
- Ownership of Apartment Units (Sarusun)
Did you know that foreigners can actually own property in Bali with a Hak Milik title? This is possible through the ownership of apartment units (Sarusun), as per UUCK Article 144 and PP 18/2021. Foreigners with valid residence permits can own these units, giving them direct ownership of the apartment but not the land underneath.
However, there are restrictions on location, minimum price, and size, as further regulated by Permen ATR KBPN No. 18/2021. This offers a unique opportunity for direct property ownership in Bali, suitable for investment and personal use. However, it’s crucial to be aware of the limitations, including location restrictions, price and size limitations, and the absence of land ownership.
Risks and Considerations
While the options outlined above offer exciting pathways to property ownership in Bali, it’s essential to be aware of the potential risks and challenges.
- Scams and Fraud: The allure of Bali’s property market can attract fraudulent schemes. Due diligence is crucial to avoid scams and ensure clear title ownership.
- Legal Disputes: Potential conflicts with the landowner or other parties can arise, highlighting the importance of sound legal advice and well-drafted agreements.
- Changing Regulations: Indonesian property laws are subject to change, which could impact ownership rights. Staying informed and seeking professional guidance is crucial.
Conclusion
While outright land ownership (Hak Milik) is not possible for foreigners in Bali, the Indonesian legal system, through UUPA and UUCK, provides several options for foreigners to secure property rights. Each option, whether it’s Leasehold, Right to Use, PMA company ownership, or owning an apartment unit, comes with its own set of advantages and disadvantages. The best choice depends on individual needs, circumstances, and long-term goals. Careful research, professional legal advice, and a thorough understanding of the risks are essential for a successful property ownership experience in Bali.
