Buying Property in Bali – AD PROPERTIES Client Guide

Buying property in Indonesia, especially in Bali, can be a rewarding and profitable investment when approached with the right knowledge and guidance. Whether you are an Indonesian citizen or a foreign buyer, understanding the legal framework, ownership structures, costs, and purchase process is essential to making a secure and informed decision.

Disclaimer: This guide is provided for general informational purposes only and does not constitute legal advice. For specific legal matters, AD PROPERTIES will connect our clients with the most competent and trusted lawyers and notaries to ensure transactions are completed securely and in full compliance with Indonesian law.

Ownership Options & Legal Pathways in Indonesia

• Freehold (Hak Milik) – The strongest form of ownership, available only to Indonesian citizens. Foreigners cannot hold Freehold in their own name.
• Leasehold (Hak Sewa) – Available to both Indonesians and foreigners. A long-term lease (usually 20–30 years, often extendable) is registered directly in the buyer’s name and is fully legal.
• Right to Use (Hak Pakai) – Can be held by foreigners with a KITAS (residency permit) or retirement visa, intended for residential purposes only.
• Right to Build (Hak Guna Bangunan / HGB) – Used by companies, including PT PMA (foreign-owned companies), allowing land ownership for residential or commercial use, valid for up to 30 years and extendable to a maximum of 80 years.

AD PROPERTIES do not recommend “nominee” ownership structures, as they are legally risky and not recognised under Indonesian law.

Step-by-Step Buying Process in Bali

1. Understand the Difference Between Freehold and Leasehold – Freehold is reserved for Indonesian citizens only. Leasehold is the most straightforward and secure option for foreign buyers, with direct registration in the buyer’s name. Alternatives for foreign ownership include PT PMA (Penanaman Modal Asing) with HGB for up to 30 years extendable to 80 years, and Hak Pakai for foreign residents with KITAS/retirement visa.
2. Define Your Needs – How many bedrooms you require, whether it will be for rental income or personal use, your preferred location, and your maximum budget.
3. Choose a Licensed Agent & Arrange Viewings – Work with a licensed real estate agency with an established office to ensure compliance and access to verified listings. Arrange private viewings for shortlisted properties.
4. Written Offer & Negotiation – Submit a written offer for the property you want. Your agent will handle negotiations until terms are agreed.
5. Preliminary Agreement (MoU) – After acceptance, your agent prepares a Preliminary Agreement (MoU) outlining all terms, payment schedules, and inclusions before proceeding to the notary.
6. Deposit via Notary Escrow – Once the MoU is signed, pay a deposit (minimum 10%) into the notary’s escrow account. The seller provides original ownership documents for verification.
7. Full Due Diligence – The notary verifies the land certificate, zoning (ITR), building permits (PBG/IMB), and tax status, ensuring the property is clear of disputes or encumbrances.
8. Sales & Purchase Agreement (PPJB) – The notary drafts the Sales & Purchase Agreement, detailing the payment schedule, penalties, and obligations.
9. Completion & Registration (AJB) – Final payment is made at the signing of the Akte Jual Beli (AJB) before the notary. The title (Freehold or HGB) or lease is registered in the buyer’s or PT PMA’s name.
10. Handover – Receive the keys, inventory list, and transfer of utility accounts, banjar/community obligations, waste collection fees, staff salary records, and severance payments (if applicable). For managed properties, transfer operational licenses, access to websites or booking portals, management contracts, supplier agreements, and any other operational documentation.
11. Post-Purchase Support – We assist with insurance, property management, and legal compliance after purchase.

Closing Costs & Taxes

• Buyer’s Tax (BPHTB) – 5% of the property’s taxable sale value above the non-taxable threshold.
• Notary/PPAT Fees – Typically 0.5–1% of the transaction value, depending on complexity.
• Legal/Due Diligence Fees – If using an independent lawyer, costs vary depending on scope.
• PT PMA Setup & Compliance – For company purchases, includes establishment and annual reporting costs.
• Government Fees – For land measurement, mapping, and registration.
• VAT (PPN) – 11% applies if buying from a developer or company registered for VAT.

Required Documents

From Seller

• Original land certificate (SHM / HGB / Hak Pakai)
• Latest PBB (Land & Building Tax) payment receipt
• Copy of KTP of both husband and wife (if married) or passport
• NPWP (Tax Identification Number) of seller
• ITR zoning confirmation from local authorities
• Building permit (PBG/IMB)
• Any operational license (e.g., Pondok Wisata) if applicable
• Proof of road access or easement rights
• Inventory list (if the property is sold furnished)
• Any existing lease or management agreements

From Buyer

• Passport (for foreigners) or KTP (for Indonesians)
• NPWP (if applicable)
• KITAS or retirement visa (if purchasing under Hak Pakai)
• PT PMA company documents (if purchasing through a company)

Why Choose AD PROPERTIES

We priorities legal compliance, secure payments via notary escrow, and transparent transactions. Our experienced team works with both local and international buyers, ensuring every property purchase in Bali is safe and successful.