ownership · Bali, Indonesia

Property Ownership Structures in Bali and Indonesia for Foreign Investors

Updated 9 min readBy Global Investments

Bali has established itself as one of the world's most sought-after locations for property investment and lifestyle relocation, drawing buyers from across Europe, Australia, and the Americas. Yet Indonesia — of which Bali is a province — operates one of the most restrictive foreign property ownership regimes in the Asia-Pacific region. Understanding the legal framework is not optional for a foreign buyer: the choice of structure directly determines whether you actually own what you think you own, and what happens to it when you die.

This guide is for general information only and does not constitute legal or tax advice. Indonesian property law is complex and subject to change; always seek independent legal advice from a qualified Indonesian notary (notaris) and lawyer (pengacara) before making any investment decision.

The Core Legal Framework

Indonesian land rights are governed by the Basic Agrarian Law (Undang-Undang Pokok Agraria — UUPA) of 1960. This law establishes a hierarchy of land title certificates and specifies which title types may be held by whom. The key title types relevant to foreign investors are:

  • Hak Milik (HM — Right of Ownership): Full freehold ownership. May only be held by Indonesian citizens and certain Indonesian legal entities (primarily government bodies and designated social organisations). Foreign nationals cannot hold Hak Milik.
  • Hak Guna Usaha (HGU — Right to Cultivate): A cultivation right for agricultural or plantation use. Not relevant for residential investment.
  • Hak Guna Bangunan (HGB — Right to Build): A building right allowing construction and use of structures on land. Initially granted for up to 30 years, renewable for up to 20 years, extendable for a further 30 years. Can be held by a PT PMA (foreign-owned Indonesian company). Foreigners cannot hold HGB in their personal name.
  • Hak Pakai (HP — Right to Use): A use right that foreign nationals CAN hold in their personal name since a regulatory amendment in 2015 (Government Regulation No. 103 of 2015). HP is the primary route for foreigners owning property personally.
  • Hak Sewa (HS — Leasehold / Rent): A contractual lease right. Not a land title certificate in the formal sense; rights derive from the lease contract rather than the land registry.

Hak Pakai: Personal Ownership for Foreign Nationals

Government Regulation 103 of 2015 permitted foreign nationals who lawfully reside in Indonesia to hold a Hak Pakai certificate over residential property. This was a significant liberalisation.

Key conditions as of 2026:

  • The property must be a single residential unit.
  • Minimum investment thresholds apply — for a landed house, the minimum property value varies by region; in Bali and major cities, the floor price has been set at IDR 5 billion (approximately USD 300,000–310,000 at 2026 exchange rates).
  • The buyer must hold a valid Indonesian residence permit (KITAS or KITAP). Tourists and short-stay visitors cannot hold Hak Pakai — only legal residents.
  • The initial HP term is 30 years, renewable for a further 20 years, and extendable for a further 30 years — giving a potential total of 80 years.
  • HP is registrable at the Badan Pertanahan Nasional (BPN — National Land Agency).

Practical limitation: The Hak Pakai route is better suited to investors who actually reside in Indonesia (or plan to) than to pure absentee investors without a residence permit. Holding a Second Home Visa (introduced in 2022) appears to satisfy the lawful residence requirement, which has made this route more accessible — see below.

Indonesia's Second Home Visa and Property Rights

Indonesia introduced the Second Home Visa (Rumah Kedua Visa, previously called the B211) in late 2022. It grants a 5-year or 10-year multiple-entry stay right. One of its conditions is the deposit of IDR 2 billion (approximately USD 125,000) in an Indonesian bank account, or ownership of Indonesian property of equivalent value.

The Second Home Visa has been widely discussed as enabling foreign property ownership in Bali because holders may satisfy the lawful residency requirement for Hak Pakai. However, as of 2026:

  • Regulatory guidance on whether Second Home Visa holders can hold HP in their personal name is still developing.
  • In practice, many holders of this visa use leasehold arrangements rather than attempting formal Hak Pakai registration.
  • A qualified Indonesian notary or immigration lawyer should confirm the current position before relying on this route.

Long-Term Leasehold (Hak Sewa)

The contractual lease is, in practical terms, the most widely used route for foreign property investment in Bali. A foreign individual enters a lease agreement with the Indonesian landowner (who holds Hak Milik) for a defined term.

Typical structure: An initial term of 25–30 years, with a pre-agreed option to extend for a further 25–30 years, giving 50–60 years in total. Some premium developers offer leases of 80 years or more. The lease must be notarised (signed before an Indonesian notaris) to be properly enforceable. It should be registered at the BPN to provide notice to third parties (though enforcement of this registration requirement in Bali is not universal in practice).

Key protections to insist upon:

  • Notarised lease agreement (akta sewa) signed before a PPAT (Pejabat Pembuat Akta Tanah — a notary specifically authorised for land transactions).
  • Clear identification of the land parcel by BPN certificate number, boundaries, and area.
  • Extension terms: price, mechanism, and trigger for renewal clearly specified.
  • Pre-emption right (right of first refusal to purchase should the landowner ever wish to sell, or should Indonesian law be amended to allow foreign freehold).
  • Succession clause: the lease should expressly state it is transferable to the lessee's heirs and assignable (with or without consent) to a buyer if the lessee wishes to sell the leasehold interest before expiry.
  • Power of attorney allowing the lessee to deal with the property and enforce their rights without needing the landowner's signature for day-to-day matters.

Risks with leasehold:

  • The landowner's heirs may dispute the lease on death if it is not properly documented.
  • Landowners may attempt to renegotiate terms informally when extensions are due, particularly if property values have increased substantially.
  • Title integrity depends on the Hak Milik certificate being clean — check for encumbrances, mortgages, or disputed ownership before signing.

