At EasyROI we operate in Bali and we'll say it plainly: in Bali the first decision isn't "which villa" but "with which legal structure". Getting it wrong is the market's biggest risk.
The starting point: freehold isn't an option for foreigners
The rule has existed since 1960 and hasn't changed. Indonesia's Basic Agrarian Law (UUPA No. 5/1960) reserves full land ownership (Hak Milik) for Indonesian citizens only. A foreigner, as an individual, cannot register freehold land in their name in Bali. Full stop.
This doesn't mean foreigners are shut out of the market: it means they access it through different structures, each suited to a different profile. Let's look at them.
The three legal routes for foreigners
1. Leasehold (Hak Sewa) — the most common route
It's a long-term lease over the land and/or property. What you acquire is a registered contractual right to use the property for a fixed term, not a land title. Features:
- Duration: typically 25-30 years initial, with extension options (often 25+25 or 30+20), for an effective period that can reach ~50 years or more, negotiated and written into the notarised deed at signing.[2]
- Entry cost: roughly 30-50% less than an equivalent freehold.[5]
- No residency requirement, no minimum price threshold.
- Ideal profile: those seeking a single asset, lifestyle or medium-term rental income.
The critical point of leasehold isn't the duration itself but the clauses: extension terms, renewal pricing, right of first refusal, transfer and sublease rights, succession, and what happens if the landowner sells, dies or mortgages the land. They must be reviewed by a qualified notary or lawyer before any deposit becomes non-refundable.
2. Hak Pakai (right of use) — for those with residency
It's a registered land title that an individual foreigner can hold, provided they have a valid stay permit (KITAS or KITAP). It differs from leasehold because it's recorded with the National Land Agency. It can reach up to ~80 years total (initial term plus extensions) and is especially relevant in 2026 for holders of Indonesia's Second Home Visa or Golden Visa. Ideal profile: those who want to live in Bali long-term, rather than pure investment.
3. PT PMA + HGB — the most solid control for investing
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is a foreign-owned Indonesian company. It cannot hold Hak Milik, but it can acquire land under HGB (Hak Guna Bangunan, right to build) and own buildings for residential and commercial use. HGB through a PT PMA is generally granted for 30 years initial, extendable by 20 and then a further 30: around 70-80 years of control when each renewal is handled correctly. It's the right structure for those building a portfolio or running a rental/hospitality business: it grants commercial rights, can be mortgaged, and exit can happen via a share sale.
| Structure | Who can | Duration | Entry cost | Profile |
|---|---|---|---|---|
| Freehold (Hak Milik) | Indonesian citizens only | Perpetual | — | Not available to foreigners |
| Leasehold (Hak Sewa) | Anyone | 25-30 yrs + extensions | -30/50% vs freehold | Single asset, medium term |
| Hak Pakai | Foreigner with permit | Up to ~80 yrs | Medium | Residency/personal use |
| PT PMA + HGB | Foreign-owned company | ~70-80 yrs | Higher (company setup) | Portfolio, rental business |
The nominee agreement: why NOT to do it
This must be said clearly, because it's the market's most widespread and most dangerous practice. A "nominee agreement" is where you pay an Indonesian citizen to hold the freehold title "on your behalf", with a side agreement saying it's really yours.
It's illegal. The 1960 Agrarian Law explicitly prohibits foreigners from indirectly holding freehold land.[1] Indonesian courts have consistently ruled against the foreign party in nominee disputes: if the nominee decides the property is theirs, or their family makes a claim after their death, you have virtually no legal recourse.[1] The agreement is void: you risk losing your entire capital.The PT PMA is not a workaround: it's the legally mandated vehicle that replaces the nominee trap with a compliant, transparent and scalable structure. Our position is clear: better a well-structured, legal leasehold than a fictitious, fragile freehold.
What it costs, in summary
Closing costs depend on the structure:
- Leasehold: about 1% of the price (notary fee); no transfer tax, because it's a registered contract, not a title transfer. The 10% leasehold tax on the lease value is typically borne by the lessor, not the buyer.
- Hak Pakai / HGB (PT PMA): the buyer pays 5% BPHTB on the declared value; the seller pays 2.5% PPh. Plus company setup costs for the PT PMA.
On rental income: the final tax is 10% on gross for Indonesian tax residents, 20% for non-residents.
In summary
In Bali the choice of structure comes before the choice of property. Leasehold is the simplest, most accessible route, PT PMA gives the longest control and commercial rights, Hak Pakai suits those living on the island. Freehold isn't a route for foreigners, and "freehold via nominee" is a legal trap that can cost the entire investment.
Our work is choosing the right structure first, and verifying the clauses before any deposit. To understand which structure fits your goal, talk to an advisor — or explore active deals.
FAQ
Can a foreigner buy freehold property in Bali?No. Indonesian law (UUPA 1960) reserves freehold (Hak Milik) for Indonesian citizens. Foreigners access the market through leasehold (Hak Sewa), Hak Pakai (with a stay permit) or a PT PMA holding the right to build (HGB).
What's the difference between leasehold and freehold in Bali?Freehold is full perpetual land ownership, not available to foreigners. Leasehold is a registered contractual right to use the property for a fixed term (typically 25-30 years plus extensions), available to anyone and 30-50% cheaper.
What is a PT PMA and when is it worth it?It's a foreign-owned Indonesian company that can hold land under HGB (right to build) for around 70-80 years and operate rental businesses. It's worth it for those building a portfolio or running a hospitality business, seeking the longest, most solid control.
Is a nominee agreement in Bali safe?No, it's illegal and risky. The law prohibits foreigners from holding freehold land via a nominee; courts consistently rule against the foreign party. You risk losing your entire capital. The equivalent legal route is the PT PMA.
How much tax do you pay buying leasehold in Bali?For the leasehold buyer, about 1% notary fee and no transfer tax. The 10% leasehold tax is typically borne by the lessor. On rental income, a final tax of 10% for tax residents and 20% for non-residents.