Ownership & Leasehold in Bali

Overview of property ownership and leasehold structures in Bali. This guide is for general information only—always consult a licensed PPAT/Notary or legal advisor before making decisions.

Overview

Due Diligence Required
Indonesian citizens (WNI) may own Freehold (SHM). Foreign individuals or entities cannot directly hold SHM.
PT PMA companies typically hold HGB (Right to Build) on state or HPL land, or through legal transfer.
Foreign individuals may hold property through Hak Pakai (Right of Use) or a valid Leasehold agreement.
Avoid illegal “nominee” arrangements — high legal risk. Use only legitimate structures: PT PMA + HGB, Hak Pakai, or compliant Leasehold.

Freehold (SHM)

Indonesian Citizen
  • Holder: Indonesian individual.
  • Rights: Full and strongest ownership; transferable, mortgageable, and inheritable.
  • Key docs: SHM certificate, ITR/RDTR compliance, PBG/SLF for buildings.

HGB (Right to Build)

PT PMA / Legal Entity
  • Holder: Legal entity (including PT PMA).
  • Duration: Usually 30 yrs + extend 20 yrs + renew 30 yrs (per regulations).
  • Note: HGB held by PT PMA remains HGB – not convertible to SHM.

Hak Pakai (Right of Use)

Foreign / PT PMA
  • Duration: Typically 30 yrs + extendable (20 + 30) under certain conditions.
  • Object: On state/HPL land or SHM with proper approval and notarial deed (PPAT).

Leasehold (Hak Sewa)

Common 25–30 yrs
  • Nature: Usage right, not land ownership. Renewal must be stated in contract.
  • Payment: Usually upfront or in stages; may include renovation, sub-lease, or exit clauses.

Transaction Flow & Documents

Checklist
StepFreehold / HGB / Hak PakaiLeasehold
1) Due DiligenceCheck certificate (SHM/HGB/HP), land map, ITR/RDTR, taxes, encumbrance/dispute, and building permits (PBG/SLF).Verify owner’s certificate, authority, road access, boundaries, and renewal/sub-lease clauses.
2) AgreementPPJB (if staged) → AJB at PPAT. For HP/HGB: deed of acquisition/ conversion as required.Notarial lease agreement recommended; include site plan, renovation and technical clauses.
3) PaymentVia escrow or milestones under PPJB/AJB.Usually upfront or staged; specify handover & penalty terms.
4) Tax & TitleSeller PPh ≈ 2.5%; Buyer BPHTB ≈ 5% (subject to local thresholds). Title transfer at BPN.Rental income tax per law (for lessor); no title transfer for leasehold.
Zoning (ITR/RDTR) Building Permits Taxes & Fees
*Tax figures are general references. Local rules may vary. Always confirm with your Notary / PPAT and tax office.

Common Risks

Caution
  • Nominee schemes for SHM ownership – high risk of cancellation.
  • Buildings without PBG/SLF or zoning mismatch (ITR non-compliance).
  • Unclear lease clauses on renewal, sub-lease, renovation, or force majeure.

Best Practices

Tips
  • Work with trusted Notary/PPAT and verify directly with BPN.
  • Use escrow accounts and link payments to project milestones.
  • Ensure road access, boundaries, and utilities are clearly documented.

Quick FAQ

Can foreigners own SHM? Not directly. Options: PT PMA (HGB), Hak Pakai, or legitimate Leasehold.
Is a 25 + 25 + 25-year lease safe? Only if renewal options and conditions are clearly written and the owner consents.
Can you build on leasehold land? Yes, provided zoning and permits (PBG, environmental, etc.) are complied with.
Full Checklist & FAQ