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The allure of owning a slice of paradise of Bali is undeniable. Bali offers vibrant culture, stunning landscapes, and burgeoning economy.
But for foreigners, buying land in Bali can be a complex journey fraught with legal intricacies.
Foreigners cannot own freehold land directly in Indonesia. The primary and safest option for long-term control is Leasehold, through which you lease land for an extended period.
This guide will cut through the confusion and provide essential what-you-should-know knowledge for 2025.
Understanding Foreign Land Ownership in Indonesia
The foundational principle of Bali real estate for foreigners is enshrined in Indonesian Agragrian Law: foreign individuals cannot directly own Freehold land.
This ownership right is reserved exclusively for Indonesian citizens. This isn’t a loophole to find; it’s a fundamental legal barrier.
However, this doesn’t mean owning land in Bali is impossible. It simply means you must understand and utilize the legally recognized structures available.
Leasehold vs. Freehold: The Core Distinction for Foreigners
This is the most critical distinction for any foreigner looking to buy land in Bali:
| Leasehold | Freehold | |
| What it is | A leasehold means you own the property for a set period, but not the land it’s built on. The initial lease can last between 125 and 999 years. Once this set period, or lease, ends, the leasehold property will return to the owner of the land. Flats are often sold as leaseholds | A freehold means you own the property and the land it stands on outright for an unlimited time. This means you have full control and are responsible for all maintenance, upkeep, and expenses, with no ground rent or a landlord to answer to |
| How it works | A formal lease agreement is notarized and often registered. You pay an upfront lump sum for the entire lease period. | A freehold property is one that you own with no fixed time limit. You will own the building and the land it’s on. If you buy a freehold, you’re responsible for maintaining your property and land. You should budget for these costs. |
| Pros | Direct Control: You control the land for the duration of the lease. Simplicity: Legally straightforward for individuals. Cost-Effective: Often a lower upfront cost compared to purchasing through complex nominee structures. Transferable: You can typically sell or transfer your leasehold interest. | Complete ownership: You own both the property and the land it’s on indefinitely. Full control: You can make alterations and renovations without needing landlord permission. No ground rent or lease expiry: You avoid paying annual ground rents and won’t have to worry about extending a lease as it nears its end. Simpler resale: Freehold properties are often easier to sell as they are free of the complexities of leasehold terms. Financing advantages: Banks often favor freehold properties for loans due to clear ownership. |
| Cons | Depreciating Asset: The value of the lease diminishes as it approaches its expiry date, unless there’s a clear extension clause. Negotiation: Extension terms and pricing can be subject to negotiation if not clearly defined upfront. | Higher upfront cost: Freehold properties are generally more expensive to buy than leasehold properties. Full maintenance responsibility: You are solely responsible for all repairs, upkeep, and maintenance of the entire property. Administrative burden: Managing the property, including insurance, taxes, and potential disputes (especially in a jointly-owned freehold), can be time-consuming and complex. Potential for limited choices: Freehold is less common for flats, which may limit your options if you are looking for an apartment. |
Key Considerations Before Buying Land in Bali in 2025
Beyond the ownership structure, several crucial factors demand attention:
- Zoning (IMB/PBG): Verify the land’s official zoning and permits. Is it zoned for residential, commercial, or agricultural? Building a villa on agricultural land without proper conversion is a recipe for disaster. This also ties into your Exit Strategy if you plan to sell.
- Access & Infrastructure: Ensure legal and practical access to the land. Is there clear road access? What about utilities like electricity, water (PDAM or well), and internet connectivity?
- Land Survey & Boundaries: Always conduct a proper land survey to confirm the exact boundaries and size of the plot, preventing future disputes with neighbors.
- Encumbrances: Ensure the land is free from any liens, mortgages, or ongoing disputes. A thorough due diligence process is non-negotiable.
- Local Community Engagement: Building good relationships with the local Banjar (village council) is vital for smooth operations and community acceptance, especially if you plan to build or operate a rental property.
Why Expert Guidance is Essential
The legal landscape in Indonesia is dynamic and can be confusing for even experienced international investors. Relying on casual advice or unverified sources can lead to significant financial losses.
At Pellago, our Personalized Local Expertise and Deep Market Insight are built on years of experience navigating these exact complexities. We don’t just find you land; we ensure it’s legally sound, strategically located, and poised for your investment success.
Ready to secure your piece of paradise with confidence?
Don’t navigate the intricacies of buying land in Bali alone. Our team of local experts provides transparent advice and comprehensive due diligence to protect your investment.
Contact Pellago today for a personalized consultation and build your Bali dream on solid ground.