PT PMA (Foreign-Owned Indonesian Company) Structure

A PT PMA is a Penanaman Modal Asing (foreign direct investment) company incorporated under Indonesian law. It may be wholly foreign-owned in sectors not restricted by the Negative Investment List. A PT PMA can hold Hak Guna Bangunan (HGB — Right to Build) over Indonesian land.

How it works for property investment:

  • The PT PMA acquires HGB title over land.
  • The foreign investor holds shares in the PT PMA.
  • The investor exercises control over the property through the company rather than owning it directly.

Advantages:

  • Legitimate corporate ownership structure recognised by Indonesian law.
  • Can hold multiple properties.
  • Shares in the company can be bequeathed under the investor's national succession law, potentially avoiding Indonesian succession complexity.
  • Can engage in commercial property rental activities formally.

Disadvantages and conditions:

  • Annual compliance: filing financial reports with the Investment Coordinating Board (BKPM/OSS), tax returns, corporate administration.
  • Minimum investment capital requirements (the minimum authorised capital for most PT PMAs was IDR 10 billion as of recent regulation — a significant threshold for smaller investments).
  • The PT PMA must have a genuine business purpose; companies formed solely to hold a single holiday villa with no rental activity may attract scrutiny.
  • HGB is not permanent ownership — it is a time-limited right requiring renewal.

For a portfolio investor or developer, a PT PMA can be the appropriate structure. For a single villa purchase, the compliance cost often outweighs the benefit over a well-structured lease.

Nominee Ownership: The Structure to Avoid

Despite the legal restrictions, nominee arrangements — where an Indonesian national holds Hak Milik on behalf of a foreign buyer, with a private agreement acknowledging the foreigner's beneficial interest — remain widespread, particularly in Bali. They are illegal under Indonesian law. The Basic Agrarian Law and subsequent regulations expressly prohibit foreigners from circumventing ownership restrictions through nominees.

The consequences can be severe:

  • The Indonesian nominee is the legal owner. There is no Indonesian law mechanism to enforce beneficial ownership claims; the nominee can sell the property, mortgage it, or refuse to cooperate.
  • On the death of the nominee, the property passes to the nominee's heirs under Indonesian law — not to the foreign investor.
  • Enforcement of private agreements purporting to give a foreigner control over Hak Milik land through an Indonesian nominee is legally tenuous at best.

Despite being common practice, nominee arrangements represent an unacceptable legal and financial risk. Any adviser recommending this route should be treated with serious caution.

Inheritance and Succession

Indonesia applies its own civil law to inheritance of Indonesia-situated assets. Under the Indonesian Civil Code (for non-Muslim Indonesians) and Islamic law (for Muslim Indonesians), succession rules may differ significantly from the investor's home country expectations.

For a foreign investor holding a lease:

  • The lease should expressly provide for inheritance — that the rights pass to the investor's designated heirs or estate.
  • A notarised Indonesian will dealing with Indonesian assets simplifies the process for heirs; without it, probate of a foreign will in Indonesia can be slow.

For a PT PMA shareholder:

  • Shares in an Indonesian company are governed by Indonesian company law; the transfer of shares on death to foreign heirs requires compliance with shareholder procedures and potentially BKPM notification.

Practical advice: Obtain an Indonesian will (wasiat) drafted by an Indonesian notary covering your Indonesian assets, with a parallel will in your home country for worldwide assets. Coordinate the two documents carefully to avoid conflicts.

Taxes on Property Ownership in Bali

Acquisition taxes:

  • BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan — title acquisition duty): 5% of the transaction value above a non-taxable threshold set by the local government.
  • PPh (Income Tax on transfer): Seller pays 2.5% of the gross sale price as a final withholding tax.
  • Notary fees and BPN registration fees: typically 0.5–1% of transaction value combined.

Annual holding costs:

  • PBB (Pajak Bumi dan Bangunan — land and building tax): Annual charge based on assessed (NJOP) value; rates are low (typically 0.1–0.3% of NJOP), but NJOP values in popular Bali locations have risen sharply.
  • Maintenance and management costs vary widely; villa management in Bali typically costs 20–30% of gross rental revenue.

Practical Recommendations for Foreign Investors

  1. Use a notarised long-term lease (50–80 years total term with documented extension options) as the baseline structure — it is safe, legal, and widely understood.
  2. Never use a nominee arrangement under any circumstances.
  3. For residents or Second Home Visa holders: explore Hak Pakai for residential property above the minimum value threshold, taking current legal advice on whether your visa type qualifies.
  4. For portfolio or commercial investment: consider a PT PMA, accepting the higher compliance cost in exchange for the greater legal certainty of registered HGB title.
  5. Draft an Indonesian will covering your Indonesian assets and ensure your heirs know where it is and who the notary is.

How Global Investments Can Help

Global Investments works with trusted Indonesian notaries and property lawyers who have deep experience in structuring leasehold and PT PMA acquisitions in Bali for foreign buyers. We can guide you through the title verification process, structure the lease agreement to international standards, and connect you with experienced advisers for succession planning.

Contact our team to discuss your Bali investment and ensure your ownership is properly protected.

This guide reflects the law as understood in June 2026. Indonesian property law and investment regulations change regularly. This is not legal advice. Always seek independent professional advice from a qualified Indonesian lawyer before proceeding.

This guide is for general information only and does not constitute financial, legal or tax advice. Programme rules, prices and tax rates change; verify current requirements with a qualified adviser before acting.