The first thing every buyer hears is that foreigners cannot own land in Indonesia. That is half true. Full freehold is genuinely closed — but three other rights are registered by the state and will hold up in court.
Why you cannot simply buy freehold
Indonesia's Basic Agrarian Law divides land rights into several categories. The strongest of them, Hak Milik — perpetual, inheritable freehold — is reserved for Indonesian citizens. A foreigner cannot hold it personally, and cannot acquire it through marriage without a prenuptial agreement separating assets.
Freehold is not the only way to control a property, though. The law provides three instruments that foreign buyers have used legally for decades.
Structure 1. Leasehold
By far the most common route on the island. You do not buy the land; you buy the right to use it for a fixed term — usually 25 or 30 years — with a pre-agreed extension of another 20 to 25. The full amount is paid once, up front.
The agreement is signed before a notary, translated into Indonesian and noted in the land records. A handshake and a receipt are worth nothing if the matter ever reaches a court.
What the contract must contain
- The right to build and to own what you build, separately from the land itself.
- Extension terms — a formula or a fixed price, never "to be agreed between the parties". Vague wording becomes leverage in year 25.
- The right to transfer — to sell, gift or sublet without further consent.
- Inheritance — the lease survives the death of either party.
- Continuity on sale — a new landowner inherits the obligations of the old one.
Upside: two to six weeks to complete, nothing to maintain, no company and no residence permit required. Downside: the asset melts. Every year shortens the remaining term, and that feeds straight into resale value — a villa with twelve years left is a fundamentally different asset from the same villa with twenty-seven.
Structure 2. Hak Pakai
A right of use that a foreigner can register personally, with their own name on the certificate. It requires a valid residence permit, a residential property rather than a commercial one, and a value above the minimum threshold set for the province.
The current term is 30 years, extendable by 20 and renewable for another 30. It is registered at the land office, can be inherited and can be used as collateral.
Upside: the closest thing to ownership available to an individual. Downside: you need residency, the property is meant to be lived in rather than commercially let, and the price threshold rules out cheaper stock.
Structure 3. PT PMA and Hak Guna Bangunan
A PT PMA is an Indonesian company with foreign shareholding that you control outright. The company can hold Hak Guna Bangunan — the right to build and own structures for 30 years, extendable by 20 and renewable for 30 — and it can trade: rent villas out, manage them, sell them.
The requirements are heavier: declared and paid-up capital, licences matching your business activity codes, a director, proper bookkeeping and regular reporting.
Upside: this is the only structure in which short-term rental income is fully legal and documented — which means the property can be sold to an investor and shown to a bank. Downside: roughly two to four thousand dollars a year to run, and it demands discipline.
Side by side
| Criterion | Leasehold | Hak Pakai | PT PMA + HGB |
|---|---|---|---|
| Who holds the right | you, by contract | you, personally | your company |
| Term | 25–30 yrs + extension | 30 + 20 + 30 | 30 + 20 + 30 |
| Residence permit needed | no | yes | no |
| Legal short-term rental | limited | no | yes |
| Time to complete | 2–6 weeks | 1–3 months | 2–3 months |
| Annual running cost | — | — | $2,000–4,000 |
| Best for | a home for yourself | residents | investors who rent |
The nominee structure, and why we decline it
It looks convenient: the land is registered to an Indonesian national while you hold a folder of protective paperwork — a power of attorney, a loan agreement, an undertaking not to sell.
The problem is that courts consistently treat these arrangements as a sham. A transaction that conceals ownership the law prohibits is void — and if the underlying transaction is void, so is every safeguard built around it. A power of attorney also dies with the person who granted it, and their heirs are not party to your understanding.
We do not handle nominee purchases, and we do not list properties that can only be bought that way.
Taxes and fees
- BPHTB — transfer duty, around 5% of assessed value, paid by the buyer.
- Final income tax on the sale, around 2.5%, paid by the seller.
- Rental income tax, withheld at source; the rate depends on the landlord's residency.
- Annual land tax, a fraction of a percent of the assessed value.
- Local levy on tourist accommodation, around 10% of turnover, plus the licence itself.
Worth knowing. Rates, value thresholds and capital requirements are revised periodically. Treat the figures above as budgeting guidance rather than legal advice, and confirm the current numbers with a notary and a tax adviser before you sign.
In short
- Buying a home for yourself and not renting it out — leasehold does the job quickly and cheaply.
- Living in Bali on a permit and want your name on the certificate — Hak Pakai.
- Buying as an investment and letting it — PT PMA with HGB. There is no other honest route.
- If someone suggests registering it to a trusted local, walk away.
